Americans and Albertans alike looking to the mountains for recreation homes
The old truism of “location, location, location” applies as equally to recreation property as it does to a good piece of primary real estate. And it may become even more important in a tight economy.
Alberta’s recreational property market — much of it located in the mountain areas and lakes within an hour and a half of Calgary — continues, at least for now, to be fairly strong.
With the decreasing Canadian dollar, American buyers coming from a healthier economy are once again looking at Alberta property while local buyers may be seeking cottage life closer to home.
Developer Frank Kernick who is currently selling the master-planned community of Spring Creek in Canmore and has just launched phase three of the River’s Bend community in Dead Man’s Flats, has seen half a dozen financial cycles during his 20-year career.
He says while the Canmore area market has been buffeted to some extent by an international market— including Americans for whom Canada is “on sale” right now — there has been continued interest from Calgarians.
After the first shock of the economic downturn, “we had the best June in four or five years. “
Canmore has maintained steady growth, Kernick says, with no oversupply or devaluation of properties.
“Between 2008 and 2010 there was both with a lot of the inventory used as rental properties. We now have a balanced market with an inventory of 250 resale homes versus 500 during the last dip. And the amount of new development is low.”
He cites a second quarter report released by Sotheby’s in July that showed a 28 per cent increase in sales between the first and second quarter of 2015 in the Canmore/Banff area.
In fact, July was the strongest month in sales in the past 13 months, with the average sale price of a townhome of $590,000.
In Spring Creek townhome sales have been steady — four of seven sold at prices of $1.2-million to $1.4-million — and they sold within the last few months.
The community, with everything from family homes to recreational properties to senior living, has seen American sales but also several buyers from the Alberta market taking buyouts and putting them into recreational and retirement properties.
Kernick says he fully expects, over the next year, people will continue considering cashing out to buy a rec property in Canmore.
That seems to be supported by a recent national RE/MAX report that says 15.6 per cent of Albertans would consider downsizing their home to buy a recreational property. It also says 74.1 per cent of people in this province would rather spend a long weekend at the cottage over a big city getaway compared with 67.8 per cent nationally.
Don Stengler, project manager at Lamont Land Inc. building CottageClub at Ghost Lake, says sales in the project this year have outpaced last year.
Of the 228 serviced lots, 141 have been sold — more than 40 per cent of them to Calgary residents.
Located 15 kilometres from Cochrane, and about a 45-minute drive from Calgary, Stengler says CottageClub, with its private beach on the 90-foot deep Ghost Lake, is attracting people who never considered owning a cottage.
“They weren’t aware of anything available close to the city— and they don’t want to have to go all the way to B.C.”
Stengler says most buyers have not come from the oil industry, but been a mixture of lawyers, doctors, accountants and business owners.
Older purchasers may have another property in the U.S. and want a lake home where grandkids can gather, and younger affluent purchasers have young kids who want to be able to run into Calgary easily for things like soccer games.
“We are selling our most expensive lots right now — some $500,000 on the lakefront — and for cash.”
Stengler says with the U.S. exchange rate not favouring Canadians, the advantage has switched to buying locally.
Don Campbell, founding partner and senior analyst of the Real Estate Investment Network says REIN’s research has shown the first market to be negatively impacted by an economic slowdown in Calgary are the farther away areas such as the Shuswap and the Invermere Valley in B.C.
He says the longer the downturn continues, the closer the recreational downturn gets to Calgary. “A reverse ripple effect would be a good way to visualize it.”
Meanwhile, Kernick is confident enough in the Canmore area real estate market to launch sales in the first townhome product in the River’s Bend project, in Dead Man’s Flats, five minutes outside of Canmore.
Called Skogan Court, it will include 28 townhomes starting at $499,000 located adjacent to the Bow River and mountain bike and walking trails.