Reason expected to trump passion this summer
Sellers should be realistic about what they ask, agent warns
CAROLYN IRELAND
July 4, 2008 at 12:00 AM EDT
Real estate broker Anita Latner has a five-bedroom log cottage for sale on the south shore of Lake Muskoka. With five acres of land, 217 feet of shoreline and "sun all day," it's listed at $2.1-million.
"The guy coming up to look at that likely isn't worried about the price of gas," Ms. Latner points out.
But it seems plenty of potential cottage buyers are worried about the price at the pump - along with increasing traffic congestion, a slumping real estate market in Toronto and other cities, and the general health of Canada's economy.
A survey of cottage owners and potential buyers shows that "reason is likely to outweigh passion this summer" when it comes to buying and selling vacation homes. Sponsored by Royal LePage Real Estate Services, the poll of 3,000 Canadians was conducted last month by Acrobat Research Inc.
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A newly completed cottage called Topajo II is for sale on Lake Joseph for $4.3-million. It's listed by Paul Crammond of Chestnut Park Real Estate Ltd. and Steve Hunt of Re/Max Muskoka Realty Corp.
Damp spring weather that stretched all the way through June has added to the malaise in Ontario's cottage country this year.
"I heard on the radio this morning the bugs are five times worse than ever," says Ms. Latner of Anita Latner Realty Inc.Still, she points out that "it's not all doom and gloom," as plenty of buyers are still out looking for properties. One client, she notes, has been in the area throughout the season and recently bought a cottage despite the fact he hadn't seen it when the sun was shining.
And, Ms. Latner says, people who can afford to spend $500,000 to $1-million and up on a luxury vacation property are not likely to be deterred by high gas prices.
She cautions, however, that sellers need to be realistic about the price they're asking for a cottage this year.
"It's a little more crucial in this market. If the market softens, you're going to be following it down."
Royal LePage president Phil Soper says the recreational property market in Canada is echoing the general housing market in returning to a more balanced number of buyers and sellers than in years past. Some cottage owners cut the asking price when their property sits too long, but overall, prices are increasing - if at a more moderate pace than they were in 2007, Royal LePage says.
The number of buyers and sellers is pretty close to even now, Mr. Soper notes, compared with two years ago when seven potential buyers were competing for every two properties for sale.
Mr. Soper adds that the rising cost of gas may not be a big deterrent for potential buyers because it's still a small percentage of the overall cost compared with purchase price, maintenance and the big-ticket purchases that go along with cottage ownership. Still, the Royal LePage survey indicates that prospective buyers are aware of the increasing financial burden of filling their tanks.
"It's getting on people's radar screens as they're toying with these decisions," Mr. Soper says.
The survey found that 19 per cent of cottage owners would consider selling their properties if gas prices continued to rise.
While that's still less than one in five, the number of those who echoed the same sentiment last year was only one in 10, he points out.
"That's a pretty significant jump."
That trend could mean firmer prices for sellers who own cottages within two hours of Toronto, he says, as buyers may be willing to pay an increasing premium for properties closer to the city.
Paul Crammond, an agent with Chestnut Park Real Estate Ltd., says a lot of good cottages were picked up in last fall's blazing market.
Right now, he has potential buyers looking in the $1-million to $2-million range, but some are having trouble finding what they want.
Buyers in that price range are often moving up from another property, or switching lakes to be closer to friends, Mr. Crammond adds. They may be looking for specific features, such as a beach for the kids or a favoured location. As a result, they are taking more time to look for just the right property.
Mr. Crammond currently has a newly completed cottage called Topajo II listed on Lake Joseph for $4.3-million. The property, co-listed with Steve Hunt of Re/Max Muskoka Realty Corp., also has a large boathouse with a guest suite.
Another of Mr. Crammond's listings is on Blackstone Lake with an asking price of $975,000.
The agent is hoping that hot, sunny weather in July and August will draw out people who have been putting off the hunt.
"Buying a cottage is an emotional decision, so it's easy to postpone when the weather is poor. The mosquitoes are flourishing in the wet weather," he says.
He also points out that in the past, people often waited until the end of the summer, when they were back from vacation, to buy, resulting in a flurry of sales in the fall. In more recent years, however, the market has stayed active through the summer because buyers have access to Internet listings, he says.
Mr. Soper agrees that poor weather only deters buyers for a short time. Once they've made the decision to look, lined up financing and done their homework, they usually go through with a purchase, he says.
One thing that hasn't changed from year to year is that potential buyers almost always underestimate the cost of obtaining a cottage, he points out.
"When they dig into it, prices are quite a bit higher than people expect."
As a result, more buyers are looking at condominiums and fractional ownership of a unit in a larger project, Mr. Soper says.
