TORONTO - An increasing number of cottage owners across Canada are mulling the sale of their summer properties to reduce the strain on their wallets brought on by soaring gas prices, reports a leading real estate firm.
A poll by Royal LePage showed that about two in 10 respondents might get out of the cottage lifestyle if gas prices were to go way up, Phil Soper, CEO and president of Royal LePage, said in an interview.
'Last year when we asked the same question, it was approximately one in 10 people" who said they might sell their cottage if gas prices went through the roof, he said following the release of the 2008 Royal LePage Recreational Property Report.
'This year it was closer to two in 10 - 19 per cent. That's a pretty significant change year-over-year... in people's attitudes towards the cost of commuting to the cottage."
The average pump price in Canada on Friday was C$1.38 a litre, nearly 30 cents higher than what it was a year ago, according to the price-tracking website Gasbuddy.com.
Analysts say they don't see prices at the pumps easing any time soon.
CIBC World Markets has predicted that gas prices in the U.S. will hit US$7 a gallon - the equivalent of C$1.86 a litre - two summers from now.
Americans now pay about US$4.07 a gallon, the equivalent of C$1.08.
'Recreational properties are a luxury, so when consumer confidence wanes or there is worry about the economy, people put off making those luxury purchase decisions," said Soper.
The Royal LePage survey indicated that the number of potential sellers this year is up seven percentage points from last year and a third of respondents said they plan to reduce the number of cottage trips they will take this summer.
Nevertheless, said Royal LePage, the number of cottage owners has remained steady over the past three years at nine per cent as the "lure of the great outdoors" continues to trump gas prices, increased traffic congestion and a change real estate climate.
The Royal LePage poll follows a recent ReMax Ontario Atlantic Canada survey that found, after a decade of substantial price increases, a significant jump in listings on the market and fewer buyers have resulted in declining sales in the majority of Canadian markets surveyed.
Craig Alexander, an economist with TD Bank, said "we're shifting across the country from a sellers' market, particularly in the West. Now we're really into more balanced markets."
This trend is "broadly based" across the country and affects both the residential and recreational sectors, he said following the release of a housing report by the bank.
'Our forecast is that price growth in 2008 will average two per cent and then it will be about 3.5 per cent next year. So we're going to be below the (4.5 per cent average) trend for a few years."
Said Soper, "like the overall real estate market, prices continue to rise in the recreational sector but at approximately half the rate of the increase in 2007."
This is "more a reaction to adequate supply" in the recreation market rather than over supply, he said.
'If you go back two years ago, the annual Royal LePage summer recreational report showed seven prospective buyers for every two sellers," said Soper. "We had a market that was way out of whack."
Inventories have now risen to a level "that's still somewhat tight and that does take some of the pressure off price increases."
The market now appears to be about equal, said Soper, where there is about one buyer for approximately every seller. Prices are continuing to rise but at a slower pace.
Last year, "we had national prices going up on average 10 per cent ... My guess is we'd be looking at a five per cent increase by the end of 2008."
The average price for a recreational property in Canada now ranges between $326,567 and $1,066,389, according to the Royal LePage report.
