Tag: cottages

Legal issues to consider when buying a cottage

Originally published in REMonline.ca
Jul 16, 2019
By Natalka Falcomer

Maybe it’s the new flight service by Porter Airlines to Muskoka or maybe it’s the smog that’s prompting Torontonians to move from the hustle and bustle of the city to set up a life in cottage country. Or maybe (and more likely) it’s the cost of a home in the city.

Some Torontonians are opting out of the market to find greener (literally) pastures in the rural parts of Ontario. The math makes sense even if you decide to buy in rural Ontario and rent in Toronto. How? Homes, and therefore mortgages, outside of our urban centres are significantly cheaper than the urban core. As an article reported in Toronto Life, if you Airbnb your cottage when you’re caught in the city, you will more than cover your mortgage and your Toronto rent.

There are, however, some caveats and critical legal and practical issues that may affect your decision.

Short-term rentals:
If you plan to put your cottage on Airbnb, be aware of noise regulations and open fire rules and your neighbours, who may not be pleased with short-term renters partying throughout the summer months. Especially if they’re out there to relax. Zoning restrictions, and not just noise by-laws, may also be in store for parts of cottage country. And don’t forget that your insurance will be sky high because you’re not living in the cottage and because you’re renting it out.

Financing:
Some other things to consider: many banks will only permit financing if the cottage has a furnace, a heated water line from the lake during winter months and a foundation in the ground and not on cinder blocks. Also, as further described below, ensure that the roads are maintained all year and that the property has a proper septic system and clean drinking water. If not, your lender may back out at the last minute. One wonders also wonders about the impact of insurance on homes near the water due to the flooding in Muskoka … stay tuned!

Easements:
Easements and rights of way are deceptively complex legal concepts and often the cause of litigation between neighbours. The point of most easements or rights of way is to ensure that adjacent properties are accessible or that views are protected. Sometimes these easements are noted on title, while in other cases they’re granted by legislation or arise out of implication. Often when there’s nothing in writing or on title, neighbours will litigate over whether or not such access rights exist. As such, if you intend on buying a cottage that needs access to its neighbouring property or if you want to protect a view, don’t assume these rights are protected. Confirm if these rights are registered on title. If not, you may be exposing yourself to unhappy neighbours or a lawsuit.

Unregistered hydro easements:
Unregistered hydro easements can be highly problematic because they permit the hydro authorities to cut through your land and prohibit you from building on the hydro easement. Case law and Hydro One’s policy requires homeowners to be financially responsible for the maintenance of wires and poles found on or near their property. To complicate matters further, such hydro easements are not found on title! You must contact the appropriate hydro authority to determine such easements.

Waterfront improvements:
Never operate under the assumption that the existing cottage or dock on a property is in line with bylaw mandates. Take, for example, a dock. The provincial Public Lands Act and federal Fisheries Act will apply if the construction of a dock impacts both the shoreline waters and fish habitat. This means that the construction of a dock may require not only municipal approval, but also federal and provincial approvals and permits. Ensure that these permits are in place before you purchase any oasis.

Property insurance:
Proximity to a fire hall can impact the rate charged for fire insurance. Typically, insurance companies focus on whether the structure is within five miles of a responding fire hall. In certain locales, insurers may not provide coverage, given lack of adequate fire protection. Get this information before an offer goes in.

Seasonal zoning:
While you may want to escape to your cottage year-round, it doesn’t mean that this is an option. Some rural residential properties are zoned “seasonal”, which means roadways are not maintained during the winter. Apart from no access during certain seasons, you may also be on the hook to provide and pay for maintenance. Seasonal zoning means that the municipality may not provide emergency services in the wintertime, which is cause for concern if you have elderly visitors or grandchildren.

Water supply:
If the water supply for the cottage is municipally provided, you’re in luck. Unlike most cottages that are supplied by well water, you don’t have to be concerned with potability. This is because there is no reliable potability certificate for well water, or water drawn from lakes or a cistern.

Wells supplying multiple properties may be subject to the Ontario Clean Water Act, and easements for pipes from neighbouring wells (if registered) may violate the Ontario Planning Act. As always, request applicable certificates and obtain warranties from the seller that the water supply is in accordance with all federal, provincial and local regulations.

