Real estate sales in the Cariboo region saw a slight increase in Quesnel, slight decrease in Williams Lake and a decrease in 100 Mile House according to the BC Northern Real Estate Board’s first quarterly report in 2019. File image

Be careful when buying recreational property before a city home, say experts

In addition to Toronto, some buyers in B.C. are also opting for recreational properties for first purchase

First-time homebuyers aching to get into the real estate market should be cautious about trying to bypass expensive urban housing by purchasing a recreational property first, real estate experts say.

“It’s more of a lifestyle choice than it is a great investment choice,” says Brad Henderson, former president and CEO of Sotheby’s International Realty Canada.

READ MORE: Canadian millennials buy more than recreational properties than boomers, survey says

Some hot locations such as the Muskoka Lakes, Georgian Bay or Collingwood north of Toronto are seeing prices soar because of short supply, but these properties may now be as unaffordable as Toronto. That’s prompted potential buyers to look to properties in Prince Edward County east of Canada’s largest city, or west, to the shores of Lake Erie.

These types of purchases could be good for someone planning to use it as a weekend getaway or summer retreat, but the properties typically need to be within a three-hour drive of the city.

While more affordable than urban housing, recreational properties typically appreciate at a slower pace than city homes, Henderson said in an interview.

“So if not on a lake or close to mountains, those properties follow the market versus lead it, whereas well-located properties in Toronto, Vancouver, Calgary and Montreal will tend to appreciate at a faster rate.”

Canadians have been buying recreational land before a principal residences for decades, often parking a motor home or pitching tents until ready to build.

However, the rising cost of urban housing may be opening the idea to more buyers.

“One of the trends that has been identified in Ontario particularly was this first home purchase in cottage country,” says said Phil Soper, CEO of Royal LePage. “Now it’s a relatively small slice of the market but it was big enough that it came through in our interviews of our practitioners in the field.”

In addition to areas around Toronto, some buyers in B.C. are also opting for recreational properties as their first purchase.

Short-term rental services like Airbnb, cottage rental websites and VRBO can help to offset some of the costs by facilitating the rental of the property.

Due diligence is required, however, because some rural municipalities such as Morin Heights and St. Sauveur in Quebec have imposed bylaws banning Airbnb rentals in some zones.

Soper said purchasing a recreational property is normally viewed as a luxury.

“I know some people justify it as a financial investment because typically property appreciates over time, but recreational property doesn’t appreciate in the predictable, reliable way that urban property does.”

The sales prices of recreational properties in Ontario and Quebec are currently increasing at about seven per cent compared to little increase at all for urban locations following a correction. But Soper said that’s an anomaly. The recreational market was dead in the post-recession years, but is strong now because of low unemployment, implied wealth from urban home prices and the Canadian dollar making it attractive to U.S. buyers.

“But that’s not something you should bet on,” he said in an interview.

“Buy it for a lifestyle decision. Buy it for your children…Buying a rec property purely for investment is not a good decision.”

Royal LePage’s 2019 recreational report says overall prices rose five per cent to $411,471 last year as low inventory caused sales to decrease 8.3 per cent. Prices are forecast to increase 4.7 per cent this year, led by high demand in Ontario and Quebec to offset softer market conditions in British Columbia.

John Pasalis, president of the Toronto-based firm Realosophy Realty Inc., says the cost of housing in Greater Toronto is prompting buyers who feel they need to be in the real estate market to buy what they can, which is a cottage.

“I think buyers need to be cautious and really understand that cottages do not move at the same rate as the city of Toronto housing market. So if they’re expecting really, really big gains in capital they might be surprised in five or 10 years to see what their cottages are worth.”

Ross Marowits, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Missing boy was dehydrated but in good health

The boy who went missing near Mackenzie was found to be somewhat… Continue reading

All Nations Driving Academy gets $360K boost from province

Terrace-based driving school bridges gap in services for remote northwest B.C. communities

Skeena Watershed reopened for recreational pink and coho

Four sections and tributaries remain closed

Skeena-Bulkley Valley candidates react to finding Trudeau broke ethics law

The election campaign is heating up before the writ has even dropped

Parking lot rework effort begins

Work is well underway on the Downtown Parking Lot Redevelopment Plan, which… Continue reading

Disney Plus to launch in Canada in November

Analysts say latest streaming service may escalate cord cutting

B.C. manhunt suspects left cellphone video before they died: family

Family member says Kam McLeod, Bryer Schmegelsky recorded final wishes

Okanagan bus driver assaulted for asking patron not to smoke

59-year-old in hospital with non-life threatening injuries

B.C. sets rules for ride hailing, same minimum fee as taxis

Larger operating areas seen as threat by cab companies

Two hiking families team up to extinguish fire in B.C. backcountry

Children and their parents worked for three hours to ensure safety of the popular hiking region

Vancouver man arrested after pregnant woman’s SUV stolen, then crashed

Police are recommending charges against a 22-year-old Vancouver man

Elections Canada to assess ‘partisan’ climate change rhetoric case by case

People’s Party of Canada Leader Maxime Bernier has said climate change is not an emergency nor caused by human

Unseasonable snow forces campers out of northeastern B.C. provincial park

Storm brought as much as 35 centimetres of snow to the Fort Nelson, Muncho Lake Park-Stone Mountain Park

Most Read