The Hintze Team Blog

Generation X purchasers are poised to replace aging baby boomers as the major force in recreational property markets across the country, says a new report by Re/Max.

The report found demand from Gen X (those born between 1965 and 1980) has nearly doubled over one year ago. Seventy-four per cent of markets surveyed this year reported a marked trend toward 30-something buyers snapping up affordably priced product, ranging from waterfront cottages to resort condominiums, compared to just 40 per cent in 2008.

“Much of the activity in the marketplace today has to do with the mindset of this particular generation,” says Elton Ash, regional executive vice-president, Re/Max of Western Canada.

“More important than the investment aspect is the commitment to lifestyle. The purchase of a waterfront home or a condominium is more than a simple transaction to Gen X purchasers – owning a recreational property underscores their dedication to family and balance.”

The financial strength of the cohort dovetails well with current market realities, says Re/Max. Sixty-six per cent of recreational property markets surveyed reported a decline in recreational product sold in the first four months of 2009, while 22 per cent indicated sales were either up or on par compared to one year ago. While the combination of inclement weather and a global recession clearly hampered sales activity earlier in the year, many major centres are currently experiencing an upswing in activity as the traditional cottage season gets underway, the company says.

“After being priced out of most markets for the better half of the last decade, Gen X purchasers now have the financial wherewithal to buy recreational product at virtually every price point,” says Michael Polzler, executive vice-president, regional director, Re/Max Ontario-Atlantic Canada. “Gen X is ideally positioned to pick up any slack in recreational property markets caused by softer demand from baby boomers and retirees. They represent the next wave of recreational property owners in Canada and they know it.”

Re/Max says the time to buy has never been better. With four exceptions, recreational property prices have softened in most major markets across the country. Only on the Newfoundland Coast and in Ontario, from Innisfil to Oro, Kingston, and Beaverton, have values increased this year compared to 2008. Starting prices remain similar to one year ago and in some cases are even higher.

“While buyer’s market conditions exist virtually across the board, sellers of recreational properties from coast-to-coast are clearly content to wait out the storm,” says Polzler. “They are in no hurry to unload their product. Many have held on to their properties for generations – they’re fully owned yet underutilized, which has prompted some aging owners to list them for sale.”

The report also found that while lowball offers are on the rise, very few meet with success. Through tough negotiations with multiple sign backs, purchasers who are serious tend to find out the hard way that sellers are serious too. As a result, the sales-to-list ratio remains relatively high in most recreational property markets across the country.

“The prospect of greater stability down the road is creating cautious optimism in the marketplace,” says Ash. “Purchasers are seeking to buy quality product, whether it be situated on lakes, rivers, or ponds, before values start to once-again edge up.”

The report says supply is adequate in most markets, but heated activity in the lower end has resulted in tight inventory levels for entry-level product in 18 per cent of markets including: Bancroft, Combermere, Honey Harbour/Port Severn, West Kawarthas, Orillia, Flesherton, North Saskatchewan and Salt Spring Island.

Older cottage owners, many who own their properties outright, are selling to younger purchasers with families, the report says.


Some American cottage owners in Canada are taking advantage of the stronger dollar to cash out of the market. American purchasers have largely fallen off the radar, with some exceptions: Lake Winnipeg, Shediac Bay, and Sault Ste. Marie.

Pent-up demand is a factor in the marketplace, as those purchasers who had intended on buying recreational properties in the latter half of 2008 deferred their purchases to 2009.

The report says older Canadians continue to seek secondary homes in warmer parts of the U.S. such as Florida, Arizona, California and Nevada.

It says the upper end has somewhat softened in markets across the country.
Source: www.remonline.com

I am tired of gloom and doom stories about the North American real estate market. Not long ago people would call me and ask how high the market would go. I would then read their absurd prognostications, some going as high as a 30 per cent increase by next year. Now I am amused to see that these same pundits are falling all over themselves shoveling more gloom on mountains of doom.
It is time we started thinking in terms of a glass half full instead of a glass being half empty. It’s time to think and talk happy real estate news. A little light dispels a lot of darkness.
There’s no denying the mortgage meltdown and its effects in the United States. November 2008 in Phoenix saw 53 per cent of all homes sold were “distressed”. Las Vegas is even higher. Loan mitigation officers are overwhelmed. Short sales are becoming so common that lending institutions now treat them as routinely as a dollar bill.
But in real estate it’s important to remember there isn’t one market out there, there are hundreds of thousands. The factors driving these markets vary from city to city, neighbourhood to neighbourhood, even from street to street. Not all segments of the markets are down. Some are actually up. You can see happy activity in many vibrant markets throughout Canada and the U.S.

I believe every real estate professional should have an arsenal of good news when seeing clients. Consumers can read about bad real estate news in virtually every newspaper.

If you are having trouble finding happy real estate news, here are six examples you can use to find your own good news:

Break home sales into categories. Starter homes, move-up homes and luxury homes. You will notice that these don’t move in tandem, following the dictum of supply and demand. You will find many cases of one segment selling faster with minimal price changes.

Do area segregation. Toronto, Vancouver, Calgary, Edmonton, or Halifax are not one real estate market. What they have in common is an MLS. For practical reasons, it behooves an MLS to encompass as much territory as possible, and have as many members as they can. Go back to the smaller area components of your MLS and you can find areas that buck the trend.

Forward Sorting Areas (FSAs) – Canadians are fortunate to have a postal code system that you can use to segregate your working area into almost homogeneous factors. The logic is that you don’t normally find million-dollar homes next to townhouses. FSA provides a unique way to distinguish one real estate market from another. Here is an example: The Toronto MLS has 208 FSA with more than 10 homes sold in the last 12 months.

Filter your MLS fields. Your MLS provides many fields that allow you to break down happy real estate news possibilities by district, city, county, type, area description style, sub-area, subtype, year built, community, community description and much more.

Type or style of homes -- In Toronto you can find 20 different styles of homes, ranging from an average price of $182,000 to $683,000. You will also find 26 types of homes from low-end mobile/trailers to costly fourplexes. Each one of these styles and types are unique and behave differently. Suggesting that the “market is down” without paying attention to the merchandise that is not moving is comparable to saying that all airline fares have dropped. (Tried getting a cheap flight on shorter notice lately?)

Per cent of total – Detached homes are a mainstay in many markets. Yet as the number of home sales decline, the proportion of these homes sold is not necessarily even. It does not take long for the prices to reflect this fact, and make your list of happy real estate news.
I feel there is a real need for real estate professionals to take a more buoyant view of the market. Find some good news to tell your clients by becoming knowledgeable. I thought I would do my part by creating www.HappyREnews.com, dedicated to a biased – happy real estate news – point of view.

This website is a reality check, based on actual facts on the ground. I created this free site last June and update it monthly. It struck a chord, as wire services and newspaper picked up the site, and I am still giving interviews espousing happy real estate news. Many of the journalists are downright hostile to me for daring to suggest happy news exists, instead of joining the doomsday crowd. It seems that the media is fixated on gloom and doom.

The mix and match reporting lumping average and median sales prices into one real estate pot and then stirring it some more with bad news to produce worse news, will be the subject of my next article.

To keep your real estate business successful and to educate your clients about the market in your area it is nice to have some good news in your briefcase. It sets you apart from others.

Source: By Leon d’Ancona
www.remonline.com