No time like the present
No time like the present
By all indications, 2012 is shaping up to be a great year to buy the vacation or retirement home of your dreams.
Several factors affecting recreation property suggest that now is a good time to get into the market, says Elton Ash, regional executive vice-president of Re/Max of Western Canada.
Several areas in particular appeal to Calgary and Alberta recreation property buyers, including the southern United States and British Columbia, Ash says.
In U.S. states such as Arizona and California, there has been a price drop of around 30 per cent from the market highs of several years ago, and this is luring Canadians looking to buy snowbird real estate to escape winter, he says.
In B.C., the harmonized sales tax (HST) introduced in 2010 had been blamed for putting a damper on the recreation property market.
The unpopular HST scheme will be discontinued in 2013, but in the meantime changes rolled out recently will provide a hefty tax rebate for recreation property buyers in certain regions, including Vancouver Island and the Interior. (See story on page 14.)
With the rebate, there is no longer an advantage to waiting to buy recreation property, Ash says.
In many regions close to Calgary, the flow of purchases south of the Canadian border has led to slower real estate markets and a softening in prices — a plus for people looking to buy in locations such as Fernie, Invermere or the Crowsnest Pass.
Ash says low interest rates also remain a positive factor for anyone planning to finance the purchase of a recreation property, as both the Bank of Canada and the U.S. Federal Reserve have indicated that rates will remain at historic lows at least until 2014.
“You roll all that together and it’s a pretty positive market,” says Ash, adding that even with attractive prices and low interest, it’s still important to be aware of what you can afford and stay within those limits.
For many years it was the baby boom generation primarily driving the recreation property market in Western Canada, but that has now changed, says Ash.
About two years ago, buyers from the so-called Generation X, now in their 30s and 40s, began to be a factor in the market. They’re being joined by “Millennials” — the even younger generation in their 20s.
Carl Stepp, an associate with Re/Max Real Estate Central Alberta in Sylvan Lake, says many baby boomers are buying recreation property in the United States, “chasing warm weather,” so the typical buyer in Sylvan Lake is younger — a 35- to 45-year-old executive from the city, with two children under 12 years old.
While they may not be able to afford the most expensive properties on the lake, “more and more, it’s young families buying their own place with lake access so they can use it on weekends,” Stepp says.
With so many reasons to buy now, people waiting on the sidelines too long might find themselves missing out, says Jessica Stoner, broker-owner of Re/Max Alpine Realty in Canmore.
All real estate markets are cyclical, Stoner says, adding she often hears people lamenting that they had a chance to buy a recreation property for a great price at some point in the past, and didn’t.
“So this is the opportunity where in five years you won’t have to say ‘I wish I had,’ but ‘I’m glad I did.’”
Ash says the real estate market in the U.S. Sun Belt states could heat up dramatically as the American economy improves and the number of foreclosed homes continues to drop.
There is a pent-up demand for homes that could quickly change the real estate scene in some regions from the current buyers’ market to one with double-digit price increases in the coming years.
In B.C. and Alberta, the recent softening in prices has been a result of lower demand but as economies strengthen around the world, international and American buyers will return to the local market along with Canadians, adding to demand for recreation properties and putting upward pressure on prices.