Co-ownership, rent-to-own, tenant units; dizzying real estate prices and gouging interest rates are forcing Canadians to get creative when it comes to buying homes.
A new survey released by RE/MAX revealed that nearly half of the respondents (48 per cent) would consider non-traditional methods when purchasing a house. Rent-to-own was cited as the most popular method at 22 per cent. This is where homeowners strike an agreement with landlords, developers, or previous owners. They pay rent to live in the home, with a portion of the rent going towards a down payment.
Co-ownership with a friend or family member was the next most popular method at 21 per cent, followed by renting out a portion of the home to a tenant at 17 per cent.
How will this impact cottage purchases? Christopher Alexander, president of RE/MAX Canada, says alternative buying methods have always been present in cottage country—particularly co-ownership. And he doesn’t anticipate this going away any time soon. “A lot of times, whether people want to or not, they end up in some form of partnership on cottages. Sometimes it has to do with inheriting a place or your parents want to sell the cottage to the kids,” he says. “It’s very prevalent in recreational properties, and I don’t think we’ll see that changing.”
The same goes for those who rent out their cottages to help with mortgage payments. “A lot of cottagers are weekend warriors and/or they go up for a couple of weeks at a time,” Alexander says. “The rest of the time you rent it out because it’s just sitting dormant. Unless you’ve got enough money to make it all work, renting it out is really attractive for most cottage owners.”
Short-term rentals, in particular, became all the rage in cottage country during the pandemic. With international travel restricted, people were looking for getaways closer to home. But the uptick in short-term rentals also caused issues with partying and noise. To get behaviour under control, many cottage country municipalities started implementing licences or other bylaws to curb the operation of short-term rentals. How this will impact the availability and prevalence of short-term rentals in cottage country remains to be seen.
So what’s in store for the cottage country real estate market in the coming months, then? Over the last year and a half the market has slowed, causing cottage prices to plateau but not necessarily drop completely. Are buyers still interested in cottage properties? Will sellers drop their prices? Alexander says cottage buyers are gaining back confidence, but inventory remains tight and sellers are still hoping for the highs of 2021 prices.
“It’s going to be a really interesting spring,” he says. “It’s been a way warmer year than typical. I think you’re going to be able to access waterfront properties in a couple of weeks because the ice will be out. We’ll have a really strong indication of what inventory looks like then.”
If you are looking to buy, Alexander says doing your due diligence on a cottage purchase is essential—no matter what buying method you’re using. “You really have to do your research, work with a professional realtor that has experience in the recreational market, and understand what the workload is going to be at the property.”
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