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Life at the lake
Baby boomers are scooping up recreational properties across the country
at an accelerated rate, either as a seasonal getaway or the retirement
home of their dreams
(published in Forever Young)
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By Ellen Ashton-Haiste
Fond memories of carefree, lakeside summers at the cottage have baby boomers redefining retirement as a permanent essay on “how I spent my summer vacation.”
Two major real estate companies — RE/MAX and Royal LePage — are reporting a trend to record sales of recreational properties, even at pumped-up prices, as boomers recapture the summers of their youth.
“The baby boomers have been challenging the way people think about life all along and now they are redefining retirement,” says Christine Martysiewicz, spokesperson for RE/MAX Ontario-Atlantic Canada Inc. “They are better off financially than their parents — they’ve inherited wealth and also have equity in their primary homes — and they’re more educated, more internet savvy. They are driving the demand for upscale product (in the recreational housing market) because they can.”
She point out that boomers — those born between 1945 and 1965 — represent about a third of Canada’s population, but control 45 per cent of its wealth. And, with a net worth of $530 billion, they own some $230 billion in real estate. “These are amazing statistics,” she says.
While it’s impossible to “pigeonhole a typical boomer,” their buying habits are indicating a trend to “selective buying of recreational properties” as they move into retirement in stages, says Phil Soper, president and CEO of Royal LePage Real Estate Services. They may be looking for a seasonal property, where they can spend part of the year, allowing for more travel at other times, or a four-season residence with advantages like internet access which will allow them to continue to work on some level while living the vacation lifestyle.
“Baby boomers are investing in the future — from both a lifestyle perspective and an economic standpoint,” says Elton Ash, regional director with RE/MAX Western Canada. “Tremendous equity gains have been realized in recent years as demand for recreational properties across the country swells. Given the aging of the population, this trend is expected to continue for at least the next five to 10 years as boomers move through the cycle.”
This buying spree and an attendant renovation boom as family cottages are expanded and redesigned is impacting prices across the board, Martysiewicz says. RE/MAX’s 2007 Recreational Property Report found that starting prices topped $500,000 in 31 per cent of recreational property markets with only seven properties under the $250,000 price point.
Some of the most expensive properties are on the West Coast, listing at up to $2 million in Kelowna in the heart of B.C.’s Okanagan region, $1.1 million at Whistler and $1.5 million on the upscale Salt Spring Island.
In Ontario, waterfront property at Wasaga Beach is topping out at around $700,000 and at Moore Point, a private enclave on land jutting into Georgian Bay between Port Severn and Honey Harbour, luxury cottages with 200-plus feet of waterfront are going for $1 to $3 million.
Part of what is fueling the price escalation, Soper adds, is that more than 60 per cent of those buyers will bequeath the property to their children, a much higher percentage than for standard homes. “So they buy but don’t sell and that pushes prices up,” he says, adding with a touch of humour, “and, it’s certain that we’re not building any more waterfront in this country; in general, there’s considerably more demand than there is supply (for prime waterfront property) and this is seen in research going back a number of years.”
Despite a reputation as one of the wealthiest generations to date, not all boomers want to or are able to invest a million dollars in a cottage with the ongoing costs of upkeep. But there are plenty of more affordable options, including fractional ownership, which Martysiewicz says has been growing in popularity over the past couple of years.
Under this model, owners purchase a share in a cottage, which gives them access for a certain number of weeks throughout the year. It’s similar to the time-share concept with the difference that it offers an equity factor, says Walter Thompson, owner and developer of Touchstone on Lake Muskoka in Ontario’s cottage country. Owners have full title to their share of the cottage and can, thus, rent it out, allow family and friends to use it, sell it or leave it to their children in their wills.
“It’s the fastest growing form of real estate in the U.S.,” Thompson says. “And about 77 per cent of buyers say they are very satisfied with the purchase.” The primary reason, he adds, is the high cost and the maintenance that comes with full ownership.
The turn-key aspect is an important factor for boomers who want to come and go as they please, Martysiewicz agrees.
“It’s the best of cottage living without the hassles,” says Bill Van Gelder, owner of Blue Water Acres Resort on Lake of Bays near Huntsville, Ont., who’s rebuilding his existing enclave to rental cottages to convert to fractional ownership.
And, owners can enjoy luxury cottage living at a fraction of the cost, says Thompson.
At Touchstone, which will eventually comprise 75 cottages and villas anchored by a lodge with dining facilities and a spa, ownership segments are sold in quarters which translates into 13 weeks a year, a two-week period in the peak months of July and August, plus an additional week every month from September to June and one long weekend week every year. The times are carved in stone, Thompson says, adding that, by and large, people seem to like to vacation at the same time each year.
At Blue Water Acres, encompassing one- to three-bedroom cottages and a slate of existing amenities including an indoor pool, tennis courts, natural forest trails and a clubhouse that is being renovated, purchasers buy five-week intervals with one week in the summer and one week in each remaining season plus an additional week. The summer week is fixed but the others rotate through a 10-year cycle. Since sales launched on Victoria Day weekend, most buyers and picking up one, or sometimes two, intervals.
Cottages at these high-end resorts are not the casual bunkies many people remember from their childhood summers.
These are homes with Jacuzzi tubs, decks, Muskoka rooms, panoramic views of the surrounding countryside and amenities like propane fireplaces and barbecues, flat-screen televisions and high-speed internet access.
At Touchstone, quarter segment prices range from $164,000 for a two-bedroom villa to $399,000 for a three-bedroom treetop villa. At Blue Water, where Van Gelder says the existing infrastructure is keeping prices lower, intervals are selling from $29,900 to $58,900.
In addition to fractional ownership, there are other affordable options, says Soper. “Buyers need to re-evaluate where they want to be and what they really need.” Maybe year-round use isn’t necessary or someone who isn’t a “water person” may be happy with a place a bit further from the lake where they can still relax and enjoy the natural surroundings.
“There is plenty of un- or under-developed areas still available for those who can be patient, are willing to travel and flexible in terms of the water they are on.”
As well, a longer commute from major metropolitan centres can lead to more affordable properties, Martysiewicz says. In areas north of Muskoka, such as North Bay and Elliot Lake, prices are not as high and Ontario also has a wealth of smaller lakes and riverfront areas where purchases can find entry-level price points.
Royal LePage’s 2007 Cottage Country Snapshot highlights some expensive hot spots across the country but also lists more affordable “hidden gems,” ranging from George’s Lake in western Newfoundland, near Cornerbrook ($75,000-$90,000), to B.C.’s Stack Lakes, north of the Okanagan region ($200,000=$250,000).
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