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Leisure properties

Prices in cottage country again on the rise Add to ...

As memories of the recession dim, city dwellers are again starting to dream of owning a cottage property - maybe on a lake; maybe near a ski hill. A place where they can escape the traffic and concrete for well-earned days of R&R away from the pressures of big-city life.

A word of advice: Better move quickly because prices are again on the rise in the most popular areas north of the GTA, and since almost nothing new was launched during the past couple of years, pickings are limited.

Also, the closer the cottage is to the GTA, the greater the demand and the faster prices will rise this year. Muskoka, for example, is just now recovering from the slump that started in 2008 but the ski-hill country further south is well into business as usual.

In the Georgian Triangle, the cottage area closest to the GTA and home to towns like Blue Mountain and Collingwood, overall MLS sales were up 40 per cent in the first five months of this year and the average price of a home or cottage sold through the system rose 12 per cent.

Granted, those sales reflect not just recreational properties but also homes snapped up by locals and a healthy chunk of pre-retirement and retirement buyers looking to spend their remaining years in the area. Andres Paara, president of the Georgian Triangle Real Estate Board, figures buyers divide neatly into thirds: A third of the 788 properties sold in the first five months of 2010 went to those looking for recreational properties, a third to locals and a third to people looking for a retirement haven.

But he also suggests that if you look at specific areas within the Georgian Triangle where cottages are most prevalent, you might get a better picture of what buyers face. For example while in Collingwood, where the market is mainly local buyers, prices rose only 0.4 per cent; in Blue Mountain the up-tick was 10.4 per cent; in the Grey Highlands it was 16 per cent and in places like Stainer and Creemore it was 17.2 per cent.

And while the average price at the end of May was $312,529, recreational properties in the Triangle can run from $150,000 to $1.5-million.

"I think you may see some slowing this summer as interest rates rise and the HST on new homes kicks in," Mr. Paara says. "But working against that is a shortage of supply. There just has not been much spec building here for the past two years because of the recession."

Muskoka, by comparison, is still in the process of recovering from its peak year of 2007, says Don Evans, a sales representative with Royal LePage Lakes of Muskoka Realty Inc. in Port Carling.

"Prices dropped about 15 per cent from the 2007 record year once the recession started," he says. "We are not back to those levels yet but this year we are definitely seeing a lot more activity."

The Muskoka market, he adds, is considerably smaller than that of the Georgian Triangle.

The average year might see 200 to 240 cottage properties change hands and the bulk of those will be on the area's big three lakes: Muskoka, Joseph and Rosseau. If you are looking for waterfront property on any of them you will pay at least $1-million and likely as much as $1.5-million, he says.

"On the other hand, if you want a small place inland you can find properties starting at around $115,000," he says.

Of course, few buyers really want that place in the woods, says a recent Royal LePage survey. Every year Royal LePage hires Angus Reid to do a national poll of recreational property buyers' preferences and concerns. It found that 45 per cent of Ontario recreational property buyers want a detached cottage right on the water. Only 5 per cent want an inland cottage surrounded by a forest.

While 24 per cent said they would settle for a condo, only 9 per cent preferred a timeshare property.

The survey also found that Ontario recreational properties cover a huge average price range: from $140,000 to $1,050,000. By the way, the cheapest properties were in New Brunswick where prices start at an average of $65,000, while the highest average prices were in British Columbia where $345,000 gets you something modest and the top average prices run $1.5-million.

The real-estate agents also note something that separates today's buyers from those in boom years: Most of them are paying cash on closing.

"I think in many cases what they are doing is refinancing their principal residence or cashing in investments," says Mr. Evans. "For example I just sold a property on Lake Joseph for $1.5-million to a young professional couple with two kids from Toronto. It was an all-cash deal."

Mr. Paara notes the same shift. "We regularly get calls from local mortgage brokers looking for us to refer business to them. What I have to tell them is there just isn't anything to refer. Most buyers these days are paying all cash for their recreational properties."

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