Septic:
Septic systems require approval by the municipality or the Ministry of Natural Resources. Ask the sellers for such documentation. If you plan to make any additions to the cottage that affect the septic system, you are likely required to get additional approval to satisfy regulatory requirements. If you plan to rebuild and expand the cottage you plan to buy, ensure that such growth is permissible.

 

Natalka Falcomer
Natalka Falcomer is a lawyer and Certified Leasing Officer who has a passion to make the law accessible and affordable. She founded, hosts and coproduced a popular legal call-in show on Rogers TV, Toronto Speaks Legal Advice. She founded Groundworks, a firm specializing in commercial real estate law, and is the EVP of corporate development at Chestnut Park.

Real Estate Market Update | Muskoka January- December 2018

Cottages in Muskoka

JANUARY 26, 2019

It became obvious as 2018 wound down that the recreational market place was not immune to what was happening on the broader economic front. Throughout 2018 borrowers in the Toronto and area market place were reluctantly pulling in their horns, forced to do so by rising interest rates and borrowing costs, mortgage stress testing, and a 15 percent foreign buyers tax. By the end of the year Toronto and area sales had (on a year-over-year basis) declined by approximately 15 percent and average sale prices were off by more than 4 percent. It is anticipated that 2019 will be a year of sluggish sales and some moderation in average sale prices, particularly for higher priced homes. The same market scenario will likely play out in recreational property markets as well.

 

Interestingly, sales volumes will to some extent be impacted by declining inventory levels. For example, in 2018, 1110 waterfront properties came to market in the combined Townships of Muskoka Lakes, Bracebridge, Gravenhurst, Lake of Bays and Huntsville, almost a 10 percent decline from the 1224 properties that became available in these regions in 2017. It is even more concerning when 2018 inventory levels are compared to 2016 and 2015. During these years 1419 and 1594 recreational properties respectively came to market. Between 2015 and 2018 inventory levels have decreased by more than 30 percent.

 

On Muskoka’s big Lakes (Lakes Joseph, Rosseau and Muskoka) the same pattern has emerged. In 2015 there were 515 properties listed for sale on the big Lakes. This year that number tumbled to 332, a decline of over 35 percent. The same is true for Lake of Bays and the big Huntsville Lakes, although that decline has not been as dramatic.

 

It is not surprising that with declining inventories, sales have also declined. Combined in the Township of Muskoka Lakes, Bracebridge, Gravenhurst, Lake of Bays and Huntsville there were 684 recreational properties reported sold in 2017. In 2018 that number dropped to 565, a decline of more than 17 percent.

 

There was a similar decline in sales on Muskoka’s big Lakes. In 2017 there were 220 recreational properties reported sold, a number that declined to 165 in 2018. This represents a 25 percent drop in sales, which is consistent with the decline in inventory over the same period. On the basis of percentages, the decline in sales of properties having a sale price of $3,000,000 or more was greater than properties having sale prices lower than that.

 

It is interesting to note that not only were there fewer higher priced properties that sold in 2018, but it took longer for these properties to sell in 2018. In 2018 all properties in this category sold, on average, in 66 days. In 2017, which was a record year for the market, all recreation properties sold, on average, in only 59 days. Between 2014 and 2016, recreational properties in this price point sold, on average, in 73 days. Days on market in 2018, therefore, were consistent with historical norms. Although days on market increased between 2017 and 2018, there was no difference in the ratio between sale price and list price. In both 2017 and 2018 all properties sold on average at 78 percent of their original list price, and at 95 percent of their final list price.

 

 

The Muskoka and area recreational market place is varied and not homogeneous. As a result, it is difficult to determine what happened to average sale prices in 2018 with any accuracy, especially given the categories of properties that have sold and the numerous recreational locations. But evidence indicates that the average sale price for properties reported sold on Lakes Muskoka, Rosseau and Joseph declined by 6.5 percent, from $2,211,372 in 2017 to $2,069,142 in 2018. If we include sales of properties (over $500,000) in the Lake of Bays and Huntsville region, the decline in the average sale price is approximately 7.5 percent, from $1,994,810 in 2017 to $1,843,627. Interestingly, sales data of all recreational properties combined, which includes lower priced properties, indicates a substantial increase in the average sale price year-over-year. In 2017 the average sale price was $450,000. In 2018 the average sale price climbed to $650,000, an eye-opening increase of 38 percent.

