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Prices rise as teardowns, renovations change recreational property landscape, says RE/MAX

Press Release: RE/MAX Ontario-Atlantic Canada; RE/MAX of Western Canada
June 19, 2003
KELOWNA, BC -- Recreational property values continue to soar as permanent dwellings replace traditional cottages on lakes and rivers across the country, according to the 2003 RE/MAX Recreational Property Report.

The RE/MAX Recreational Property Report features an in-depth look at sales, prices, and trends in close to 40 Canadian markets. Eighty-two per cent of markets surveyed reported teardown and renovation activity as commonplace, a trend inflating recreational property prices from coast-to-coast. Approximately 74 per cent of recreational property markets experienced appreciation in starting prices, some in spite of lower sales activity year-to-date. Softer performance was attributed to severe weather conditions, particularly in the eastern Canadian region, and limited inventory levels earlier in the year.

"The landscape is changing in Canadian recreational property markets," says Elton Ash, Vice President, Regional Director, RE/MAX of Western Canada. "Markets have undergone tremendous evolution since the turn of the century when second homes first became popular. Today's more expensive mix includes waterfront homes, resort-style condominiums, ski chalets, and timeshare properties - the market is moving away from the traditional cottage of yesteryear."

Baby boomers continue to be the driving force in the market, pushing prices up for recreational properties across the board, explains Ash. Ownership levels have increased close to 80 per cent since 1977, but the recreational property market still represents a relatively small proportion (seven per cent) of the Canadian population, according to a Statistics Canada report released in 1999.

"We suspect that these figures have increased over the past three years as baby boomers plan for the future," says Pamela Alexander, CEO, RE/MAX Ontario-Atlantic Canada. "Our survey found the desire to retire within a five-year period was the primary impetus for the construction boom now underway on most lakes and rivers. Strong move-up activity has also been reported in popular recreational property areas as existing owners trade-up to better waterfront properties and larger premises, taking advantage of significant equity gains."

The RE/MAX 2003 Recreational Property Report found starting prices for a three-bedroom, winterized recreational property on water frontage ranged from a low $80,000 in markets like Prince Edward Island to close to $1,000,000 on Salt Spring Island, British Columbia.

Nineteen markets surveyed offered recreational properties starting at or under $200,000. Affordable markets could be found in virtually every province, from Ucluelet and Mt. Washington in B.C., both Regina and Saskatoon in Saskatchewan, Lake Winnipeg in Manitoba, Perth, Pembroke, Kingston, Flesherton, Bancroft, Haliburton, Bracebride/Gravenhurst, Huntsville, Parry Sound, and the Bruce Peninsula in Ontario, and much of the Eastern Seaboard, including Shediac Bay in New Brunswick, the South Shore/North Shore of PEI, and South Shore and Lunenberg County in Nova Scotia.

The most affordable entry-level recreational properties were those deemed seasonal (not winterized) and back lots with lake access. Smaller lakes and rivers also offered better value for many purchasers who sought refuge from higher-priced waterfront recreational properties on larger, more popular lakes. Condominiums in ski areas also offered great value, particularly for those purchasers who were able to place their units in a rental pool.

Other highlights include:

- A shortage of inventory has been reported in close to 80 per cent of
all markets surveyed, led by Ontario which recorded shortages in 86
per cent of its recreational markets (19 of 22 markets).

- Starting prices for recreational properties increased in 74 per cent
of all markets surveyed nationally. Eighty-one per cent of markets in
Ontario and 55 per cent of markets in British Columbia saw starting
prices appreciate.

- Recreational property rentals are providing a new income stream for
savvy investors. Tight rental market conditions are contributing to an
influx of investors into the market. Given stock market volatility,
poor mutual fund performance, and low interest rates, the return on
investment has proved attractive to many.

- Fewer sales involving international purchasers - particularly
Americans - were reported in Ontario. Contributing factors include a
weaker American dollar, uncertainty brought about by war in Iraq, and
to a much lesser extent, the threat of SARS in Canada.

- By contrast, most markets in Western Canada reported that
international recreational property purchasers were active and
fuelling activity in some markets, including Salt Spring Island,
Ucluelet/Tofino, Mt. Washington and Canmore.

- The most expensive recreational properties currently listed for sale
include a $13 million home on the mountain in Whistler and a $7.5
million property on Lake Muskoka.

RE/MAX is Canada's leading real estate organization with over 11,600 sales associates in more than 540 independently owned and operated offices. The RE/MAX franchise network, now in its 30th year of consecutive growth, is a global real estate system operating in over 43 countries. More than 4,500 independently owned offices engage 80,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, relocation and asset management. For more information, visit: www.remax.ca.


To view the REMAX Recreational Property Report, go to
http://files.newswire.ca/40/REMAXReport.pdf

For further information

Amber Piche, RE/MAX of Western Canada, (250) 860-3628
Christine Martysiewicz, RE/MAX Ontario-Atlantic Canada, (905) 542-2400
Eva Blay, Point Blank Communications, (416) 781-3911

Source: RE/MAX Ontario-Atlantic Canada; RE/MAX of Western Canada