Insider Advice
The Great Getaway Vacation homes are more in-demand than ever. Here’s what you need to know about buying one. By Matt Olinski
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HEN LOCKDOWNS and travel restrictions sent city-dwellers scrambling for cottage rentals last summer, some Toronto residents started thinking about a more long-term investment in lake life. After all, with many of us now permanently working from home, those back-to-back Zoom meetings would be more bearable with sunset drinks on the dock to look forward to at the end of the day. As things stand right now, it’s a purchase many urbanites are jumping at the chance to make. According to a survey commissioned by RE/MAX in May, more than half of those looking to purchase a recreational property in 2021 were first-time vacation home buyers. Low borrowing rates have sweetened the deal, with 22 percent of buyers saying they have increased their ability to buy. If you’re fortunate enough to have the means, buying a vacation home is an investment that can pay significant dividends, both financial and emotional—as long as you’re prepared for the financial and practical implications, says Matt Olinski, agent at The Richards Group. “Having the luxury of being able to work from wherever you can means the value of vacation properties has gone up 50 percent or more in some areas,” he says. With inventory stretched thin and bidding wars commonplace, expect to pay more than half of what the average home sells for in Toronto. In the fall of 2021, the average home in the GTA sold for $1.1 million, while a waterfront property in Prince Edward County was $840,000, according
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EastTO Magazine
to a report by RE/MAX. Average prices for waterfront homes in Peterborough and the Kawarthas as well as Niagara-on-the-Lake went up a whopping 70 percent since 2019, both topping $1 million. “Buyers looking for a cottage need to be 100 percent prepared for multiple offers,” says Carley Stenson, a RE/MAX agent in Kawartha Lakes. “We’ve seen up to 20 offers on waterfront properties, and there are no signs of things slowing down anytime soon.” Still, there are affordable properties to be found if you’re flexible on property type and location— 57 percent of recreational property markets in Canada had listings available under $500,000, according to RE/MAX. In 2021, the average price of a condo in Muskoka, Haliburton, Niagara, Collingwood, Barrie, or Parry Sound was in that range. Non-traditional high-end vacation homes have also seen a pandemic-induced bump in popularity—think farmhouses with five to 10 acres of land, and estate-style spreads. “These buyers want weekend retreats with a lot of space around them, far away from their neighbours,” says Jacqueline Pennington, an agent in Northumberland County around Cobourg and Port Hope. “Prices for these properties have easily doubled to $1.5 million or more.” Financing the dream
The good news for buyers looking to add a second home: low-interest rates can make refinancing your current mortgage more attractive, freeing up cash for a down payment on a vacation property. What’s more, with the rental market going gangbusters in the warmer months, you can recoup significant costs by renting out your property just a few weeks a year. “Refinancing your mortgage can let you access up to 80 percent of the appraised value of your home, which means you could potentially buy your cottage outright,” says mortgage agent Angie Alvarez with Capital Home Lending.