A cottage that sold for C$7.4 million ($6.9 million) in Ontario’s Muskoka region highlights the increasing trend of younger, wealthier buyers investing in vacation spots as they profit from housing booms in major cities.
The 7,000 square foot (650 square meter) cottage overlooking Lake Rousseau with a three-boat garage and nanny suite, was the most expensive recreational home sold in the province in six years, according to Re/Max Holdings Inc. (RMAX), the Denver, Colorado-based franchiser of real estate brokerages.
The cottage is in Port Carling, a three-hour drive from Toronto’s Bay Street financial core. Families and investors have more cash to buy a second home as a booming real estate market increases the value of their residences, according to a report Re/Max released today.
“The equity gains in urban center homes have led to increased demand in recreational properties,” Gurinder Sandhu, executive vice president of Ontario and Atlantic Canada for the firm, said by phone from Toronto yesterday. “They’re leveraging that to purchase cottages. As a result, you’re seeing an increase in the number of cottages changing hands and a steady price increase.”
The average buyer in Port Carling, a strip of land bordered by three lakes, is 35 to 45 years old, younger than previous years, according to the report. The region had 32 sales of properties over C$1 million so far this year, 11 of which were priced above C$3 million, according to Re/Max. Prices start at about C$400,000 for a cottage in the area.
The Rousseau cottage was the most expensive since the C$7.5 million sale of an island home on Lake Joseph in February 2008, according to Re/Max.
“Whether they work on Bay Street or Main Street, we’re seeing healthy demand across the board,” Sandhu said.
Average home prices in Toronto, the country’s financial capital, rose 8 percent in May over the same month last year to reach C$557,547. Between 2003 and 2013, home prices jumped 78 percent in the city.
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