Cottage country woes

While there are no hard data, real estate brokers report they are not seeing the same type of activity from American buyers as they have over the past 10 years, thanks to a rising loonie, a sluggish U. S. economy and out-of-control gas prices.

U. S. citizens have been flocking to buy in Ontario since the province eliminated in the mid-1990s a special 20% land transfer tax that applied only to non-Canadians.

John O’Rourke, president of Royal LePage Lakes of Muskoka, confirms gas prices alone are not reason enough for people to sell their cottages. He doesn’t see a panic. “We went through an episode like this with the tax and nobody sold,” says Mr. O’Rourke, referring to when the 20% tax was implemented. “There are some U. S. citizens trying to sell, but it’s not a large number. But the supply has gone up. It’s a buyer’s market.”

The real problem is the lack of American buyers. “The dollar is almost on par. We’re not getting too many calls. When the dollar was 60¢, 70¢ [compared to the U. S. dollar], the advantage was huge,” says the broker.

The Muskokas have long been an attractive summer home for Americans, but when Goldie Hawn and her husband, Kurt Russell, moved in and celebrity citings became common, the lake region north of Toronto took off. It didn’t hurt that the greenback’s strength compared with the loonie gave U. S. citizens a powerful incentive to buy.

Susan Pryke, the Mayor of the Township of Muskoka Lakes for the past eight years, says Ontario cottage country has always been popular with Americans as a getaway and she doesn’t believe that will change.

“Muskoka is easy to get to from New York and Pennsylvania. Even in the early days, there were trains that came up here and then you got on a steamboat. It was a natural fit. The early cottagers were Americans and supported the hotels that started here,” says Ms. Pryke.

Even today, the Muskoka area has a corner called “Little Pittsburgh,” which was set up by cottagers escaping Steeltown. Their descendants still summer there and Ms. Pryke doesn’t expect them to be leaving because of their long-established roots in the community.

But she does admit there are signs the U. S. presence has died down. “I don’t hear the American accents as much around town,” says the Mayor.

Judging by the fact he’s not getting many calls from Americans these days, Muskoka lawyer Bill Grimmett says volume is definitely down. “There are just not as many people buying,” says Mr. Grimmett. About 90% of the business out of his Port Carling, Ont., office is real estate.

But he doesn’t believe the sellers today are Americans taking profits from cottages that have appreciated in value. U. S. citizens who owned cottages have also made a healthy profit from the rise in the loonie, he notes. “The American family compounds stay in the family forever,” says Mr. Grimmett.

He agrees that the problem in cottage country is that there are no new American buyers. Even hockey players, who get paid in U. S. funds, are reconsidering major cottage purchases. “The hockey players are much more price-conscious than they used to be,” says Mr. Grimmett.