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(Fred Lum)
(Fred Lum)

Home Turf

Cottages are a discretionary sale Add to ...

Lots of people in Canada would welcome a heat wave about now - Paul Crammond more than most.

"Buying a cottage is so psychological," says the real estate agent at Chestnut Park in Port Carling, Ont.

Crammond took me on a tour around the heart of the big lakes in Muskoka this week. It's still jacket weather but at least the sun was shining.

"Last year it was cold, it was rainy, the bugs were out of this world," says Crammond. "When the weather finally improved, the economy tanked."

As we drove out to a vintage cottage on Lake Rosseau, Crammond filled me in on the real estate climate.

Last year by this time, six properties in the $600,000 to $1-million range had sold on Muskoka's main lakes. So far this year, 16 cottages in that price range have changed hands. In Muskoka, anything under $1-million is considered "entry level".

Now, Crammond and his fellow agents have started to show properties in the $2-million-and-up tranche.

Despite the cool weather, Crammond is feeling heartened by what he's seeing in the real estate market.

He keeps in regular contact with his colleagues at Chestnut Park in Toronto because he figures the Muskoka market lags Toronto's by a few months.

"What happens in Toronto will also happen here."

If so, that's great news for him because the Toronto market has been sizzling. Even the houses listed for $5-million or more have started to move after some in that segment sat stagnating for more than a year.

Crammond expects a similar pattern in cottage country.

"The renewed energy has started in the lower price segments and worked its way up."

In the spring, prospective buyers were phoning Crammond and telling him very bluntly that they were interested in shopping for a cottage, but only if they could snag a deal. Bargain hunters are still driving the market, he says.

Crammond points out that a cottage is still a want or a desire and not a need in the way that a house is. That means buyers can wait for a property that appears to be selling at a discount.

"Pricing is important every year but it's particularly important this year. Most people realize that prices have cooled off their peak of 2007 and they're really demanding to see value."

If a property has been on the market since 2007 and it's still listed with the same asking price, no buyer wants to pay that, he says.

Crammond says prices so far in 2009 appear to be about flat compared with 2008.

Believe it or not, he says, cottages costing $2-million and up appeal to a lot of first-time buyers.

"That's not a rarefied commodity any more."

Crammond says some of those first-time buyers are people who have sold houses in Toronto. They could be 30-somethings with kids or boomers who want to retire to a well-appointed house on a rocky shore.

But the agent points out that sellers can also sit back and take their time. Many are not in a position where they need to sell in a hurry, he says.

"Maybe it's not only a discretionary purchase, it's a discretionary sale as well."

cireland@globeandmail.com

@CarolynIreland on Twitter

 

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