 

What does all this market information tell us? It appears to be giving us the same signals that the market is projecting in the greater Toronto area. Lower priced properties are very much in demand and when available are selling briskly, putting upward pressure on prices in this segment. The urban equivalent would be condominium apartments. In the greater Toronto area, average sale prices for condominium apartments increased by 11 percent. They are in demand primarily because they are affordable, even with the market pressures of increased borrowing costs and mortgage stress testing.

 

Under the prevailing economic landscape, the upper end of the market in the greater Toronto area has seen a considerable pull back, both in terms of sales volumes and average prices. The most recent data indicates a considerable decline in the sale of properties having a sale price of $2 million or more. In 2017, 3,435 properties were reported sold in this category. In 2018 only 2077 properties sold at this price point, a decline of almost 40 percent. Average sale prices for this category of properties declined by 8%. Although property sales in recreational markets in this price point are discretional to a greater degree than urban markets, they will not be entirely immune to these market pressures.

 

Notwithstanding these turbulent conditions, Chestnut Park’s Port Carling office managed to beat market expectations by exceeding the next closest competitor brokerage office by more than 50 percent in dollar volume sales. Chestnut Park’s sales representatives were responsible for more than $250 Million in recreational property sales. Given the lack of inventory and the market pressures that have been discussed in this Report, this is a sterling performance.

 

As we go forward in 2019 the market challenges that have been discussed will continue to be at play. 2019 will be a transitional year when less foreign capital, increased borrowing costs and stricter financing qualifications will impact the decision making of buyers and sellers. Added to these factors is the lack of inventory and supply in all price points, but especially properties having a value of less than $1.5 Million. As the year unfolds pricing will be the key to sales in the new normal that buyers and sellers of recreational properties will be adjusting to.

 

Prepared by Chris Kapches, LLB, President and CEO, Broker — with tweaks by Jim Gardiner, Broker

 

 

Muskoka Haliburton Orillia – The Lakelands Association of REALTORS® May Report

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Sales of waterfront properties recorded through the MLS® system of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS® came in just two sales below last May’s record.

On a year-to-date basis, waterfront sales were up 2.9% from the first five months of 2016. This was the highest level on record for this period.

“At this point the local housing market appears to be on its way to another record year in 2017,” said Mike Stahls, President of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®. “That said, housing markets not too far south of Cottage Country cooled in May in the wake of recently announced changed to Ontario housing policy. That did not seem affect our area in May, but it will be worth keeping an eye out in the months ahead for any signs of those Greater Golden Horseshoe demand and supply trends creeping into the Muskoka, Haliburton and Orillia areas.”

The median price for waterfront sales was $522,500 in May 2017, rising 24.4% from May 2016.

The total value of waterfront sales was $164.2 million, up 1.2% from May 2016.

Summary – Sales by Housing Type
Category May 2017 May 2016 Year-over-year
percentage change
Waterfront 242 244 -0.8
Includes transactions in all areas recorded by Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®
Summary – Median Price by Housing Type
Category May 2017 May 2016 Year-over-year
percentage change
Waterfront $522,500 $420,000 24.4
Includes transactions in all areas recorded by Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®

 

Detailed – Waterfront Sales and Median Price by Area
Waterfront
By Area Unit Sales Median Sale Price
May 2017 May 2016 Year-over-year
percentage
change		 May 2017 May 2016 Year-over-year
percentage
change
Muskoka 165 156 5.8 $515,000 $429,500 19.9
Haliburton 57 55 3.6 $510,000 $399,000 27.8
Orillia 19 33 -42.4 $650,000 $410,000 58.5
All Other Areas 1 0 — $445,000 $0 —
Note: A percentage change of — indicates there were no sales in the same month one year ago.

