Recreational properties have always been impacted by factors like lifestyle trends, location, interest rates and the economy. Recently, in Alberta and the Calgary area, it is also being impacted by the downturn and employment situation.
Now more than ever, nationally as well as in Alberta, the recreational property market is noticing the impact of overlapping generations. A few years ago, when baby boomers were at the peak of strategizing about retirement, recreational properties were a hot topic for personal lifestyle as well as for sound investments.
Contemporary strategizing about recreational properties has shifted to gen-Xers (35-54 year olds) and especially millennials (18-34 year olds). Location is still a key factor as are prices but recreational property strategy is heavily balance-of-life driven.
According to respected real estate expert Elton Ash, regional executive vice president, Re/Max of Western Canada, there is a generation shift happening.
“The traditional key driver in the recreational property segment has been the financial ability of the baby boom generation to buy recreational property. The motivation has been fuelled by a desire to lead a more balanced lifestyle and provide the opportunity for children and grandchildren to also enjoy a great lifestyle.
“Baby boomers looked at recreational properties, cabins and cottages as a legacy they could provide for their families. There is a major shift happening. We are seeing a growth of ownership in the gen-X and millennial generations looking to improve their 24-7 plugged-in world by finding time and a place to unplug and spend quality time with family and friends. After all,” he says, “millennials are the most plugged-in generation ever.”
When it comes to location, a reliable benchmark reference is the annual Re/Max Recreational Property Report that monitors and shows comparables for recreational property markets in 41 regions across Canada.
The 2017 report shows: “More than a quarter (28 per cent) of Canadians with children under the age of 18 indicated they would consider selling their primary residence in the city in which they live in order to purchase a cottage, cabin or ski chalet.
“Other options that these potential buyers are willing to consider include fractional ownership in a shared property, purchasing a recreational property with a friend or family member, and renting out the recreational property they purchase on a vacation rental website such as Airbnb.”
Despite recreational property supply-and-demand trends, some things never change. Such as the consistent cautions about considering recreational properties as investment strategy. The consensus is – don’t!
The dollars and common sense of a recreational property is a different story. A quarter of the respondents to the report indicated they would consider purchasing a recreational property as an investment vehicle to help finance retirement. The caution, from many millennials, is that high real estate prices in the city will negatively impact their ability to buy a recreational property, in addition to owning a primary residence.
According to Douglas Gray, a retired lawyer and respected author of 25 books, including The Complete Guide to Buying and Owning Recreational Property in Canada, “A recreational property is traditionally a retreat and family bonding experience, sometimes over generations, and collaterally has increased in value over time, sometimes a little, sometimes a lot.
“But recreational property purchased specifically for investment purposes implies a rental revenue plus capital gain objective. Careful research has to be done to ensure an investment goal can be realistically achieved. There are many variables: a high-demand vacation area; zoning and condo bylaws that allow short-term rentals. The projected financial numbers have to work.”
The 2017 Re/Max Recreational Property Report also highlights the new and influential generational factor. “Almost 65 per cent of millennials expressed interest in purchasing a recreational property in the next 10 years.”
For Alberta – and specifically the reasonable-distance range for the Calgary area – the hot spots continue to be Canmore, Sylvan Lake and, although a bit of a trek, the Shuswap and Windermere.
Distance, or the commute, may not be a hard-core business-of-real-estate factor but it is important when looking at recreational property options. “Thursday and Friday and Sunday night on the Trans-Canada is a good indicator,” Ash points out.
“Increasing pricing and desire are big factors and location is still a huge factor. It always has been. It’s still a popular preference to be within two to three hours of home. That may also be changing. It’s less and less of a big deal, especially for millennials, to drive six hours to the family cabin in the Shuswap. And six hours back!”
Although recreational property decision-making has new aspects, Gray recommends setting out the primary motivations in priority to determine whether the timing or decision to buy is appropriate. He mentions factors such as “affordability, tax implications on rentals and sale, location and driving time, personal use or rental use or combination of both.”
Ash underscores technology is a relatively new but vital component of the recreational property generational factor.
Technology allows the gen-X, millennials as well as thinking-about or recently-retired boomers to enjoy the special aspects of being rural but staying connected.
“Wi-Fi is increasingly now more common and available in many recreational property areas and affords the opportunity to enjoy the cabin or cottage lifestyle with the option of connecting and working by remote.”
A Little Piece of Paradise
“Recreational properties around the world are in more and more demand,” says Brian Ehlert, managing partner of the Windmill Golf Group and Montana’s Wilderness Club. “People are more knowledgeable and want to get away to explore, have fun and relax.
“Experience and discretionary income go hand and hand. People want a place to go where they can participate in a variety of activities.”
With subjective bias but a whole lot of genuine pride, he explains that Wilderness Club (WC) is a little piece of paradise in the ponderosa pine forest with the No. 1 golf course in the state of Montana (also ranked No. 60 on the Top 100 courses in the U.S.).
“WC also provides horseback riding, clay shooting, a water park with slides, cabanas, hot tubs and splash pad, as well as a spa, sports courts with basketball/volleyball and an inset sports field for soccer. Outside of the resort, WC owners have world-class snowmobiling, fly-fishing, boating, hiking, deep-lake fishing, cliff jumping and various types of skiing.”
While the “timeshare” concept of a generation ago has been redefined, Ehlert explains that a new concept is popular at Wilderness Club. “It’s a fractional ownership program, similar to timeshare but the individuals actually own real property within the club. People who don’t want to have the expense or sometimes hassle of full ownership of a home can opt for the WC fractional ownership program for as much as a half or as little as one-17th of the on-site cabins or villas.
“The club fully maintains the property for the fraction owners including the cleaning, furnishing, landscaping and general maintenance so the owners can fully enjoy the resort and surrounding amenities during their stays.
“Nothing will match the time spent away from the hustle and bustle of daily life, and in my opinion,” he smiles, “there isn’t a better area of the world to be in than northwest Montana, only three-and-a-half hours away from the busy city of Calgary. After all, the recreational property idea is all about lifestyle enjoyment!”