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5 questions to ask yourself
before you buy your dream cottage
Is non-waterfront a deal
breaker? If you can give up being immediately
on the water, you'll find much better deals.
Can I afford the mortgage?
Another thing to consider is the mortgage
process, which is also different in the recreational
market. Down payments are usually larger and interest
rates might be higher with less-flexible terms
as banks price in the risk of ownership of a frequently
unoccupied property.
Can I afford the upkeep?
Upkeep won't be the same as for your chic
urban shack, especially if you're looking at something
that's screaming for more than a coat of paint.
Could I be a landlord?
Renting your property part of the year could be
a huge help in offsetting mortgage and maintenance
costs. But renting brings its own costs in terms
of time and hassles. As an MD, you may not have
the time to manage these.
Do I really need to own the
place? A fractional ownership or rental arrangement
might be a better option, depending on how much
you plan to use the property.
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"Canada's six-year housing market
boom is officially over."
So declared well-respected Bay
Street economist Doug Porter, of BMO Capital Markets,
last month. For the first three months of this year,
sales of existing homes dropped 13%. In cities like
Calgary and Edmonton, sales dropped 36% and 30% respectively
from January to March.
That's what the market as a whole
looks like. So what does all this mean for your plans
to snap up that cottage you've been eyeing? Plenty.
"It's a luxury," says Phil Soper,
president and CEO of Royal LePage Real Estate Services.
"And as such it tends to be more impacted by downturns
in the economy than the general market." In other words,
when the economy starts to sag, the recreational home
market is the first to fall.
So even though this market is characterized
by a "chronic supply constraint" - a Royal Lepage report
last year found that there were seven buyers for every
two recreational properties - Mr Soper predicts "a much
lower rate of appreciation than we've experienced for
most of this decade."
Last year, buyers paid 15% more
for a recreational property. In comparison, overall
market prices appreciated 10%. This year, Mr Soper expects
appreciation to be slightly below 10% and 5%, respectively.
LOCATION,
LOCATION
Location will be your biggest friend or foe when it
comes to buying a cottage in this market. Prospective
buyers looking for a cottage within driving distance
of Calgary and Edmonton, for instance, should expect
to pay more than the national average. Located between
these two fast-growing cities, Sylvan Lake has some
of the expensive properties in the country.
Prices tail off the further you
get from a major city. Within a two-hour drive of Toronto,
for instance, in the Golden Horseshoe region, prices
are also well above the national average. But as you
move out of that range - west to Lake Erie or north
to Georgian Bay - prices fall dramatically. A caveat:
if you plan to make frequent weekend jaunts, high gas
prices could undermine the money you save by buying
further away.
"The trick is to decide how much
money you can afford," Mr Soper says. "And then talk
to a realtor in the areas you've heard about that are
within the maximum distance you'd be comfortable driving
to."
EASTERN
PROMISE
"Atlantic Canada continues to offer the biggest bang
for the buck," says Christine Martysiewicz, spokeperson
for Re/Max Ontario-Atlantic Canada.
Ontarians in particular are scouring
the East Coast for permanent retirement homes and not
just a summer getaway spot, according to Cathie Billings,
owner of Royal LePage People First in Nova Scotia. Improved
roads are making certain locations accessible year round.
In the Dalhousie, NB, area, a waterfront property starts
at less than $200,000.
Around Chester and Mahone Bay,
NS, because they're on the ocean, you're looking north
of $350,000, much less than prime spots in Ontario,
Alberta and BC. You can find something outside popular
spots like Lunenburg and Shelburne for under $240,000.
"You don't have to drive too far south of Halifax to
find some real deals," Mr Soper says.
On the Northumberland Strait in
PEI, Mr Soper says you can get an oceanside property
for dough that would get you "a small lot on a slough
in Alberta." Prices ranged on the island last year between
$100,000 and $350,000. Newfoundland cottages are simply
a steal, priced between $70,000 to $100,000. Consider
that the average cottage price tag in Canada in 2006
was $380,000. That would get you a year-round home with
a boathouse on the Rock.
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PHYSICIAN LIFE