BOARD & ASSOCIATION INFORMATION

The area served by the more than 700 REALTORS® who belong to Muskoka Haliburton Orillia – The Lakelands Association of REALTORS® serving Muskoka, Haliburton and Orillia, is located less than a two-hour drive north of Toronto, in the heart of Canada’s Cottage Country. There are several major geographical areas within the Association’s boundaries, including the City of Orillia, Gravenhurst, Bracebridge, Muskoka Lakes, Huntsville, Almaguin Highlands, Lake of Bays and Haliburton. Each of these areas has a unique blend of properties ranging from residential homes in the City of Orillia and smaller towns to the rural areas in-between, as well as a mix of waterfront homes/cottages on the many rivers and lakes throughout our regions that range from the smaller entry level properties to the prestigious.

Real Estate Market Report | Muskoka, January – March, 2017

Chestnut Park News

APRIL 18, 2017
Muskoka Real Estate Update

 

As 2016 came to an end, the concern in the Muskoka and area recreational market place could be summed up in one word: supply. The lack of supply has become dramatically obvious in the first three months of 2017. Generally supply is limited during the early months of any year. Weather conditions, inability to access properties, and the disinterest of buyers usually means that recreational properties are not brought to market until April or even later. This report acknowledges that market phenomenon, and is simply comparing what was happening in 2016 against the first three months of 2017.

 

The Muskoka-Haliburton Realtor Association reports that during the first three months of 2017 it processed 1815 listings of all types. This is a decline of 15 percent compared to 2131 listings that were submitted by local realtors during the same period in 2016. The decline in recreational inventory is even more startling. At the end of March the Association reported 439 active recreational property listings, a decline of more than 40 percent compared to the 751 recreational property listings on the market last year.

 

The situation is even more dramatic in 2 of the three market places in which Chestnut Park’s agents are active. On Muskoka’s big lakes (Rosseau, Joe, and Muskoka) there were only 103 active listings at the end of March, a decline of almost 50 percent compared to the 200 active listings available to buyers last year. The situation in the Haliburton Highlands is no different. Last year there were 193 active listings, this year only 103, a decline of 47 percent. Although listings are down in Lake of Bays the decline is not as extreme as in Muskoka’s big lakes and the Haliburton Highlands. This year there were 59 active listings, last year 83, comparatively a moderate decline of 30 percent.

 

At this stage of the year we have limited recreational property sales data. What we do have does not indicate that there is a corresponding decline in demand. The Association reports that 101 recreational properties have been reported sold year-to-date, an increase of 15 percent compared to the 88 reported sold last year. On the big lakes there has been a marginal increase in sales: 21 this year compared to 19 last year. Sales activity in the Haliburton Highlands is marginally down: 27 last year, 25 this year. Only Lake of Bays has shown an appreciable increase in sales, although the actual numbers are small: 12 reported sales this year compared to 9 last year, an increase of 30 percent.

 

During the first three months of 2017 Chestnut Park’s agents were responsible for 25 recreational property sales, representing $27,875,500 in dollar volume. This result is our highest number of reported sales during this period in the year, and by far the highest dollar volume ever achieved. These numbers also demonstrate that demand remains strong. The next best year for sales was in 2012 and for dollar volume it was last year.

What to expect:

Unless something dramatic happens we can anticipate a very tight recreational market as 2017 continues to unfold. As forecast in the year-end report, we will begin to see competition for well priced, desirable properties.

 

That competition will not amount to the frenzied activity that has become the norm in urban environments like Toronto, but multiple offers will not be uncommon. This is brought out by the fact that agents have already experienced the multiple offer phenomenon on new listings and when acting for buyers.

 

The unknown factor that may have an impact on the Muskoka real estate market place will be the provincial government’s reaction to the runaway prices for properties in Toronto and area. The prevailing belief is that foreign investors and speculation are fuelling price increases. Legislation by the provincial government in either or both of these areas could have a cooling effect on recreational markets, even if the effect is due to a wait-and-see stance by buyers. Unfortunately by the time the impact of the tax is absorbed by consumers, the major part of the recreational selling season will be at an end. It is anticipated that the province will move to deal with exorbitantly rising prices in Toronto and area by late April or May.

