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The Real Estate Market CMHC policy change on second homes fails to dent cottage sales

A cottage in Bracebridge, Ont.

FRED LUM/THE GLOBE AND MAIL

The Globe's Real Estate Beat offers news and analysis on the Canadian housing market from real estate reporter Tara Perkins. Read more on The Globe's housing page and follow Tara on Twitter @TaraPerkins.

Canada Mortgage and Housing Corp.'s decision to stop insuring mortgages on second homes is not having a noticeable impact on the country's cottage market, Re/Max says.

CMHC, the Crown corporation that dominates Canada's mortgage insurance market, said in late April that it was no longer going to insure mortgages on second homes effective May 30.

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While a full month has yet to pass since the change came into effect, Gurinder Sandhu, Re/Max's regional director for the Ontario-Atlantic region, says there has been "very little, if any," impact on the market for recreational properties.

That's in large part because people who are buying cottages tend to make a down payment of more than 20 per cent, which means that mortgage insurance isn't necessary. Also, CMHC's private sector rivals did not tighten their products to the same degree, meaning that insurance is still a possibility for those who have a smaller down payment.

"While some potential recreational buyers may have been discouraged by the Canada Mortgage and Housing Corp.'s recent decision to eliminate insurance on second mortgages, there is little to no material impact expected from this change," Re/Max says in its 2014 recreational property report, which will be released Wednesday.

The report says recreational property sales and listings have rebounded from the chill that this winter's cold weather put on the market. Mr. Sandhu expects that an uptick in sales will make up for the slow start to the year.

"What we're seeing across the board is high single-digit price increases, and by the end of the year the number of transactions will be on par with last year," he says.

Here are a few highlights from Re/Max's regional breakdown of the recreational market:

Tofino/Ucluelet, B.C.

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– Overall prices are down about 20 per cent since before the recession.

– A number of vacant lots have been sold this year, meaning more construction is coming.

– The most expensive property sold in Ucluelet so far this year was a beachfront vacation rental home with a caretaker cottage for $1.6-million.

– The most expensive in Tofino was a 1.5-acre, 4,600-square-foot oceanfront property for $7.9-million.

Whistler, B.C.

– The market is picking up after suffering a slump following the 2010 Winter Olympics.

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– One of the most expensive properties sold in the past year was a 7,000-square-foot, five-bedroom estate with a guesthouse, pool and tennis court on six acres of land for $10-million.

Canmore, Alta.

– Including both houses and condos, the average price is about $556,000 and sales have been steady over the past year.

– The average price for a single-family home is $888,000.

– One of the most expensive homes sold recently was a 3,500-square-foot, four-bedroom, four-bathroom property with two fireplaces for about $2.3-million.

Lake Winnipeg West, Manitoba

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– Prices start at about $70,000, while the average price of a three-season home ranges from $95,000 to $140,000. Winterized properties are closer to $375,000.

– There has been an increase in inventory in Sandy Hook with discussions under way about installing a sewer system in the area.

– Vacant land sales are becoming increasingly popular, especially among hunters and those looking for recreational land.

Collingwood, Ont.

– There is roughly a 60/40 ratio of homes and cottages to condos now.

– Recreational property prices have stabilized and are now rising.

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– At least 13 properties have sold for more than $1-million this year.

– A typical two-bedroom winterized waterfront cottage ranges from about $450,000 on the east side of town to about $650,000 on the west side.

Bracebridge/Gravenhurst

– Appears to be a buyer's market.

– Typical cottages start at about $300,000 riverfront or $400,000 lakefront, plus an additional $100,000-plus for ones that are winterized.

– One of the most expensive properties on the market, a 5,500-square-foot home on a 22-acre island, was recently listed for $6.4-million.

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North Shore/South Shore, PEI

– Sales have been slow.

– An oceanfront cottage in PEI starts at about $180,000 and increases to about $900,000 depending on size and location.

– One of the most expensive properties listed in the past year was a 2,000-square-foot oceanfront place with five bedrooms and three bathrooms, which sold for $372,450.

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