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The percentage of Canadian households that own vacation homes is on the rise.

In 1977, about six per cent of households owned recreational property. By 1999, growth had only gone up by about one percentage point, to seven per cent. But in recent years, vacation properties have become a much sought-after commodity. A recent survey by pollster Ipsos-Reid, on behalf of Royal LePage Real Estate Services, shows about eight per cent of Canadian households now own vacation properties. During the next three years, six per cent of those surveyed say they will purchase a recreational home or property. Only 17 per cent of existing owners say they plan to sell within the next three years.

"In 2003, there will be four Canadians seeking recreational properties to every one cottage owner who plans on selling, and this scarcity of supply continues to exert pressure on property prices across the country," says Sherry Chris, executive vice-president for Royal LePage. Chris says low interest rates, investors redirecting their money into real estate from the stock market, and an increase in U.S. buyers are pumping up demand and prices in cottage country. European buyers are also becoming a factor in some parts of the country.

LePage says multiple offer situations are common in recreational areas in Quebec, Ontario, Manitoba, Alberta and British Columbia.

The survey says more buyers are willing to consider creative methods of finance in order to afford a cottage, including renting the property out when it's not in use. It says 40 per cent of prospective buyers plan on renting the property to help cover some of the costs. Only 10 per cent of existing cottage owners say they rent it when it's not in use.

Recently Canada's largest mortgage broker, Mortgage Intelligence, launched a new product aimed at the vacation home market. The mortgage is available for owner-occupied ski chalets, cottages, and non-winterized or seasonal properties with year-round access in known vacation areas.

"Secondary properties are generally considered less than desirable for traditional lending institutions," says Bob Ord, president of Mortgage Intelligence. "These purchasers are often advised to take out an equity loan or place a second mortgage on their principal residence to finance their recreational property."

Features of the mortgage include loans of up to $600,000, with up to 85 per cent financing of the property. The mortgage is available in three-year and five-year fixed rates, and in a five-year variable rate. Rates are guaranteed for up to 60 days.

Mortgage Intelligence says the average age of vacation home owners is 52, and that during the next several years, aging baby boomers will fuel demand for recreational properties.

The LePage survey asked potential purchasers what they were looking for in a cottage lifestyle. Half of respondents said wanted a place that offered peace and tranquillity, while 38 per cent said they wanted quality family time and nine per cent were looking for place in which to party and let loose.

The party crowd seems to be finding what they are after, because 15 per cent of current cottage owners have had to ask their neighbours to keep the noise or music down. In addition, 37 per cent of cottage owners and prospective buyers said that police patrols on cottage lakes and waters is currently inadequate.

Royal LePage says the least expensive areas of the country for a standard cottage with waterfront access are Silver Lake, B.C. ($34,000), and Deer Lake and Ocean Pond in Newfoundland ($40,000 to $45,000). Standard cottage prices in Prince Edward Island range from $60,000 to $145,000; in New Brunswick from $50,000 to more than $80,000; in Nova Scotia from $95,000 to $200,000; and in Quebec from $225,000 to more than $275,000.

In Manitoba, standard cottages with waterfront access range from $100,000 to $150,000 except in the Lake of the Woods area, where buyers are paying more than $250,000. Saskatchewan prices are about $150,000, while in Alberta the range is $399,000 to $550,000. Prices in B.C. range up to $350,000 in the Cranbrook area for properties with waterfront access.

Ontario's prices range from about $75,000 in northern areas of the province, to more than $1 million in the province's most popular vacation destinations.

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