 

Prepared by:Chris Kapches, LLB, President and CEO, Broker

 

 

Muskoka Real Estate Update / Jan-Dec 2016

Cottage-winter-sunrise-Huntsville-Susan-Brown
JANUARY 19, 2017

2016 was a remarkable year for recreational property sales in Muskoka and nearby seasonal markets. It is difficult to pinpoint the reason for this increase in sales activity. 2016 was the second year in a row that saw sales grow fairly dramatically. Some of the factors at play are the following.

Firstly, the Muskoka and area market place is in close proximity to the greater Toronto area. Sales of residential resale properties in the greater Toronto area have, in the last two years, exploded. Sales have been strong in all price points, including the high-end properties (properties having a value exceeding $2 Million). Prices have correspondingly also increased, creating an urgency to get into the market. Real estate has come to be viewed as an asset that will ensure that buyers are not outdistanced by the ever-increasing value of resale properties. In the greater Toronto area residential property values increased by 20 percent in 2016 alone. In addition, there is a strong belief, supported anecdotally and statistically, that the market will remain strong, especially real estate values.

This prevailing attitude is no doubt behind the rising sales of recreational properties, not only in the Muskoka and related market places, but even further afield. Ironically, the increase in sales volume is having a dramatic impact on supply, consistent with the urban market experience. For example, at the end of December, the Toronto and area market place had 50 percent fewer listings than at December 2015. That is unprecedented. The recreational market place is beginning to mirror Toronto.

Supply will, although not to the same extent, become a concern in recreational markets. In 2016 the Association that manages listings for the Muskoka, Haliburton and Orillia market places published the following statistics. In 2015 the association processed 10,149 properties of all types on its multiple listing service. In 2016 that number decreased to only 8,976, a sharp decline of over 11 percent. At the end of December, there were 1466 active listings. At the end of December 2015 there were 2,290, a decline of almost 36 percent. The recreational property supply has also diminished in a startling way. At the end of December there were only 423 recreational properties available for sale. One might assume that since the recreational market is not active in the winter months that there is nothing exceptional about this number. However, when compared to 2015, it does give rise to some concern. Last year there were 656 properties available for sale. A decline of more than 35 percent is remarkable, even in the slowest season of the year for recreational property sales.

Except for Lake of Bays sales of recreational properties were strong in 2016. The Association reported that there were 1301 recreational properties sold in 2016. This compares with only 1098 in 2015, an increase of almost 20 percent. In 2014 there were only 890 reported sales.
The strongest recreational market place in 2016 was the Muskoka big lakes, Lake Rosseau, Joe and Muskoka. There were 350 reported sales on the big lakes, a 20 percent increase compared to the 291 sales in 2015, and a remarkable 32 percent increase compared to the 266 sales in 2014. What makes these sales eye- catching is the fact that the most expensive recreational properties in the region are located on the big lakes.

There was a considerable increase in activity in 2016 on Muskoka’s big lakes for properties having a value of $2 Million or more. In 2016 there were 21 sales in this category on the Lake Joe. The average sale price for these properties was $3,960,142. These 21 recreational properties sold in 95 days following their list date, and they sold for 95 percent of their original asking price. In 2015 there were only 14 sales in this category on Lake Joe. Although there were substantially fewer sales, the average sale price for the reported sales of these recreational properties was $4,512,564. They sold in just 58 days, but at 93 percent of their asking price.

On Lake Muskoka there were 20 reported sales in this category. The average sale price was $2,971,000. These recreational properties sold in 81 days following their list date, and they sold for 97 percent of their original asking price. In 2015 there were 18 sales on Lake Muskoka. The average sale price was $3,585,805.

They sold in 74 days at 94 percent of their original asking price.

In 2016 there were 24 sales of recreational properties that sold for $2 Million or more on Lake Rosseau. The average sale price of these properties was $3,533,250. They sold in 63 days and at 95 percent of their asking price. In 2015 there were only 10 sales in this category. Their average sale price was $3,093,863.

