Summer’s here at last. Long sunny days, barbeques with friends and family, vacations at the cottage: let the good times roll. But with the skyrocketing price of real estate, owning a primary residence is challenging enough for many, which means owning a detached vacation cabin is sheer fantasy for most.
So will the recreational condo replace the traditional family cabin? Most real estate insiders say that it won’t, but that it may evolve as a new hybrid that’s part vacation getaway, part revenue property, and partly a way to transition into retirement.
A condo’s biggest advantage is, hardly surprisingly, affordability. No matter what the location, condominiums cost less than a detached property with similar square-footage and finishings… period. It’s also as close to maintenance free as you’re likely to find – strata fees pay for most things outside our own suite. As a bonus, you might get some fancy amenities: pool, gym, outdoor lounges, even secure private gardens located on the podium level or rooftop of a larger building.
On the “cons” side, you’re going to be close to your neighbours – just like you are at home if you live in an urban centre. With 94 per cent of respondents in Re/Max’s 2016 Recreational Property Report stating that a quiet, tranquil atmosphere is key to their purchase decision, this proximity translates into a major deterrent. Even at a vacation destination as popular as Cultus Lake, at least two attempts to build luxury vacation condos during the past five years failed to gain traction – in sharp contrast to cottage-style offerings that sold, if not with lightening speed, at least at a steady pace.
Then there’s the tricky questions of condo zoning and bylaws. “The average person who wants to purchase a vacation home is almost certainly going to rent it out at least part of the time, because it’s the only way they can afford one,” says Anthony Bastiaanssen from Re/Max Kelowna. Tapping into the burgeoning power of online booking services like AirBnB has made this far easier than it used to be, however most strata bylaws and many municipal zoning regulations prohibit short term rentals — some prohibit rentals of any kind.
The Whistler Exception
One notable exception is Whistler. In this year-round, outdoor lover’s paradise, a majority of homes must be rented – although specifics of those regulations vary dramatically. “If your home has Phase One zoning, you live there full-time or rent it out for whatever time period you want – daily, weekly or longer,” says James Askew, president of rareEarth Project Marketing. “The only thing you can’t do is leave it empty.” Phase Two zoning, also known somewhat infamously as condo hotels, is even more restrictive. “You can only use your property for 28 days in summer and winter, and the rest of the time it must be rented out through the hotel’s management program.”
For some, though, benefits outweigh the restrictions. Thirty-year real estate veteran John Ryan of Whistler Real Estate Co. says 2016’s first quarter was the strongest he’s seen since 2003. Driven by low interest rates and a strong US dollar, he notes the average condo transaction was $314,300 – a price that’s frequently well below replacement costs and definitely below the original prices when first built.
In Sun Peaks, Whistler’s younger sister, prices are well below the levels achieved in 2007, according to Liz Forster, agent with Sotheby’s International Canada. “Buyers are still cautious, though, and probably 75 per cent of condo homes are rented out when the owner isn’t using them.”
Okanagan Options
Farther south in the Okanagan, Bastiaanssen notes there are also still affordable condo properties to be found in most areas outside Kelowna, but there’s definitely increasing upward pressure on the bottom line – meaning buyers need to grab a deal when they see it.
He also sees a growing trend among mature but still-working buyers. “These people are looking ahead to when they move to the Okanagan full time. They want to park their money – and perhaps earn some rental revenue when they aren’t using it themselves – for when they retire. That way, even if they don’t end up retiring to the vacation property they buy today, they’ll still be buying and selling in a relative market.”
Jamie Maw, a real estate agent who splits his time between Kelowna and Vancouver, sees some purchasers employing an innovative strategy to make a vacation condo work. “Kelowna is a big university town now, so if you rent to students from September to May, you can still use your condo during the prime summer months. And if you decide to rent in the summer as well, you’ll get an even higher rate because it’s high season.”
Island Life
In the quest for a vacation condo, Vancouver Island has become something of an oddity. True, Victoria’s condo market is booming as Metro Vancouverites cash out the equity in their home and escape to a more affordable (at least for now) setting. But like the rest of the Island, the point is these people are moving… packing up lock, stock and barrel and making a new life in a new full-time home, not using it as a weekend getaway.
Nanaimo, according to Janice Stromar, president elect of the Vancouver Island Real Estate Board, has some attractive condo pricing – for $200,000 to $250,000 it’s relatively easy to get an older, two-bedroom facing the water – but virtually zero tolerance for short-term rentals. She also acknowledges many snowbirds will simply lock up their summer home and leave it empty when they head south for the winter. Whether this will be a precursor to the same evening dead-zone experienced in Coal Harbour remains to be seen.
Looking ahead, despite the challenges, those who flex their vacation-home-buying muscles in the condo market will most likely do no worse than make an investment that appreciates over time, brings pleasure now, and could become a new lifestyle in retirement. Not such a bad thing, all round.
