Real Talk!

Over the past half dozen years, the price of waterfront property, in the traditional Ontario cottage areas, has escalated dramatically. Limited inventory (listings) are reported in more than ½ the markets and demand is higher than ever.

As you know, the laws of supply and demand state: when demand is higher than supply, prices will rise until they reach that point where the quantity of product on supply (listings) equals the demand for the product (Prospective Buyers).

Baby boomers are still being credited with the increase in prices for cottage/recreational property. Baby boomers are investing in their future, both from a lifestyle perspective (recreation & retirement) and for economic purposes (equity). With 1/3 of our population (the Boomers) being in control of just under half the economic wealth of the country, it is no wonder that they are “in the driver’s seat”.

Foreign investors, also, maintain a continued interest in acquiring land and recreational properties in Ontario. Here, land is available in quantities and at prices out of reach for most people in Europe PLUS our air and water quality are unsurpassed- we all know that the Bancroft &Barry’s Bay areas have been a well-kept secret until recent years!

Experts say the boom in seasonal getaway markets is bound to continue for the next five or ten years- particularly in the luxury markets as Boomers appear to be more interested in the upscale, turn-key, year-round properties. Large waterways (like the 90 kilometer Madawaska River system that runs from Whitney, through Kamaniskeg Lake and down to Arnprior) which offer extensive boating & superior fishing are high on most lists.

Major renovations and new, custom-builds are all the rage- with many older, smaller cottages being demolished and replaced with luxurious homes, considered necessary for family comfort and entertaining. The lakeside cottage remains the favourite weekend and vacation destination, as most Buyers have a preference for properties that have private water frontage and beaches.

Despite the trends, Buyers remain grounded and affordability is a serious consideration. While some Sellers are accused of being greedy, others are simply confused about how to price their property in the current market. Realtors ® are finding the market unpredictable, as well, however they are aware that very few Buyers are going to spend more than the fair market value.

Many recreational property owners are holding on to their property. Some are waiting for the opportune time to “cash in” their ever-climbing equity and others are planning to retire to the cottage built by Grandma & Grandpa.

Out of curiosity, I did some number crunching this morning. I did a search of “sold” waterfront property from January 1st, 2006 to May 20th, 2006 and from January 1st, 2007 to May 20th, 2007- to compare. My study concluded waterfront properties have shown a staggering increase of about 27% in the year.

In ’06 in that period, the Bancroft Real Estate Board showed 93 sales of waterfront property with an average price of about $182,000. The lowest priced property that sold, in that period, was $4900 for a river lot and the highest price about $655,000 for a waterfront 3 bedroom with 1000’ of lake frontage.

That same period, this year, showed 57 sales of waterfront property with an average price of about $232,000. The lowest priced property sold in that period, was $12,200 for a 1 acre back lot (water access down the road) and the highest price property sold was a waterfront acreage with 9000’ of shoreline and a 3 bedroom home that sold for $526,000.

Don’t despair; there are still opportunities for Buyers with a tighter budget to get into the recreational market. The key is to become a Buyer Client with a good Realtor ® and be prepared to act fast when the right opportunity presents itself.