Millennials Are Becoming Cottage Owners. But, Surprise, They Rent in the City to Finance the Dream

Trend alert: millennials are becoming cottage owners. But, surprise, they rent in the city to finance the dream

SKIP THE HOUSE

Want to buy an island, hahaha?” That’s what Shantel Clark recalls her father-in- law saying when he texted her and her husband, Ian. Ian had grown up cottaging on an island about 30 minutes from Honey Harbour in Ontario’s Georgian Bay. Now, the family that owned the one-acre island next to them was selling. The text arrived as they were on the way to a family wedding, only a few months “after Shantel and Ian’s own wedding. The couple had been thinking about starting to hunt for a house in Toronto, but weren’t very excited about the task. “I knew that whatever we could afford in the city would be something we’d be settling for” is how Shantel puts it. She and Ian figured the best they would do in Toronto would be to get a small starter home or condo, which they would then aim to buy up from before eventually—at some distant date in the future—ending up with a house that would be their “forever home.” And that made anticipating that first property purchase seem more like a grind than a joy. Still, they weren’t thinking of other options until Ian’s father got the email that flipped their property priorities. “Ian’s dad was joking,” she says, “but we were like, maybe yes.” Even with a recent market softening, the average price of a detached house in Toronto is still more than $1 million, and in Vancouver, at almost $3 million, owning a house is By Kim Pittaway beyond the reach of many millennials. “Home ownership has become unattainable in the Lower Mainland of B.C. for a number of years, even for people with very good Photography Derek Shapton

48 cottagelife.com Spring 2018 Spring 2018 cottagelife.com 49 Skip the golf membership “Young people are want a smaller urban director of Freedom 55 Financial in B.C., rejecting ‘keeping up footprint, not a big sees more and more of her clients opting with the Joneses,’ home in suburbia. the values of their And they’ve made a to use the “ocean road” as a quicker parents,” says Ross conscious decision commute out of Vancouver (with some Halloran, the senior to buy where they even opting for float planes). While she vice-president, sales, can appreciate the incomes,” says Al Dubé, a financial advi- and her husband eventually did buy a Sotheby’s Interna- natural setting with YOUNG BUYERS sor with Dubé Insurance and Wealth city property, she considers their week- Great deals tional Realty, in Port family and friends.” Advisory Services in Victoria. “But end place their real home, with their city Carling, Ont. “They —Blair Eveleigh ALSO WANT vacation properties can be much more property a place they stay at while work- in the West TO BE ONLINE: affordable.” When you consider that the ing. “Indian Arm is our slice of paradise.” average price of recreational properties Meanwhile, in Calgary, where the WI-FI IS in Southern Ontario is $413,000, with average price of a detached house is A PRIORITY waterfront properties on Saltspring and $560,000, some buyers have a different Vancouver Islands clocking in at around strategy for their recreational property: half a million dollars, the logic of enter- make the cottage work overtime. Chris- ing the real estate market via the cottage topher Vincent, the senior vice-president market becomes clear. of sales with Sotheby’s International “We could rent in Vancouver more Realty in Canmore, Alta., sees more cli- Ski, Swim, Fish cost-efficiently than we could buy,” says ents opting for what might traditionally 3-bedroom, 818 sq. ft. cabin in Judith Silverman, and so she and her have been vacation properties, but using Invermere, B.C.; new deck, husband, both in their thirties, shifted them as a year-round home base. “They southern exposure, steps to their ownership dreams to a vacation could be doctors or medical profession- beach. $399,000 property. They bought an $800,000 als who work in fly-in communities in vacation condominium townhouse in Northern Manitoba or the Territories, Whistler in January 2017, while renting but make a place in Canmore their home a three-bedroom apartment near the base,” he says. Others spend three or UBC campus, where they were both work- four days a week working in Calgary, ing. “Our place in Whistler is the place couch-surfing with friends or staying in that we love,” she says. In addition to hotels, and commute back to Canmore on their summer vacation, the couple spent the weekend. “Because we’ve got great as many weekends as they could manage high-speed Internet and good highways, Quirky & Serene at the property, renting it out for a few doing that reverse commute into the city 2-bedroom, 1,359 sq. ft. log weeks to help contribute to their mort- can be a great option—and you’re not cabin with turret near Shining- gage payments. “It’s the perfect space spending any more time in your car than bank Lake, Alta.; snowshoe, for us. We can breathe when we’re there.” you might be if you bought in a Calgary cross-country ski. $324,900 While more millennials might be opt- suburb and were stuck in that traffic.” ing for a cottage-first property strategy, they aren’t the first to have done so. “I knew this was going to be our for- The sign on Izumi Miki McGruer’s dock ever place,” says Shantel Clark. Ian had says, Where Dreams Really Do Come been vacationing at his family’s Geor- True. McGruer and her husband bought gian Bay island cottage his whole life, the periwinkle ski chalet–style house and Shantel had fallen in love with the at Indian Arm on B.C.’s Pacific coast spot as well. They’d visited the island for $380,000 16 years ago, while still next door for summer cocktail hours and Boater’s Delight renting in Vancouver. Indian Arm is a Monopoly games—and now they had the 3-bedroom, 571 sq. ft. log cabin steep-sided fjord adjacent to Vancouver, chance to own it. “We didn’t plan for it, on Pigeon Lake, Alta.; dock and the territory so rugged that it’s virtually but we couldn’t resist it,” says Shantel. boat lift; woodstove, covered inaccessible by road—but it’s just a The couple had been saving for a deck, basement. $319,000 30-minute journey by boat from the house, but diverted the funds to the cot- city’s downtown. “We’d been boaters for tage down payment instead. Still, the a while, but hadn’t thought that buying financing didn’t go smoothly. As they a boat-accessible property might be an made their offer, they thought they had Island Life Park Central option,” says McGruer. “We were out on a pre-approved mortgage sorted out, 1-bedroom, off-grid 400 sq. ft. 2-bedroom, 1,040 sq. ft. post- the water one day and came around the but when the bank realized that the pur- cabin on Gossip Island, B.C.; and-beam rancher on Slocan panoramic views, beach, Lake, B.C., near three provincial corner into this place that just took our chase was a seasonal island property,

