If you are in the market for a ski chalet or maybe a year-round retirement home in the Georgian Bay Triangle, a word of advice: Start looking now. The next six months could see a boom in both new and resale properties in areas such as Collingwood and Blue Mountain.
What happens after that, however, is anyone's guess. The new harmonized sales tax kicks in July 1, instantly raising prices.
On what am I basing my predictions? Nothing fancy, just the usual indicators: measurable demand, available supply, and shifting demographics, drawn from figures supplied by the Georgian Triangle Real Estate Board and industry insiders.
Board president Andres Paara says residential sales figures cover three main markets: recreational properties such as cottages and chalets; retirement and semi-retirement homes; and demand from locals for year-round housing. The first two represent about two-thirds of annual sales. The largest market segment by far includes buyers from the Greater Toronto Area.
The winter months of last year were tough on housing, he says. “From October of 2008 through early April of 2009, almost nothing got sold or built. Then, in spring, sales really started taking off again.”
Because little got built, the demand was filled mainly by resale properties. The board ended the year reporting sales of 1,857 homes, up 8 per cent from 2008. The total dollar value of sales was up 10 per cent; and just 15 per cent off 2007, which was a record year.
That strong finish took its toll on inventory – the number of resale listings. They finished the year at 5,875 homes, down 2 per cent from 2008.
So, with supply of resale homes down and demand strong, have conditions improved so much that builders are willing once again to start turning out new chalets and retirement homes?
Morris Kansun, president of Sierra Building Group of Markham, says he certainly is. Sierra is in the midst of its third major recreational and retirement project in the Triangle since 2000. He says that by his own estimate, Sierra accounted for between 60 per cent and 70 per cent of all ski chalets built in the area in the year or two leading up to the recession.
“The market is driven by demand from the GTA,” he says. “And that demand has changed. When we first started, we focused on estate lots and homes that sold in the millions right in the town of Blue Mountain.
“Today we are in the middle of developing Tanglewood, which is between two golf courses and close to the ski hills. Eventually, there will be 800 semi-detached and town homes selling for between $199,000 and $400,000.”
To boost sales, Sierra, similar to GTA developers, has been offering incentives. For its $199,000 townhomes, for example, if buyers put down 25 per cent of the purchase price, Sierra guarantees to cap monthly mortgage payments at $500 a month for the next five years.
“The market has changed and we have to change with it,” he says. “The softest spot is $1-million-plus homes. The sweet spot are chalets between $250,000 and $350,000. I think that reflects the buyers. They are ordinary people looking for an alternative to southern family vacations or for a great place to retire.”
Today's market also differs greatly in another way from that of 10 years ago. Then, a ski chalet was usually just a small (maybe 1,100-square-foot) cottage – “a shack,” in Mr. Kansun's words. Today's buyer, however, wants that chalet or retirement home to have all the fancy bells and whistles enjoyed or dreamt of in a year-round city home.
“They are willing to come down in overall size, but want to go top-drawer in finishes,” he says. “That means things like eight-inch plank flooring, marble countertops and big stone fireplaces.”
The downside, of course, is that limited supply and anticipated high demand means prices are bound to rise. “Last year, the average selling price for resale homes went up by 2.4 per cent,” says Mr. Paara. “But I think this year we can look for something well above that.”
The Globe and Mail January 28th, 2010