Baby boomers are pricing young families out of cottage country
The generational divide that has formed in Canada’s hottest real estate markets — with home prices boosting boomers’ wealth and leaving young homebuyers scrambling — is now playing out in cottage country as well.
That, at least, is the picture that emerges from a recent report on Canada’s recreational real estate market by real estate company RE/MAX.
“Large numbers of retirees and baby boomers nearing retirement are putting the equity they received from the sale of their home in cities like Toronto and Vancouver into the purchase of a recreational property,” Elton Ash, regional executive vice president at RE/MAX of Western Canada, said in a statement. “Significant price appreciation in those regions has made recreational property ownership a relatively affordable option for many retirees.”
Demand from boomers, in turn, is driving up prices in popular vacation spots such as Whistler in B.C. and Haliburton, Ont., Ash noted.
Contrast that with what the report says about young families and millennials.
A whopping two-thirds of Canadians aged 18 to 34 also dream of owning a cottage, according to the survey. But can they afford to do so?
Hardly. Millennials, in particular, often feel that high housing prices in the city where they live will reduce their chances of ever being able to stake a claim to their very own holiday gateway, according to a survey conducted by market research firm Leger for RE/MAX.
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To overcome the gap between what the heart wants and where the wallet can reach, both millennials and parents of children under 18 said they were prepared to resort to creative financing.
In both groups, more than a quarter (28 per cent) of respondents said they would consider selling their primary residence in order to buy a cottage, cabin or ski chalet, according to RE/MAX.
Other options include buying a holiday home with family members or friends, renting it out on sites like Airbnb, or purchasing fractional ownership in a shared recreational property.
While a cottage may still be a distant dream for younger millennials, families with children represent a key driver of demand in 73 per cent of recreational real estate markets surveyed by RE/MAX in a separate study. And those families are increasingly having to contend with older buyers, the report suggests. Over half of the regions included in the study saw an increase in retiree buyers this year compared to last year.
The stock of vacation homes is at or nearing record lows in a number of popular holiday retreats across Canada, according to the RE/MAX 2017 Recreational Property Report.
In British Columbia, there were until recently only 29 properties listed in Tofino and 69 in Ucluelet, compared to 120 listings in Ucluelet alone at this time last year.
In Canmore, Alta., inventory is currently at a 15-year low. In general, a shortage of lakefront property near Calgary and Edmonton has sent prices skyrocketing, according to a recent report by Royal LePage. The average price of a home away from home in the province now stands at an eye-watering $816,700, the same survey showed.
But that pales in comparison to the price of the most expensive cottage sold near Grand Bend, Ont., on the shores of Lake Huron, a spot that’s become popular with retirees over the past few years, according to RE/MAX.
A 90-year old, five-bedroom lakefront property there recently went for $2.5 million.
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