water-access. $319,000 parks. $299,000 INVERMERE, SLOCAN LAKE, B.C.: BILL LANDER, COLDWELL BANKER ROSLING REAL ESTATE; GOSSIP ISLAND, B.C.: HEDI KOTTNER, GALIANO ISLAND REALTY; LISTINGS AND PHOTOS COURTESY: DARCY POWLIK, RE/MAX REAL ESTATE EXECUTIVES LEADING; PIGEON LAKE, ALTA.: ARLIE JESPERSEN, REALTY INVERMERE; SHININGBANK LAKE, ALTA.: MAXWELL REALTY B.C.: GLENN POMEROY, breath away.” McGruer, the managing the terms shifted dramatically: “They

50 cottagelife.com Spring 2018 Spring 2018 cottagelife.com 51 Is a cottage-first strategy for you? As with any real work of advertising, anyone who says property insurance as an add-on to pri- estate buy, be real- management, and your cottage prop- mary property coverage, you could end istic about the total cleaning, plus higher erty is guaranteed up paying a higher rate and have a costs of your cottage insurance fees. to go up in value. “I higher deductible. And if your property purchase, and watch had a client whose Plan for the worst, is three-season rather than four, both out for what Laurie agent told her she says Stephenson, your rate and your deductible could be Quiet or Stephenson, a finan- was guaranteed a or for the not-quite- asked us for a 50 per cent down pay- higher still “because the risk is higher as cial planner with 15 per cent annual close to the best. That means ment.” Their realtor quickly connected it could be months without you visiting Starboard Wealth return based on past making sure you action? Planners in Halifax, price increases—but them to a mortgage broker in cottage the property, and a loss could go unno- could still carry the calls “city mouse no one can guaran- country, and they ended up getting a ticed for a longer period of time,” says property even with a surprises”: “Espe- tee that,” she says. mortgage with 15 per cent down. Sharma. For the Clarks, dealing with a one or two per cent cially on first prop- That kind of last-minute scramble broker in cottage country who under- interest rate hike. If If it’s your only properties, people isn’t uncommon, especially if communi- stood the ins and outs of island proper- you lost your job or erty and you com- underestimate the had a health crisis, mute there regularly, cation between the lender and borrower ties was helpful, especially since the costs of keeping the could you move to you could claim your hasn’t been crystal clear, says Michelle property has no fireplace or woodstove, property together, the cottage full-time cabin as your princi- Drover, the vice-president for Atlantic so didn’t require a WETT (Wood Energy and in the country, to cut costs? How pal residence (to Canada of Verico Premiere Mortgage Technology Transfer) certificate. where you may have fast could you sell if avoid capital gains Centre in Halifax, N.S. “Mortgage rules While traditional financing and a septic system or Bargain Near the City you had to get out? taxes when you do have changed a lot in the last couple of insurance came together for the Clarks, a well, it can be a 3-bedroom, 768 sq. ft. cabin KEEP YOUR “Buy less than what decide to sell)—but whole new, very years, and there are more factors than things didn’t fall as neatly into place for 35 minutes from Saskatoon on you can afford, so consult an accoun- EYE ON COSTS expensive world,” ever that can affect what you can get, Keith Shiner, whose hunt for his dream Blackstrap Lake, Sask., in that if your circum- tant to be sure you she says. Renting and what interest rate you’ll pay,” says cottage didn’t go quite as he’d hoped. “I resort village. $134,900 stances change for don’t run afoul of AND PLAN the cottage can help Drover. There are essentially two levels knew from the time I was 14 or 15 that the worse, you don’t Canada Revenue with costs—but of mortgage classification: Type A prop- I would own a cottage before I owned a FOR THE have to sell at a fire- Agency rules.