RECREATIONAL
Recreational Property Report (from
Royal LePage):
How can I learn more about the recreational property market?
The current Royal LePage Recreational Property Report combines a poll
of cottage/chalet owner and buyer attitudes with a market analysis of
trends, activity and prices in recreational property markets in Canada.
This year’s report examines the high prices that Canadians are
willing to pay for recreational properties in Canada. Among some of
the most interesting findings:
It seems that the cottage experiences of childhood have a profound
impact on many Canadians as the poll finds that 59 per cent of Canadians
who own or may soon own a recreational property grew up spending time
at a cottage. Half of Canadian cottage owners and intenders (50%) spent
summers at family or friends' cottages, while 11 per cent enjoyed time
at rental properties.
When it comes to matters of the heart, negotiations could become trickier
for divorce lawyers. When asked, “In the instance of a divorce
settlement would you choose to receive the primary residence or the
cottage?” the properties were almost equally favoured, with 39
per cent of current cottage owners and those likely to or planning to
purchase a cottage choosing the primary residence, and 33 per cent opting
for the cottage.
Gas allowances aside, among Canadians planning to purchase or among
those who would consider purchasing a cottage, 15 per cent have budgeted
to spend between $200,000 and $500,000, while one per cent plan to spend
between $500,000 and $1 million, and two per cent of respondents have
budgeted $1 million or more for their lavish slice of heaven. The majority
of Canadians who intend to purchase a recreational property have budgeted
less than $200,000.
For further details on the recreational property market in your area,
see the full reports below:
Click
for Latest Recreational Property Report
Click
for Latest Cottage Price Summary
Recreational properties open up
As demand grows, lenders do an about-face and make it easier for
people to buy
Suzanne Beaubien, For Canwest News Service
Published: Monday, May 12, 2008
Taking on a second mortgage is not a step most homeowners take lightly.
But with more people seeking out second properties where they can escape
the city, the financing of recreational properties is a market that
has expanded in recent years.
More options are opening up to people ready to purchase.
Mortgage brokers say traditionally lenders have seen recreational properties
as less desirable investments. "In general, it's a much more narrow
niche," explains Todd Fralic, Mortgage Intelligence's assistant
vice-president for the Prairies."At one point, it was nearly impossible
to get a recreational property with CMHC." Consequently, the requirements
for financing a second home were more stringent, requiring larger down
payments -- as much as 25 per cent -- and ensuring the home met certain
specifications.
But Canadian mortgage insurers became less conservative in their practices
as competition increased and baby boomers sought out second homes. Now
new products from the Canada Mortgage and Housing Corp. and Genworth
make it easier for buyers to invest in a recreational property -- provided
they meet a few conditions.
Under CMHC's mortgage loan insurance, approved lenders can offer recreational
property buyers up to 100-per-cent financing if the second home is accessible
year-round and has the proper facilities to house residents 24/7.
But if the buyer plans on renting out the property, he or she is excluded
from using CMHC's second-home product, says John McWilliam of CMHC.
Nor are time-shares eligible.McWilliam cautions buyers that not all
recreational properties are covered under CMHC's mortgage loan insurance;
only those that qualify as true second homes.
Genworth offers a similar product for secondary homes, which it classifies
as "Type A" to a maximum of $700,000. Type B properties, meanwhile,
need not be winterized or accessible year-round but are financed up
to 90 per cent and to a maximum of $350,000.
Calgary mortgage broker Michael Boyle of the Mortgage Group says most
of his clients still aren't making use of these new products.
"Typically, people buying recreational homes have the money to
put 25 per cent down," Boyle says.
That's what Jon Dick did when he and his wife bought their Timber Ridge
cabin in Invermere, seven years ago. They put $75,000 down on the $300,000
home. They loved the location and could see back then the Columbia Valley
would become the vacation destination it is today. They subsidized their
mortgage by renting it out. Today, the property is worth $600,000.
"I'm glad we bought when we bought," says Dick, vice-president
for Pine Ridge Mountain Resort. "It's way easier to do today. Obviously,
you have the have the income to support what you do.
There are other options. Both Boyle and Fralic say most of their clients
are taking equity out of their first homes, and putting it into their
second to defray the costs of buying a recreational property.
Then, buyers aren't subject to the same restrictions on usability, which
means a cabin that can only be accessed by boat isn't out of the question.
It's a common practice, even for buyers shopping for a second home abroad.
Calgary accountant Mesh Dayal says he found financing
his condo in Puerto Penasco, Mexico, no harder than financing his primary
residence.
But he warns, "It takes a little bit longer to go through the legal
process in Mexico than in Canada."-- Calgary Herald
© The Vancouver Province 2008
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