Cottage lust

by Susanne Hiller
National Post - July 13, 2002

Realtor Mike Baum uses words like "frantic" and "circus-like" to describe the cottage market this summer. "It's like being in head-on traffic in a cyclone blindfolded on one leg," says Baum, a sales representative for Century 21 Cottage Country Realty Inc. in Huntsville.

There are hundreds of cottage seekers waiting to bid on a property this year. Veteran real-estate agents say the discrepancy between the number of listings and the numbers of eager buyers is unprecedented. There's never been cottage fever like this.

In popular areas such as the Haliburton Highlands, the Kawarthas and Muskoka, there are virtually no waterfront lots to be had. Forget a place with a road. Anything that goes on the market sells within a week. If a property is on the market longer, it's because there is something wrong with it.

Would-be buyers are so desperate that some beg real estate agents (their new best friends) to tip them off before a cottage is even listed so they can be the first to make an offer. Some actually purchase properties sight unseen.

It's almost embarrassing to talk to people," says Baum, who has been selling Muskoka and Haliburton cottages for 15 years and says he's been flooded with calls since January. "They don't want to believe you. They keep asking, 'Isn't there something else?' But there is scarcely anything available, it's so saturated. There has never, I mean never, been a market like this, with so few listings and so many buyers at every price level."

Royal Lepage's Helen McNabb, who has been in the business since 1974, says much the same.

"Listings at five [hundred thousand], six, seven are gone within two or three days," says McNabb, who specializes in lakefront properties in Muskoka. "People don't even think about it."

She says her well-heeled clients used to look at more than a dozen vacation properties before making their choice. Now they are lucky if they can view one or two.

Some determined cottage hunters have even taken to knocking on doors themselves and asking current owners if they are thinking of selling and if they would consider a private deal.

McNabb says in the past, one partner would do the legwork with an agent and the other would come out only when it was time to consider the shortlist.

"You don't see that this year. I have women making offers without their husbands coming out. They are like, 'Is this it?' They want to see a variety, but this year they don't have a choice and they grab something before it's too late."

The frenzy has pushed many people who used to consider cottage seeking a fun weekend hobby to suddenly get serious.

Cottage buyers Helen (who asked that her last name not be used) and her husband had been looking for a summer retreat for 15 years in the Muskoka, Haliburton or the Kawartha region.

"The situation actually pushed us to get one this year," she says, on the cellphone from her new haven in north Kawartha. "We needed the pressures of a hot market to get us going and to make a fast decision. No more leisurely drives and looking around. We used to visit a lot of cottages and think 'Oh, we'll go back and see it again next week' until we found we couldn't do that any more because they were gone."

Still, when their agent called to say she had found the perfect place last fall and told them to come and see it right away they didn't jump on it.

"We were busy and we thought we'd make it out later in the week and then three days later it was gone," says Helen. "The next time, we knew the agent was serious and we were there right away. I think the agents are only calling people who are committed. Otherwise, they are wasting their time because there are so few places available."

Helen and her husband, who have three grown children, love their new three-bedroom cottage, even though it isn't on one of the bigger lakes they had originally wanted.

"A smaller lake is different, but we like it. It's not so much water sports, it's canoeing and fishing," she says. "We are just grateful to find our own place because we were starting to think it wouldn't happen. We were finally ready and the market wasn't."

Baby boomers who have hit financial maturity are driving the cottage madness. They are selling their large homes in the city, trading down to something smaller and using the profit to finance a cottage.

"The kids have gone off to university. They have sold off the big house in the city and are now living in Barrie. They now have lots of money to buy a cottage," says Baum.

Many of the boomers are looking for a second home, not just a place to spend a few weeks every summer. The concept of the cottage as a little shack in the woods with no running water is over. Today's cottagers want winterized homes with satellites and wireless Internet access.

"It's a big investment and people want to get the best out of it, not just a three-month value," says Baum.

There are a number of reasons why cottage owners aren't selling. The former dot-com millionaires who picked up vacation properties when they were in the money are hanging on to them as investments. And with all the Enrons and WorldComs, it's not just jaded dot-commers who have lost faith in the stock market and are turning to real estate.

Since Sept. 11, McNabb says people are staying closer to home. Numerous surveys have shown that family life and a stress-free environment are more important than ever. Cocooning and tradition are buzzwords and nothing symbolizes this trend more than the beloved family cottage.

"People don't want to travel far," she says. "They want to keep their family retreat."

Former cottage seeker Helen says she discovered current owners were reluctant to give up their cottages because they wanted to keep them in the family.

A recent survey by Royal LePage found that the majority of current cottage owners (81%) plan to leave their vacation homes to family members and only 5% of cottage owners are thinking about selling in the next three years. (Only 10% of Canadians, by the way, own recreational properties.)

"I think people sell their place in the city before they sell their cottage. It represents a getaway and good memories. People are very attached to their cottages," Helen says. "We were shocked at the prices, and I think people were putting a price on the emotional attachment, not just the physical condition."

And local buyers have competition. Wealthy Americans -- not to mention Germans and Swiss -- think Ontario cottages are bargains.

"I listen to the Americans referring to their glacial places as their cabins in Canada," says Baum, adding there is an increase in the numbers of Americans, especially from New York and Michigan, looking to summer here.

"They tell me that Sept 11 reshaped their philosophy of life. It's about quality and family and being safe. They like it here."

The demand, not surprisingly, is driving up prices, and sales figures are between 11% and 15% higher than last year. In the Port Carling/Bala area of Muskoka, 14 properties have sold for more than $1-million this year, according to Re/Max.

The absolute entry-level starting price for a three-bedroom cottage on a small lake in the Muskoka or Haliburtan is $350,000.

"Add $100,000 to that if it is winterized," warns McNabb.

Even in the Kawarthas, where prices are traditionally lower than in Muskoka, starting prices during the past year have edged into the $ 200,000 to $225,000 range.

Anything with a big lake is considered prime. In terms of demand, Lake Joseph, Lake Rousseau and Lake Muskoka (in that order) are the most sought after, says McNabb. A 5,000-square-foot cottage on Lake Joseph sold for $4-million two months ago.

"Lake Joseph is the be all and end all," says McNabb, who recently sold a cottage there for $1.6 million. "They are the socialites and partiers and they like being near golf. They have big boats and toys. You know, they are the celebrities and hockey players."

People who are "label conscious" are also "lake conscious," says Baum. And prices in these trendy areas are astronomical. A lakefront property with 300 feet of frontage and a modest older cottage could set you back $800,000 -- if you can find one.

"Half a million for a 1,500-square-foot cottage is a very easy price to start with. It depends on the exposure to sun, type of structure, frontage of the water. The wider the lot the more expensive," says Baum.

"It's crazy. During the mid-nineties, you could cut the price in half and no one would notice. In '89 prices peaked and in 1998 it started again. Now it's furious. But still, a modest lot in Lake Geneva in Switzerland is a million. In Lake Simcoe, the same lot is $500,000."

Beleaguered buyers are starting to drive further north and consider cottages on smaller lakes, which is a new phenomenon.

Baum thinks an area north of Huntsville, which is around four hours outside Toronto and has not yet been named, will be the next hot spot.

"People have no choice but to go further north. The lake in this area is more private, cleaner, not so populated and cheaper" he says.

"That will change though. There were eight lots available but now they are almost gone."
 

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