—K . P. also comes with the erties, which could be cottage or residen- house,” he says. “I grew up going to my UNEXPECTED sale price,” she says. tial properties, and which have central grandparents’ cottage at Lake of Bays, And don’t believe heating and year-round road access; and and I just knew that’s what I wanted.” Type B properties, which may or may not In his late 20s, Shiner started looking have central heating and may only have for a fixer-upper on good lakefront within seasonal road access. With a Type A three hours of Toronto, aiming to qualify property, you can get a 95 per cent mort- for a mortgage of around $110,000. “I Water-Access Getaway gage with a five per cent down payment; quickly found out that my budget didn’t 2-bedroom, 1,000 sq. ft. cabin in Type B properties may be financed up align with my desires,” he says. Then he Rainy Lake, Ont.; woodstove, to 90 per cent with as little as 10 per noticed lots being sold around Miskwabi southern exposure, sandy cent down payment. But other factors Lake in Haliburton. It was 1999, and the beach, boathouse. $150,000 can come into play in determining the initial development opened up 50 lots, required down payment and your inter- with municipally maintained roads. “The est rate: a prime location and good first time I drove in, the roads were still future marketability could net you a bet- being built. I hiked across the lots, and ter interest rate, while needing cottage as I looked at the orange stakes, through rental income to help make ends meet the trees to the water, I could envision could boost your rate. “The lender needs the cottage. It was just beautiful: a quiet, to truly understand what the client is clean lake surrounded by forest.” looking to do to give them the best mort- The lot he wanted was three acres on Shady & Private gage product,” says Drover. “You want to a point, 420 feet of shoreline. The price? 3-bedroom, 1,200 sq. ft. Viceroy do it in advance and be absolutely clear.” $75,000 including tax. Shiner thought in Grand Bend, Ont.; secluded And the property has to be insurable, it would be an excellent investment—but but near sandy beach and which can be more complicated if you he couldn’t convince the local bank man- nightlife. $320,000 don’t already have a city home insured ager of that. Rather than pay a higher (though having tenants’ or condo insur- interest rate (around 13 per cent), to pay

ance might make it easier). “If it’s your the deposit Shiner got some quick cash REALTY DOUG PEDLAR, RE/MAX BLUEWATER GRAND BEND, ONT.: REYNARD REAL ESTATE; only property, we face limitations on with his credit card and then a line of 21 the companies that will insure it,” says credit (at four per cent), with his father Nancy Sharma, a branch manager of the co-signing. Shiner had the land, but a insurance brokerage BrokerLink. Since cottage was still a dream. “My initial

companies typically bundle vacation investments were a shed, an outhouse, HALLMARK; RAINY LAKE, ONT.: LEPAGE BLACKSTRAP LAKE, SASK.: MIKE BOYCHUK, ROYAL LISTINGS AND PHOTOS COURTESY: CHAD JACK, CENTURY

52 cottagelife.com Spring 2018 Spring 2018 cottagelife.com 53 a tent platform, a dock, and a second- hand boat,” he says. “It was glorified camping for the first few years.” The first 10 years, to be precise, dur- River, lake, ing which he paid off the line of credit, or ocean diverting his RSP contribution to pay it Vancouver, if you’re locked out of buying down. “I was confident the land would in the city, it could look like it makes view? increase in value as much or more than sense to buy a vacation property so that my RSp would,” he says. “I was lucky that you have some real estate in your portfo- that turned out to be true.” (He adds: lio. But a home in Kelowna isn’t the same “You can’t swim in a mutual fund.”) By kind of investment as a home in Vancou- then Shiner had met his future wife, now ver, so it’s not a terribly effective way to Meaghan Phillips-Shiner. They camped hedge the market,” says Davidoff. Still, on the land, and when they decided to the decision to buy a property, whether get married, Shiner made what he in the city or not—like many decisions thought was an audacious suggestion: that have economic impact on our “ ‘We should build a cottage before we lives—isn’t always a strictly rational On the Riverfront buy a house,’ I said. And to my surprise, one, Davidoff acknowledges. 2-bedroom, 800 sq. ft. cottage on Trent River, Ont.; deck, she said that was a great idea.” The cou- “We just love our rock,” says Shantel bunkie, stone fireplace, large ple knew it would mean compromising of their one-acre island. It’s a 30-minute

