Realtors across Canada are at odds over the impact of the Canada Housing and Mortgage Corporation’s decision last month to eliminate insurance on second mortgages.
In Whistler, where the low end of property prices is still exceedingly high, Realtor Ann Chiasson believes the CMHC news will not likely affect the recreational property market.
“Most buyers of second homes in Whistler don’t require mortgage insurance,” she tells REP
in an email, “so I don’t expect a big impact on property sales.”
However, in Ontario and particularly the Muskoka region where property prices start at comparatively more modest values, Realtor John Jarvis says the CMHC impact will eventually become evident.
“It will just take time, maybe six months,” he tells REP
. “The impact will be negative – it will be one of the factors contributing to lower volume of sales.”
In a report released by Re/Max, the realty giant said it expects “little to no material impact” from the CMHC decision. Instead, the brokerage said there are many options for securing financing and insurance for a second property.
The report, which examined the year-over-year changes in the national recreational market, found that most buyers fall into one of two categories: families with young children who have benefitted from increasing property values and are using the equity gains in their primary residences to purchase vacation properties; and near or recent retirees who plan to use the vacation property as a primary residence in the years to come.
Some of the country’s hottest recreational markets experienced significant gains. In Whistler, sales are improving after a slump following the 2010 Olympic Games, and increased 35.3 per cent over the year-ago period to 23 units in the month of May. Condos are the property type of choice, especially for those who want to be close to the mountain.
The lower Canadian dollar is set to attract American buyers to the Whistler market, while the province continues to attract buyers from Singapore and Hong Kong. Still, most buyers continue to come from the lower Mainland and the rest of B.C.
“While [the low Canadian dollar] has yet to drive a significant number of American buyers north of the border, we are seeing more Canadian buyers choose to purchase properties here in Canada, rather than other areas in the U.S. such as Arizona or Florida. We do also see Asian buyers, particularly from Singapore and Hong Kong, and that may increase,” Chiasson says. “If the lower Canadian dollar persists for an extended period I expect it will also bring more American investment back to Whistler.”
In Ontario, properties in Collingwood – which is close to Blue Mountain and Georgian Bay – have increased in median price, averaging $540,000. Nearby Wasaga Beach, meanwhile, has experienced a 3.1 per cent increase in price over 2013, to $281,000.
Low interest rates are expected to continue to drive sales, particularly in the Bracebridge and Gravenhurst regions of the Muskokas, where entry-level properties average $300,000.
Jarvis agreed that low interest rates are certainly boosting the market, but added that the cultural improvements that are occurring in the small towns is also driving the demand for recreational properties.
“I think in those communities, there’s a real rise and a betterment in regards to new restaurant, local theatre, universities and colleges, medical services,” Jarvis says. “All of those services are getting better and better as time goes by, and I think that will have a positive impact in the year-round recreational market.”
On the East Coast, however, an entry level property in the South Shore neighbourhood of Nova Scotia starts around $100,000.