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Boomers drive boom in cottage prices

ELIZABETH CHURCH

Globe and Mail Update

Waterfront recreational properties are in record demand across the country, thanks to a growing wave of retiring workers and cash-rich cottage buyers from Canada's resource sector.

“The boomers are starting to enjoy the fruits of their labour,” said Elton Ash, executive vice-president with Re/Max of Western Canada. “This is a chance to live the dream and they are creating huge demand.”

Buyers in the 50-plus age bracket are behind the increased activity in about two-thirds of the recreational property markets included in a national study of first-quarter activity released by Re/Max yesterday. Add to that mix resource workers from Western Canada with five-figure bonus cheques, and the appetite for a home away from it all has never been greater, Mr. Ash said.

“These are hard-working people. The economy is good. Now they have an opportunity to enjoy the outdoors.”

Brian Wheeler and his wife, Kerry, are doing just that. The Victoria couple knew they wanted to live by the water in retirement and found their ideal seaside home last year.

It's located a short drive from the city on a small island off the coast near Sidney, B.C.

“It's an absolutely incredible place,” said Mr. Wheeler, 55, who retired from Canada Post Corp. on Valentine's Day after 31 years. His wife, a nurse, is still working and commutes each day in their boat back to the main island and her job as a community service worker.

Their two-bedroom home on the car-free island has its own sandy beach. At night, they can look north and see the lights of Vancouver.

“This was a dream we have always had,” Mr. Wheeler said. “We raised our kids. We realized we were at a stage in our life when we were ready for the next step.”

Getting to that next step is becoming an increasingly expensive proposition. The Re/Max study found limited supply and increasing buyer interest are pushing up prices in most parts of the country and prompting buyers to consider properties in more remote areas.

The increase in retired buyers is also creating more interest in larger homes that can be used at all times of the year. “You can't really call them cottages,” Mr. Ash said.

Many older cottages in prime locations are being torn down and replaced with year-round homes, the study found.

While prices are up across the country, the priciest markets are in Alberta and British Columbia. The starting point for a three-bedroom waterfront or slope-side single dwelling is now more than $800,000 in seven of the most costly markets: Whistler, Salt Spring Island, Shuswap Lake, Kelowna, Penticton, Sylvan Lake and Vernon.


The Bala-Port Carling area of Muskoka is Ontario's most expensive area: a three-bedroom waterfront property will run you at least $500,000. One of the most expensive vacation properties up for grabs in the country is located there — a cottage on its own 42-acre island on Muskoka's Lake Rosseau, listed at $12-million.

Atlantic Canada remains the most affordable market, with $200,000 oceanfront properties in some locations, the study said.

High prices are forcing many buyers who want to stay in prime areas to look at other options, such as condominiums or homes back from the water, Mr. Ash said.

Mr. Wheeler said that back in his old Victoria neighbourhood, buyers are paying millions for waterfront houses and taking them down to rebuild. He and his wife, who are seasoned boaters, were quite willing to move to a more isolated spot without regular ferry service for their piece of shoreline. He doubts they will ever give it up.

“We're here for the long haul.”
 

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Demand rises for recreational property
Market is being driven by aging baby boomers who want to spend their money on quality of life


Michael Kane, Vancouver Sun
Published: Friday, April 21, 2006

Aging baby boomers are fuelling an unprecedented demand for recreational property, even in British Columbia, which has the most expensive recreational homes in the country.

Foreigners and Alberta oil executives are paying $1 million-plus for winterized waterfront homes on Saltspring Island, Shuswap Lake and Kelowna, while middle-income earners are settling for condos or back-lot properties with waterfront access, or more affordable locations like Harrison Lake in the Fraser Valley or the Interlakes area of the Cariboo.

The market is being driven by aging boomers who are earning good money and want to spend it on quality of life rather than mutual funds, said Elton Ash, Kelowna-based vice-president of Re/Max of Western Canada.