deep lot. $369,900 on what they could expect to buy in the boat ride from Honey Harbour and a city, “but my wife was all in—she said, football-throw from Ian’s family’s island. ALL 21 ALL we’ll be raising our family up there, and “Our two dogs can swim it.” There’s a MOM & DAD that’s where she’d rather put the money.” main cottage of about 1,000 square feet In 2011, they broke ground. By 2012, with one bedroom, and a smaller cabin ARE IN THE their bungalow-style year-round cottage that they’ve reconfigured into two bed- MARKET TOO. was ready. For the first five years, they rooms and a living room. The property BIDDING used it for just two weeks in the summer initially had three bathrooms: one out- Know your market and rented it out for seven to help cover house, one composting toilet, and one their $400,000 mortgage. During that regular toilet. “We sold the composting Millennials looking homes, in turn con- WAR! Close to the Capital time, they also bought a city home, but toilet on Kijiji for $450,” says Shantel, for a recreational tributing to rising 1-bedroom, 928 sq. ft. off-grid the cottage is still the family’s focal and they reinvested that money in their property are com- prices on cottage 21 MACINTYRE; DEEP COVE, N.S.: GABE ROUTHIER, INTERHABS cabin on Toote Lake near peting against properties. “A cot- Thorne, Que., 90 minutes from point: “This magical place far outweighs renovations. “We ask ourselves what another cohort: their tage here that was Ottawa. $225,000 any concessions we made on our city can we sell, repurpose, and reinvest? For parents. Baby priced at $200,000 house.” They spend Christmas and every instance, we sold some old boat bench boomers reaching or $250,000 a few other weekend in the winter there, and seats that were on the property and used or nearing retire- years ago now gets for the last two years, they’ve expanded the money to buy a couple of cans of ment age are buying listed at $300,000,” their summer stays to three weeks. paint,” says Shantel. up choice places in says Pedlar. While they didn’t use equity from the The fact that the couple are still rent- cottage country. Ann Chiasson, of cottage to help finance the house, the cot- ing in the city also makes the financial “It’s been happen- Re/Max Sea to Sky tage was an asset on their balance sheet, burden of the cottage easier to carry. “We ing for a few years Real Estate in Whis- which Shiner says helped in landing know what the fixed cost of renting is, now,” says Doug tler, B.C., sees this their city mortgage. “If you have enough and there are no surprises, so anything Pedlar, the broker trend in her area as Oceanside New Build equity—more than 20 per cent—in a cot- extra we have can go into the cottage,” of record at Re/Max 1-bedroom, 900 sq. ft. cabin in well. “They’re taking Bluewater Realty in Deep Cove, N.S., near Halifax; tage,” says Dover, “you can use that to she says. “We’ve shifted our mindset on their city equity and Grand Bend, Ont. woodstove, cedar deck, loft help finance the down payment on a new buying in the city. We don’t feel pressure buying grandkid “They want to get bedroom. $189,000 primary residence in the city.” But while to buy anymore. We’ve got roots, some- catchers,” she says, the heck out of the the financial equation worked out well thing that’s ours: the cottage.”a especially in nearby city.” And those for Shiner and his family, not every buyer Squamish, with its boomers are taking hospital and ample can count on that. A vacation property Kim Pittaway teaches creative non-fiction advantage of the recreational isn’t necessarily going to increase in at University of King’s College in Halifax. relatively higher Quaint with Acreage Big Lake View facilities.—B.E. value at the same rate that a city home prices they are able 2-bedroom, 735 sq. ft. winterized 3-bedroom, 600 sq. ft. cottage might, for instance, says Tom Davidoff, Visit our special real estate hub for info on to get for their city cabin with 196 acres in Carling, on Paudash Lake, Ont.; west- Ont.; Crown land on three sides; facing, new dock, screened an economist at UBC’s Sauder School great cottaging regions, tips on how to find

sauna, woodstove. $285,000 porch, well. $375,000 JOSEY VOGELS, CENTURY LAKE, ONT.: CANADA; PAUDASH REALTY ROSS HALLORAN, SOTHEBY’S INTERNATIONAL CARLING, ONT.: LISTINGS AND PHOTOS COURTESY: CENTURY THORNE, QUE.: STEPHEN LYNOTT, GREG BALL, BALL REAL ESTATE; TRENT RIVER, ONT.: SEASONS REALTY; of Business. “In places like Toronto and a bargain, and more at cottagelife.com.

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