They sold in 140 days and at 94 percent of their asking price.

Clearly sales improved dramatically on the big lakes year over year in the $2 Million plus category. In 2016 there were a total of 65 sales. In 2015 there were only 42, an increase of 55 percent. The highest sale price was achieved on Lake Rosseau at $11,400,000. Unfortunately, it is difficult to determine an average increase in price year-over-year. Sales prices vary depending on location, elevation, exposure, water levels and more. Based on all the available data it is safe to say that prices increased between 5 to 10 percent in 2016 as compared to 2015.

Sales increased in the Haliburton region. There were 366 properties reported sold in all of 2016. This compares very favorably to the 319 sales in 2015, a 13 percent increase. The increase in sales is even more dramatic when compared to 2014. In 2014 there were only 246 sales of recreational properties in the region, an increase of almost 50 percent.

Lake of Bays appears to be out of sync with the overall market place. While the Muskoka Lakes and the Haliburton Highlands had double digit increases in sales year-over-year, the increase in sales in Lake of Bays was marginal. In 2016, 119 recreational properties were reported sold, a less impressive 5 percent increase. The reason why Lake of Bays did not produce as strong a positive variance that other regions did is due more to supply than demand.

Chestnut Park continues to be the market leader in Muskoka. Chestnut Park’s Port Carling office exceeded the dollar volume of sales of its closest competitor brokerage office by 78 percent. 2016 was Chestnut Park’s most successful year in serving its buyer and seller clients.

As 2017 begins we anticipate that the supply of recreational properties will become the market’s major concern. Urban markets, particularly the greater Toronto area, began experiencing shortages during the later half of 2015 and throughout 2016. As we enter the new year the lack of inventory has become critical. Although this is not yet the case in Muskoka and area, it appears to be heading in that direction. Unless a plethora of new listings come to market in the spring, we can anticipate substantial price increases, and multiple o ers on properties as a regular occurrence.

prepared by: Chris Kapches, LLB, President and CEO, Broker

(photo is provided by Susan Brown)

Waterfront sales “Best year-to-date”

Sales of waterfront properties recorded through the MLS® system of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®, declined by 14 per cent in October 2016, albeit from a record last October.

On a year-to-date basis waterfront sales were still up 11.8 per cent from the first nine months of 2015. This was the best first 10 months to any year on record.

 

“While waterfront property sales took a step down from last October they are still very strong, with much of that year-over-year decline simply reflecting the white hot pace of sales at this time last year when there were still many more properties for sale on the market,” said Mike Taylor, President of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®. “Having said all that, the bigger picture is that 2016 will, in all likelihood, be the best year ever for sales in the Lakelands region.”

The median price for residential non-waterfront property sales was $250,000 in October 2016, up 9.6 per cent from October 2015. On a year-to-date basis the median price was running at $255,000, up 8.5 per cent from the first 10 months of 2015.

The median price for waterfront sales in October 2016 showed an increase of 13 per cent from October 2015. On a year-to-date basis the median price for waterfront property sales was up 9.5 per cent from the first 10 months of 2015.

The total value of waterfront sales was $101 million, an increase of 16.8 per cent from October of last year. This was the highest level for October on record and marked the first time volumes had ever surpassed $100 million in this month.

Includes transactions in all areas recorded by Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®

musk_chart05_hi-res-1 musk_chart04_hi-res-1

Important information The area served by the more than 680 REALTORS® who belong to Muskoka Haliburton Orillia – The Lakelands Association of REALTORS® serving Muskoka, Haliburton and Orillia, is located less than a two-hour drive north of Toronto, in the heart of Canada’s Cottage Country. There are several major geographical areas within the Association’s boundaries, including the City of Orillia, Gravenhurst, Bracebridge, Muskoka Lakes, Huntsville, Almaguin Highlands, Lake of Bays and Haliburton. Each of these areas has a unique blend of properties ranging from residential homes in the City of Orillia and smaller towns to the rural areas in-between, as well as a mix of waterfront homes/cottages on the many rivers and lakes throughout our regions that range from the smaller entry level properties to the prestigious.