Is it the right time for you to be investing in recreational real estate? With Edmonton’s current real estate economy, it’s a good time to buy—but how do you know when you are making the best investment decision?
Karen Stanko, Realtor® at Realty Executives, explains that single-family homes are still the properties of choice for recreational investors.
“Single-family homes and lakefront properties are typically the top choice for those who can afford it,” says Stanko, “although the number of condos being built in the Edmonton area right now could affect trends. More seniors could decide to move out of big homes and downsize into recreational condos, or just live in condos part of the year with a wintertime recreational property on the side.”
Stanko also points out that the large number of baby boomers could cause us to see more of that trend.
However, the benefits of a single-family home still typically outweigh the draws of the condo. “The resale on recreational single-family homes is higher than condos, and they give more independence. They also become legacy properties, vacation homes where all the memories are made and that can be kept in the family as inheritances,” Stanko points out.
Stanko also notes, it isn’t unheard of for people to downsize into recreational properties year-round. “Recreational properties are the first ones to be sold when the economy shifts, so now is a good time to pick one up because the prices are low. When economies change, people unload what is costing them the most, and boats, RVs, and recreational properties top that list. You can get a smoking deal, right now, and lakefront properties tend to keep value.”
That means you can get what you want if you are looking to buy, but making the right choice is more about your lifestyle than it is about market trends, Stanko cautions.
“It depends on what you want in a recreational property. If you don’t mind driving and value skiing, somewhere like Revelstoke is good call—or Kelowna if you prefer wine tours. A lot of working professionals choose Wabamun, since it’s only a 45-minute drive from Edmonton.”
Stanko also warns that recreational properties aren’t for the faint of heart—or wallet. “Some people buy recreational properties forgetting that it means home upkeep times two: you need to maintain both roofs, furnaces, lawns, and deal with snow removal and freezing pipes. That’s where the appeal of condos in places like Canmore come in, but there are still high costs associated with condo fees.”
Mark Barron Wilbert, Partner/Realtor® at Coldwell Banker Venture Realty, points out that those condo fees are a deterrent.
“Currently, there are almost two times as many single-family homes for sale, compared to condos,” Wilbert notes, adding that, “in the current market, it is more difficult to sell a condo due to factors that include condo fees, risk of assessments (levies), and stricter financing.” Further, while “there are several downtown condo projects underway, some have turned into strictly rental complex properties (The Hendrix, The Mayfair, and The McLaren). This increasing supply has made it more difficult for those buyers that hope to rent out the condo they purchased downtown.”
You also lose yard and garden space, which is a deterrent for families with children, Wilbert observes, but while you don’t have to pay condo fees in a single-family home, you are responsible for the maintenance of everything, inside and out.
However, that doesn’t mean you should discount condominiums if that is what suits your lifestyle best—especially since, as Wilbert points out, ICE District could be making the shift to recreational condos even more enticing.
“ICE District has revitalized Edmonton’s downtown, and many new buyers want to be in the heart of downtown. The premium you might pay in a new condo might be saved by no longer needing a vehicle and paying for parking and gas. Also, you do not have to worry about maintenance, snow shovelling, lawn care, etc. And if you are going on vacation, you just lock up and go. Often utilities (other than electricity) are included in the condo fees, and you might have amenities like a gym or pool, which could save you from buying that membership at the gym.”
When it comes to making the best decision, “Asking yourself the right questions is key, as is reaching out to an industry professional that can help walk you through the different aspects and potential consequences,” says Wilbert. “At the end of the day, it comes down to what stage you are in life and your personal preferences.”
Adel Hanafi, Real estate broker, RE/MAX Excellence, commercial division, agrees that while recreational condos do show potential, “in the Edmonton marketplace, single-family homes seem to be a more popular option.”
“It’s no secret that our residential real estate economy has been depressed in recent times,” Hanafi notes. “Albeit, we are seeing some signs of it picking up. That being said, with developers like Carlisle Group, Carrington, and others having built so many residential condos, an oversupply of condos in the market has put downward pressure on pricing. There have been more single-family homes for sale in the market, which has also led to downward pressure on pricing. However, many analysts are starting to see this stabilize a bit more because, overall, there is more demand for single-family homes.”
Despite the conveniences of condo life, “Single-family homes give you autonomy over your piece of land and what sort of repairs and maintenance you do on your actual home. They are typically more spacious as well, with no involvement from a condominium board. You own the land outright without having to share with other unit owners. Factoring all of this in, looking at the price differential, it makes sense to own the single-family home, excluding the anomalies of very specific scarce locations (such as the downtown core).”
“That said, there are many factors involved in determining what is best for you and your family,” Hanafi notes, listing “lifestyle, budget, amenities, and community values. Doing a proper needs analysis to determine your household requirements will help refine your household vision. One of the biggest factors on if the home is right for you is location – does it suits your needs? Then consider if it is affordable.”
“The most significant portion is the resale value,” Hanafi concludes. “If you need to sell it afterwards, would you be able to? What is the liquidity of said property?”
Keeping all of these factors in mind should prevent you from making the wrong investment decision when it comes to your recreational real estate purchase.