Since the early part of 2000, recreational property sales across Canada have increased, and trends are showing that this will continue for some time. Major influences that have given rise to increased sales in recreational property include interest rates at a 40-year low and increased consumer confidence and job security. These factors have led to increased demand for recreational property, particularly near greater metropolitan areas.

      First-time recreational-home purchasers should do their homework carefully. Compared to purchasing property in the city or suburbs, there are many more factors to consider when purchasing recreational property. These factors vary and are often unique to specific regions, provinces, and municipalities. Buyers need to educate themselves about bylaws unique to each municipality, as well as provincial and federal regulations that pertain to fisheries, oceans, wildlife, forests, and the environment. Environmental considerations with regard to real estate typically fall under a provincial department of the environment or a ministry of natural resources. Should you wish to alter or make additions to your recreational property near or on water, there could also be federal laws that affect and restrict your intended use of the property.

      This book provides basic information for buyers and sellers of recreational homes, in the hope that your recreational-home purchase or sale will be a satisfying and rewarding experience.

      What Do You Need to Know about the Recreational Housing Market?

      Before purchasing or selling your recreational home, it is important to look at larger market conditions, such as local and national housing prices, mortgage rates, and the amount of new home construction underway. The Canada Mortgage and Housing Corporation (CMHC) Market Analysis Centre assists home buyers and sellers to understand how the housing market is evolving. This resource regularly publishes local market analysis reports and provides information on recent trends in housing market conditions. Your local cmhc market analyst can also tell you if there is currently a buyer’s market, a seller’s market, or a balanced housing market in the area you are interested in.

      Buyer’s market

      In a buyer’s market, the number of recreational homes available for sale exceeds the demand, so prices either stabilize or drop. With fewer buyers and more homes, not only do you as the buyer have more options to choose from, but you also have more negotiating leverage. You have more time to look for the right home, and you can evaluate the choices without feeling pressure to act quickly.

      Seller’s market

      In a seller’s market, the seller dictates the price. The number of buyers exceeds the number of properties for sale. In this situation of low inventory, a seller often gets his or her asking price — and sometimes more — because there may be a bidding war in which there are competing or multiple offers.

      Balanced market

      In a balanced market, there are approximately an equal number of buyers and sellers. If you are a buyer in this market, you will probably not have to go through bidding wars because there are enough recreational properties listed on the market.

      Supply and demand

      Demand for recreational real estate has already exceeded supply in many areas throughout Canada. Contributing factors are low interest rates, more international buyers, baby boomers reaching retirement age, and a decreasing number of waterfront properties. As a result, the demand for less traditional recreational properties has increased. In many markets, small farms and acreage sales are on the upswing. Also growing in popularity are leasehold properties. In many cases, purchasers of leases (of up to 99 years) are permitted to tear down existing buildings and build to their specifications on the land. (See Chapter 2 for more information about leasehold property.)

      Who Is Buying Recreational Property in Canada?

      Baby boomers, empty nesters, and retirees are the primary demographic that is buying recreational properties from coast to coast. Many buyers are between the ages of 40 to 60. Many of them can afford a recreational home because they have enjoyed business success or have inherited family money. As well, many Americans, Europeans, Australians, and Asians are attracted to recreational properties in Canada. The impetus to buy recreational real estate is primarily twofold: for personal pleasure and as an investment whose value will increase over time.

      What Are Buyers Paying for Recreational Properties?

      According to a recent report that covers more than 40 markets from Salt Spring Island, British Columbia, to Shediac Bay, New Brunswick, sales and prices have been increasing over recent years in most markets across the country.

      Cottage prices have increased significantly, year after year. Because of uncertainty due to political turmoil around the world, many people are opting to stay closer to home rather than travel abroad. This has had an impact on recreational-property buyers. For example, most purchasers in Newfoundland are from St. John’s and its surrounding communities, and again, they are baby boomers — people with equity in their homes and a double income.

      The following sections outline some of the popular regions and the price ranges for recreational properties across Canada.

      British Columbia

      On British Columbia’s Sunshine Coast, the starting price for a three-bedroom winterized recreational property on a standard-sized waterfront lot can range from $300,000 to $500,000. For the same style of property in the South Cariboo region, the starting price is $200,000, and on Harrison Lake it is $425,000.

      Other areas of interest in BC are Whistler and Salt Spring Island, where many properties cost more than $1 million. Americans, Albertans, and to a lesser extent Europeans and Australians are purchasing here. In the Okanagan Valley, in BC’s interior, prices are more reasonable, starting at $200,000.

      At the Sun Peaks Resort in southern BC, the market remains well balanced with supply meeting demand. But prices have increased year after year, with a two-bedroom ski-in/ski-out condominium starting at $300,000. Out of town purchasers are from Calgary and Edmonton as well as from the US and the UK.

      Alberta

      West of Edmonton the starting price for a three-bedroom winterized recreational property on a standard-sized waterfront lot is $175,000. In Sylvan Lake in central Alberta, the starting price is $520,000, although waterfront properties can reach $750,000.

      Saskatchewan

      In Prince Albert, Saskatchewan, the starting price for a three-bedroom winterized recreational property on the lakefront is $250,000. It is a seller’s market all around with low inventory and high demand for such properties.

      Manitoba

      In