This article was originally published in the Spring 2015 issue of Cottage Life magazine.
While everyone has an opinion about what’s going on with Canada’s housing market—bubble, no bubble, overheated in some regions and sluggish in others—getting a read on cottage-country real estate can be a bit tougher: the voices aren’t quite as loud, and the news coverage is spotty at best. We set out to scan the market from coast to coast to see what’s happening in recreational real estate, what you can expect in 2015, and how to make what’s going on work in your favour.
Realtors from B.C. to Newfoundland report that their two most common types of buyers are young families with children tapping into their home equity to buy cottages and near or recent retirees who are looking to make a cottage-country property their primary residence. In both cases, kids come into play. “I see grandparents getting places here as grandchild catchers,” says Ann Chiasson, a broker-owner of Re/Max Sea to Sky Real Estate in Whistler, B.C. In contrast, in the areas of the country that attracted the first wave of retiring boomer buyers, such as Ontario’s Kawarthas, those cottage owners, now more elderly, are selling and heading back to town to be closer to services and family. “We have a lot of retirees up here, but they’re the ones selling, not buying,” says Linda Duncan, a sales representative with Royal LePage Kawartha Lakes Realty. Whether you’re in the young family demographic, approaching retirement, or you’re simply ready to get into the market, here are the factors influencing what you’ll find, how much it will cost—and how you could score a better buy.
Hot home market = hot cottage market
Some call it “residential spillover.” Those lucky enough to own a home in a hot residential market may just call it “tapping into my equity.” What it means in cottage country is that buyers with homes in strong residential markets—the strongest markets in Canada, according to a recent Pricewaterhouse-Coopers report on real estate trends in 2015, include Calgary, Edmonton, Toronto, Vancouver, Saskatoon, and Ottawa—are pushing up the prices in nearby accessible cottage markets. But the flip side of this trend is that buyers may find bargains in cottage areas closer to weaker housing markets, such as Winnipeg, Montreal, and Halifax. And what realtors are seeing on the ground seems to bear that out, with high levels of cottage inventory noted in Manitoba, parts of Quebec, and Nova Scotia, with more cottages on the market meaning more competitive pricing overall.
Make it work for you: Opt to province-hop. Even with the higher travel costs, it may make sense to buy a cheaper place in another province, especially if your schedule allows you to visit for longer periods of cottage time, as opposed to shorter stays and weekend use.
When it comes to buying out of province, realtors are noticing the trend. “I deal with a lot of people who are either selling their big home in Alberta or their family farm in Ontario, and are looking to buy here and still have a nest egg to retire on,” says Gabe Routhier of Trade-winds Realty in Hubbards, N.S. Some are buying traditional homes to use as recreational properties—“Out here, really every property can be used as a recreational property, because you’re near the ocean,” he says—while others are purchasing actual cottages. But it’s not just the East Coast that has benefitted from high house values in other parts of the country: last year, British Columbia was seeing similar buying trends with cottage hunters flush from Alberta’s then-booming economy. “Last summer, we had tons of Albertans driving around,” says Al Christopherson of Century 21 Lakeside Realty, North Shuswap branch. Some expected property prices to be unrealistically low and made what he calls “stinky, low-ball offers,” including a $140,000 offer on a $199,900 log-barn conversion property and an $8,000 offer on a lot listed at $14,500. With the drop in oil prices, though, Christopherson says he’s seeing fewer Albertans hunt-ing in the B.C. market. Still, B.C. buyers appear to have taken up the slack, so sales are still up overall.
Make it work for you: If you are province-hopping, you may want to keep your home address under your hat so that sellers don’t assume that you’ve got bags of out-of-province loot in the trunk of your car. As well, don’t assume that every property is a bargain just because it would be more expensive closer to home: take the time to research areas and prices so that your offer is in line with local property values.
The cottage office
With cottage commutes getting uglier in many parts of the country, buyers are looking for recreational properties that have the amenities for working from the deck or dock. Just a few years ago, cottage Internet access was often dodgy (though residents in rural Nova Scotia and some other parts of the country will tell you it still is), and cellphone reception could be intermittent. Today, though, the extension of broadband service into rural communities has improved access, so that working from the cottage is more feasible than ever. That access means cottagers can dodge the weekend traffic with a day or two of telecommuting—and it also means that good cell and Internet access can be a selling feature.
Make it work for you One cottager’s unacceptable isolation may be another’s nirvana: if working from the cottage isn’t on your radar, you’ll have less competition and may get a bargain in an area that doesn’t have good broadband coverage.
Year round, all the way
While four-season properties have long been desirable in winter recreation areas—such as Ontario’s Collingwood and British Columbia’s Whistler—four-season use now tips well outside traditional ski areas. “Everyone wants their place to be usable year round,” says
John Jarvis, a broker and an owner of Re/Max North Country Realty in Huntsville, Ont. “Nearly one hundred per cent of my buyers are looking for four-season places.” Partly, Jarvis says, it’s because buyers want a property that they can enjoy year round, but he adds that financing options are more flexible for those purchasing a year-round recreational property than for those buying a three-season cottage. “The banks seem to be more competitive with offering funding for second homes,” he says. That desire for four-season use stretches across the country, and it’s a factor in markets in Nova Scotia, Quebec, Ontario, Alberta, and British Columbia.
