The thought of sipping a glass of wine while watching a coppery sunset settle over a lake, or of cosying up to a fire after a day of skiing, might inspire anybody to buy a recreational property for either personal enjoyment or investment. Surely, the dream of owning a vacation home is more emotional than pragmatic for some.
People often describe owning a recreational property as a way of creating glorious family memories despite that sometimes there comes a high cost of ownership and unexpected problems. Likewise, recreational real estate as an investment can become difficult when rental property is damaged or rental revenue is less than expected.
This is why, considering the types of amenities and things to do in a particular place – along with the pros and cons of owning a second property – is valuable before buying.
Calgary recreational buyers are fortunate to have either summer or winter real estate to choose from depending upon personal interests. Most often the motivation to buy a vacation home relies on budget, location, convenience and preference.
When it came to purchasing a recreational property, Jo Larson bought in Canmore due to the close proximity to Calgary.
“We love the outdoor lifestyle that Canmore offers (because) there are so many activities to do year round. There are great restaurants and amenities in Canmore as well as festivals and sporting events throughout the year,” Larson explains. “We are very active there with mountain biking, hiking, walking, paddle boarding and swimming in the summer, (and) also downhill skiing, cross-country skiing, snowshoeing and hiking in the winter.”
Other seasonal ski resorts like Fernie, Kimberley, Panorama and Kicking Horse offer year- round fun with skiing in the winter and golfing in the summer.
“Kimberley in particular has access to world-class golf courses that people come in the summertime for; there is also downhill biking, mountain biking and things for tourism,” says Philip Jones, president and owner of Royal LePage East Kootenay Realty.
Most recreational buyers decide on a location based upon their choice of lifestyle. For some investors the decision to buy either a summer or winter property depends on where they see themselves spending free time.
For instance, some buyers prefer Invermere, Radium, Kelowna, Vernon or Shuswap Lake for the summer. The weather is hot and there are plenty of water sports like wakeboarding, windsurfing, jet skiing and paddle boarding.
Similarly, Sylvan Lake and Pigeon Lake attract buyers primarily from Edmonton and Calgary who enjoy boating, fishing and swimming during the warmer months.
On the other hand, the sunbelt – Phoenix, Scottsdale, Palm Springs and Florida – offer better weather for snowbirds wanting to get away from the cold winters. But, those areas are currently less affordable to Canadians due to the high exchange rate.
“Now with the currency exchange where it is at, and the increase of the American currency compared to the Canadian currency, we have seen a return starting last year – which we will certainly see through this year – that Americans are buying Canadian recreational properties again,” says Elton Ash, regional executive vice president of Re/Max Western Canada.
Ash explains Canadian mountain retreats are popular with Americans when it comes to purchasing recreational properties because “ski resorts like Whistler, Revelstoke, Big White, SilverStar, Sun Peaks and Fernie are really what they are looking for more than anything else.”
Lately, the low Canadian dollar has enticed a few American and Chinese buyers to Canmore.
“We have seen a few more American buyers this year and since the election there has been more inquiries because we are on their radar. Also, there have been some interest and a few sales to Chinese buyers in 2016, (but) we saw more at the end of the year than the beginning of the year,” states Brad Hawker, broker and owner of Royal LePage Rocky Mountain Realty.
According to Ash, the cohort of buyers for recreational properties still remains the baby boomer demographic even though the millennial segment is becoming stronger.
“The baby boomers when they buy recreational property it is often seen as legacy so their children and grandchildren can enjoy it. For a millennial purchaser, they are buying it for
themselves because they are looking at it in a different perspective – which is to unplug and get out of the mainstream,” adds Ash.
Even so, the majority of recreational buyers in Western Canada are primarily from Alberta and British Columbia. Many of these investors are drawn to both mountain and lakeside resorts because of the outdoor activities.
“Historically the trends really haven’t changed a great deal when we look at recreational properties and who is out there buying and what the great attraction is, or areas that are most popular,” states Ash.
Most investors consider buying a vacation home depending upon affordability, individual preference and closeness to their primary residence. Ideally, a recreational property must provide the ease and convenience of getting there.
“The majority of people want to buy recreational property within a two-hour driving distance of their home which becomes more local than anything else. There are a lot of Calgarians who will drive six hours to the Shuswap, but the majority of people prefer to drive (less) from their home which drives the Canmore, Fernie, Sylvan Lake and Pigeon Lake market in northern Alberta,” explains Ash.
For this reason, Canmore real estate has remained relatively stable despite the economic downturn. “There was a drop off in sales in 2015, but then 2016 hit and the Canmore market has been very busy which was unforeseen,” says Hawker.
Much of Canmore’s recreational market is influenced by Calgary buyers who prefer the close driving distance with the opportunity to buy a maintenance-free condo property.
Hawker adds, “It was a very strong year in Canmore where we have seen declining inventory year-over-year with properties that need to sell down 36 per cent from last year during this time.”
Such news is hopeful for both primary and recreational owners in Canmore because property values will likely remain steady this year. Additionally, the Kootenay East recreational market stayed fairly stable with most purchases coming from Calgary buyers.
“The recreational market for Calgary buyers and southern Alberta have actually continued reasonably strong even though the Alberta economy has had the downturn that it has,” states Jones.
As encouraging as this sounds, recreational investors should pay careful attention to the type of factors affecting real estate activity. Being knowledgeable about a particular
market is helpful in understanding if a recreational property will provide a return on investment from either resale or rental revenue.
For many buyers, the potential of renting out a recreational property using websites like Airbnb, VRBO or HomeAway can be important for offsetting any ownership costs.
The extra expenses and taxes of owning might be at times more unnerving than originally thought. But, most investors who are willing to spend on a recreational property usually have the monetary means to do so.
Whether you are buying a property for personal enjoyment or investment, Ash’s advice to purchasers is to “always stay within your economic means to enjoy the lifestyle that you want, and do not – especially in buying recreational property – stress yourself economically to buy a property that you are trying to relax at.”