But one trend that’s been gaining some ground is purchasing a recreational property as an affordable alternative to a first home. A 2017 report found that nearly two-thirds of Canadian millennials would consider buying this type of property (ie. a cottage, cabin or ski chalet) in the next 10 years instead of a house in the city.
The idea is enticing for a number of reasons. Not only is the “off the grid” lifestyle becoming more popular, but prices are considered more affordable in cottage country too.
“While you’d be hard-pressed to find even a shoebox-sized condo for $250,000 in Toronto’s core, that same amount could buy you a waterfront three-bedroom cottage with a hot tub elsewhere in Ontario,” Cottage Life reported last year.
But before you start looking at cottage listings, its best to heed the warnings of real estate experts who say this type of property might not be the best investment after all.
“I think buyers need to be cautious and really understand that cottages do not move at the same rate as the city of Toronto housing market,” John Pasalis, president of Realosophy Realty Inc., told The Canadian Press. “So if they’re expecting really, really big gains in capital they might be surprised in five or 10 years to see what their cottages are worth.”
Cottages appreciate at a slower pace because these types of properties follow the market rather than lead it, Brad Henderson, former president and CEO of Sotheby’s International Realty Canada, explained to CP. Thus, if this trend falls out of fashion, the property might not be worth as much in the future.
Another big factor to consider is price. Due to the trend’s growing popularity, supply for recreational homes has gone down and prices have risen. In particular, Ontario hot spots like Muskoka Lakes, Georgian Bay and Collingwood have seen huge jumps in prices, making cottages in these areas just as unaffordable as homes in Toronto, CP reports.
As a result, potential buyers have been forced to look at places further away from the city, such as Prince Edward County or the western shores of Lake Erie.
There are also additional maintenance costs to consider, agent Karen Phillips of RE/MAX Parry Sound-Muskoka, told Cottage Life. “People often romanticize cottage ownership [but] there are costs, responsibilities and challenges associated with cottage ownership,” she said.
On top of the usual taxes and monthly expenses, unexpected costs for plumbing or wildlife nuisances (ie. raccoons) could drive up the cost.
Although there are certainly huge benefits to buying a recreational home, the decision to buy one as a first home shouldn’t be taken lightly. “It’s more of a lifestyle choice than it is a great investment choice,” Henderson warned.