Make it work for you: Consider three-season properties with upgrade potential if you need four-season use, or simply go three-season if winter use isn’t on your must-have list.
A little help from some friends…or family
Royal LePage broker-manager David Kingshott in Parry Sound, Ont., says that it isn’t uncommon in his region for friends and family to purchase property together. It’s a trend that agents in Alberta’s Gleniffer Lake and Pine Lake areas and B.C.’s East Kootenay area—regions with relatively high cottage prices—also cite. Sharing tends to be more likely in higher-priced areas where splitting the costs may be the only way into the market for some families. Still, even in those markets, shared purchases don’t always stay shared. “While we used to see families or friends sharing, in almost every case one member of the group would eventually end up buying out the other shares,” says Whistler realtor Ann Chiasson. While joint purchases were a factor in the Okanagan in B.C. in the past, softening prices linked to the economic downturn have made properties there more affordable and lessened the likelihood of sharing. In more economical regions, multi-party buying is even less common. “I have quite a few properties that would be perfect for that sort of thing, but people seem to hesitate to buy in groups,” says Tradewinds’ Routhier in Nova Scotia. “When we do have a deal involving multiple parties, it’s usually something like a son buying a place and letting extended family use it or moving an elderly parent into a recreational property. But it doesn’t happen often.”
Make it work for you: A shared purchase can put more properties within your reach—but buying together can be challenging. Check out “How to Draft a Sharing Agreement” online at cottagelife.com for advice on successful co-ownership.
Better roads = new cottage options
With an increased emphasis on ease of getting to the cottage, it should be no surprise that highway improvements can play a role in boosting cottage prices. For instance, three Ontario projects have raised interest in cottage areas: the opening of the Hwy. 404 extension near Keswick and Georgina, on the southern shore of Lake Simcoe; the imminent expansion of Hwy. 407 east of Picker-ing, giving better access to the East Kawartha region; and the expansion of Hwy. 416 in the Ottawa region.
Make it work for you: Take a look at quieter areas just beyond the reach of highway improvements, suggests Huntsville’s John Jarvis. “If you’re looking in Huntsville with a budget of $400,000, you can’t afford anything in the main area, but if you head east, west, or north of the busiest areas, the prices go down quite a bit,” he says. “Take a $650,000 cottage in Huntsville. If you go toward Haliburton, a similar cottage with the same shoreline and lake size may only cost $450,000. You get more value for your dollar and your taxes will be less.”
Are the Americans coming (back)?
For the last six or seven years, a higher Canadian dollar and a tougher U.S. economy meant that American buyers weren’t much of a factor in cottage real estate. With our dollar dipping, though, analysts are suggesting that American buyers are starting to look north again—and Canadian buyers who may have looked south will likely stick closer to home, where their dollar will go further. These two trends are likely to drive up interest in areas such as B.C. and the Maritimes. Ann Chiasson, in Whistler, has already noticed a change. “The Americans are starting to come back now,” she says. “The dollar has dropped and they can save 10 to 15 per cent.”
Meanwhile, some agents in Nova Scotia say they’re not seeing that yet. “We’re not getting the American buyers we used to,” says Gabe Routhier. “We’re now seeing buyers who are mainly from within Canada, plus we’re getting a lot of interest from Germany.”
Make it work for you: If you’re looking in an area that’s an easy drive from the U.S. or has a history of American cottage ties, getting into the market sooner rather than later—before there’s more competition for properties—makes sense, and you may see your property value pop up if and when those foreign buyers return.
Reno? No thanks
“In the last boom, in 2005-06, we saw a lot of buyers willing to buy a place and then do a big renovation on it, but we’re not seeing that much now,” says Richard Greaves, a broker-owner with Re/Max Alpine Realty in Canmore, Alta. “People now prefer to buy something that is already done.” Realtors in Ontario’s Bruce Peninsula and the Vernon area of B.C. are also seeing a shift to a desire for fully renovated properties that require no major work. Still, realtors in some areas, such as Saskatchewan’s Christopher Lake and Candle Lake area, report an interest in vacant lots, especially on the part of younger buyers. Improvements in prefabricated cottage kits may be driving interest in lots in some areas, says Huntsville’s Jarvis. “Prefabs were really popular about 30 years ago, and they’re becoming popular again, due to the dramatically increased quality,” he says. And off-the-grid options? Realtors say they’re seeing little if any interest, and little priority on green options as well. “The focus is on full service, Wi-Fi, Internet, heat, paved road,” says Century 21’s Christopherson in Scotch Creek, B.C. “They want the cottage life, but they don’t want to be too country: no 4×4 roads, no off the grid, none of that silliness as they see it.”
Make it work for you: With so much focus on ready-to-move-in cottages with full service and paved roads, you may find bargains by going to a more remote area, looking for properties down gravel roads or those with more rustic appeal. If your cottage life dream is off grid, even better: the competition for such properties and lots is likely to be low—and you might have good resale value in the future, as people now in their 20s and 30s start buy-ing properties. “I think as younger buyers start to come into some money, we’ll see greener options become a larger part of the market,” says Nova Scotia’s Routhier.
Still, while arming yourself with the knowledge on the latest trends can open your eyes to options you hadn’t considered, for most buyers, cottages end up being a purchase motivated more by heart than by head. Says Royal LePage’s Duncan in Ontario’s Kawartha Lakes area: “Most buyers just want to get up by a lake and get a cottage.”