"The whole economy is clicking very well but there is also the trend to longer hours, stresses at work, and the kids being dropped off at daycare, so quality of life becomes very important," Ash said in an interview.

"People know the stock market has recovered and there are some opportunities there but they are saying, 'How does that improve my quality of life when the kids hardly see me? I want to give them the experience I had as a child growing up and going outdoors and spending the weekends and holidays as a family'."

The Re/Max Recreational Property report released Thursday shows that buyers aged 50-plus are fuelling unprecedented demand in 27 of 40 markets surveyed across the country.

Some boomers are inheriting the money to buy a second home while others, with good incomes and job security, are taking out mortgages, Ash said. To a lesser extent, artisans and high-tech workers, who don't need to be in the office, are selling up in the city and making their year-round homes in places like Saltspring.

Early retirees who are "trading down" are also a segment of the market in places like the Okanagan, Saltspring, Vancouver Island and Nelson, he said.

While volume demand for recreational property is coming from middle-income earners, they have been priced out of the most expensive markets like Whistler where the starting price for a typical, three-bedroom home off the mountain is $1.1 million and homes on the waterfront and ski slopes start at $2.5 million and $3 million respectively.

"You are not going to get much of a house, as we think of a house, for much less than $1.1 million," said Whistler realtor Mike Wintemute of Re/Max Sea to Sky Real Estate. "You can buy a house in Emerald Estates [on the outskirts] for about $700,000 but you're basically getting an old cottage."

On Saltspring, about 70 per cent of big ticket buyers are Americans and 20 per cent are Canadians, mostly from Alberta, said Re/Max realtor Li Read. To a lesser extent, wealthy Europeans, Asians and Australians are also buying second, third and fourth residences to support their globe-trotting lifestyles.


In another sign of a booming domestic economy, the report says teardown activity is rampant in most areas of the country as baby boomers construct year-round lakeside dwellings with all the comforts of home. Renovation is also occurring at full-tilt in markets across the country.

Ash said boomers aren't too concerned that the market might fall back in a year or two because they are buying for the long term.

"They know prices aren't going to get significantly cheaper and they are looking for the opportunity to enhance their family lifestyle today and to leave a bit of a legacy for their children to enjoy."

[email protected]

- This story can be heard online after 10:30 a.m. today at www.vancouversun.com/readaloud.

- - -

Recreational

real estate boom:

B.C.'s waterfront recreational property is among the most expensive in Canada. Here are the starting prices for a three-bedroom winterized recreational property on a standard-sized waterfront lot:

2006 price % gain from 2005

Whistler $1.1 million+ 0%

Salt Spring Island* $1 million 0%

Kelowna $1 million+ +42.9%

Shuswap Lake $1 million 42.9%

Penticton $800,000-$1 M 14.3%

Harrison Lake $550,000 30.6%

Vernon $800,000 0%

Cariboo Interlakes area $275,000 37.5%

* Oceanfront property

Source: RE/MAX Recreational Property Report

BROADENING THE BROADWAY CORRIDOR OFFICE MARKET

A $37-million project that expands the Broadway Tech Centre is bringing much-needed relief to Vancouver's tightest office-space market, the Broadway Corridor. Bentall Capital L.P., the developer, and British Columbia Investment Management Corp. (bcIMC), the centre's owner, announced Thursday the construction of the new green project, 2925 Virtual Way. Completion of the 113,000-square-foot, four-storey office building is scheduled for spring 2008.

2925 Virtual Way will be the Broadway Tech Centre campus's third new office building. 2925 Virtual Way will be built to Leadership in Energy and Environmental Design (LEED) Silver specifications, featuring efficient water and energy conservation systems, and a high standard of indoor environmental quality.

HOT HOMES: BusinessBC is dedicating two full days to B.C. real estate.

Coming tomorrow: Massive gain in B.C.'s $1-million homes
© The Vancouver Sun 2006
 
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