Recreational real estate values have risen dramatically in some parts of Canada in the past few years, fuelled at least in part by lower interest rates and an aging Baby Boom generation.

A Re/Max Canada survey done earlier this year of 40 major Canadian markets says 27 of those areas - or 67 per cent - are experiencing "unprecedented demand."

And the pace is extremely strong in Ontario, where average cottage prices have more than doubled in some areas since 2000.

"Never before have those aged 50-plus been such a strong segment of the recreational property market," the Re/Max report said. Industry observers quickly point out that with the first wave of Baby Boomers scheduled to turn 60 this year, this is more than a passing fad.

Photo courtesy of Re/Max Muskoka Realty Corp.
The traditionally expensive Muskoka area has seen prices soar, including this $7.8-million property on Lake Joseph.

"We're definitely seeing an aging population with the Baby Boomers; they are looking for a nice place to retire. When you put that together with the low interest rates we've had since about 2001, it does point to strong market potential," says Jason Mercer, an analyst with the Canada Mortgage and Housing Corp. in Toronto.

Skyrocketing cottage prices in some parts of the province are not surprising.

For example, in the traditionally expensive Muskoka area, prices for a three-bedroom winterized recreational property on a standard-sized waterfront lot in 2000 were about $200,000 to $250,000. Today, that same property goes for about $500,000 to $550,000.

"This is a very strong market lately," says Steve Curry of Re/Max Muskoka Realty in Port Carling. "We've had a little more inventory the past few years, but things are still remaining steady. Anyone who has been here knows this is the perfect location for summer."

Curry says prices are starting to level off, but are still highest for waterfront properties on what's known as the "big three:" Lake Muskoka, Lake Rosseau and Lake Joseph.

He has one property listed for $1.7 million.

"People shouldn't let the high prices scare them off, though," Curry says. "There is still great value for the dollar in a lot of places.”

A smaller cottage property on an island in one of the less-known parts of Muskoka such as Bass Lake or Brandy Lake, for example, could be purchased for about $300,000, he adds.

Another Ontario hotspot for real estate is Collingwood, especially near the Blue Mountain Resort.

The Re/Max report says a typical three-bedroom winterized recreational property was selling for $140,000 to $160,000 in 2000. Earlier this year, similar properties were being shown to buyers at around $375,000.

Vel Ivardi

Other real estate brokers in the area agree with those prices. "That would be fairly accurate," says Vel Ivardi, broker/owner of Royal LePage All Real Estate Services in Collingwood. "This is where the real value is. These are properties that you would pay upwards of around a million dollars for in Muskoka. Another big advantage with us is that you are under the two-hour mark (driving distance from Toronto)."

Ivardi says an overwhelming amount of construction, especially near Blue Mountain, is for custom-built homes, while time-share projects are being abandoned for lack of interest.

"There is no active market at all for time shares," he says. "We have had builders try to sell them in the past and they gave up after a while. Two weeks or so per year doesn't work for retirees."

"Kingston is like a unique treasure most people haven't found yet," says Bob McKean of Re/Max Realty Concepts in Kingston. "It's not as busy as a lot of your other areas in the province, which provides the perfect environment to relax in."

Two-season or four-season cottages and vacant lots are the most popular, McKean says.

But he has mixed feelings when it comes to recommending vacant lots to clients. "You have to remember there are almost two sets of rules with what you can and cannot do."

Myriad provincial and municipal bylaws on new construction often restrict what property owners can do with mature trees or buildings near the waterfront, McKean says.

He adds that he has seen two property owners - one wanting to renovate an existing cottage and the other next door erecting an entirely new structure - get frustrated with the red tape.

McKean recommends buyers check with municipalities on what is allowed before they sign their purchase agreement. "Big dreams could unfortunately turn into wishful thinking," he says.

Peterborough and the Kawartha Lakes area also posted strong gains in the Re/Max market survey. During summer weekends, area residents have grown accustomed to a long line of cars and boat trailers coming from Toronto and headed north along Highway 115.

"We're keeping a close eye on our family investment," says Jennifer Atkinson of Toronto, who was stopped recently at a Country Style doughnut store along the highway. "You could spend the weekend studying your stock portfolio or you could enjoy life at your cottage. Which sounds better to you?" Atkinson says she wasn't sure how much her family originally paid for their Rice Lake cottage when they bought it several generations ago or what it was valued at now.

But the Re/Max report shows a three-bedroom winterized cottage on the western part of the Kawartha Lakes would have sold for $140,000 to $160,000 in 2000. This year, a similar cottage property would sell for $300,000 to $325,000.

By comparison, a similar property in Moncton, N.B., would have increased to $125,000 from between $75,000 to $100,000 in the same period.

"I think I'm going to enjoy our cottage even more now this weekend," Atkinson said, after hearing the numbers.

(David Hatton can be reached at hatton@businessedge.ca)