Investing in Your Future in Canada

Historically Canadians have enjoyed a very long love affair with their vacation homes. In previous generations the family cottage at the lake was the true meaning of idyllic summers. Usually it was within driving distance of the urban home and often Mum and the kids would spend most of the summer in residence while dear old Dad would commute to work daily or just spend weekends with the family cooking the summer barbecues and enjoying quality time. Even today many families still enjoy the legacy as the original cottages built by their grandparents have been passed down through the generations.

However, much has changed in this new millennium with the manner in which Canadians now view their leisure time and where to spend their vacations. We have transitioned through the 70s and 80s Snowbird era where we became internationally renowned for our mass migration during the winter months heading south for warmer climes, to our current reputation as global homeowners spending our holiday escapes in exotic and diverse parts of the world.


The late 70s and early 80s witnessed the development of time-share vacation properties and this concept rapidly gained in popularity. Perhaps the success was due to the fact that this type of ownership afforded many people the opportunity to own a vacation home if only for a short period of time---usually two weeks each year---before taking the bold step of full outright purchase of a second home. It also allowed consumers to travel further afield for their vacations, stay in their own holiday home but without the full responsibility inherent with total ownership. Currently the average price for this kind of leisure time investment begins at approximately $10,000 which is within reach of many Canadians of all ages.

There are even some recent indications that younger Canadians are purchasing their resort property before their primary residence. Now there is even a new concept called quarter sharing providing the opportunity to own your vacation home with only three other sharers and thus be able to spend more holiday time at your own familiar, cosy place.

Today with the advent of low-cost airlines, a strong Canadian dollar, home-equity loans at low interest rates and the overall wealth of Canadians, resort home ownership is booming amongst the broader population and is no longer just for the very rich. According to Statistics Canada nearly ten percent of Canadian households own a vacation property and of these seventy-seven percent own property within Canada and twenty-one percent outside of our borders with two percent owning vacation property both within and outside of Canada. However, only twenty-six percent of these homes are owned by families and the majority, fifty-two percent, are owned by couples.

Currently the global real estate markets are considered to be buyer's markets and as listings increase the prices become more appealing to prospective purchasers. This factor has been enhanced by the recent mortgage crisis in the United States and appears to be a medium term trend. United States foreclosures in May 2008 increased by fifty-percent compared to a year earlier (as reported by the foreclosure listing company RealtyTrac) and this has spurred more foreign investor curiosity.

The United States remains the most popular country for Canadians to make real estate investments and Florida is still the number one choice with California and Texas almost tied for second place. According to the American National Association of Realtors 2007 study, Canada is ranked in the top five countries along with Mexico, United Kingdom, India and China where foreigners are currently investing in United States real estate and taking advantage of attractive prices. The lure of sandy beaches and a warm climate remains strong as we are also ranked the number two foreign investor in the State of Florida. During this survey period three percent of total U.S. home sales were to non-residents with a median purchase price of $300,000 and the primary use for the purchase was for a vacation home. However, almost one-third make the purchase as both a vacation home and rental property. Foreign home owners purchase U.S. properties everywhere around the country but the south and the west account for eighty percent of total sales. It is probably safe to assume that Canadians will continue to make the United States one of their most popular places for vacation home ownership given current real estate market conditions and proximity to their primary residence.

However, one of the emerging choices for vacations and planting holiday roots is rapidly becoming Central America specifically Mexico, Costa Rica and Honduras. The condominium purchase prices are attractive from as low as $150,000 and the cost of living is much lower than at home.

The small country of Costa Rica has staked its claim as one of the most eco-friendly countries in the region and has thus become a a popular choice with Canadian investors especially on the Pacific Coast in the small coastal towns of Quepos and Manuel Antonio.

Mexico remains a favorite choice for vacations with popular coastal apartment ownership in Puerto Vallarta, Puerto Plata and Cabo San Lucas just to name three of the hot spots. Due to proximity Americans dominate the vacation home market in Mexico but Canadians and Europeans follow closely behind. Foreigners can now enjoy home ownership through the Fedeicomiso system whereby a trustee---usually a Mexican bank--- holds the deed to the property for the purchaser who is the legal owner with the rights to sell, lease or bequeath the property to heirs. SOFTEC, a real estate consulting firm, reports that in Mexico during the past three years there has been a sixty percent increase in vacation home investments. Spanish lessons are a must but the quality of life will make the effort worthwhile.

Unending sandy-white beaches, virgin forests, crystal rivers and healing hot-springs have made Honduras a relatively new holiday destination for North Americans and recent changes in 2004 to the property laws have made foreign ownership a less risky proposition than it was a decade ago. However, it is still very important to make sure you are working with a very reputable and established local realtor and be sure the prices are realistic for the local neighbourhood---do your research here.

The ever popular Caribbean Islands remain irresistible especially with Eastern Canadians. The lure of the gentle, clear blue ocean and white sandy beaches is very appealing in the middle of a harsh, cold winter but can also provide year-round holiday potential.

The island of Belize has a resident population of only about fifteen thousand but of that almost twenty percent are foreigners including a wave of Canadians and Americans who have recently purchased homes for vacation or retirement. A beach condo typically sells for between three and five hundred thousand US dollars and with major expansion at the International Airport it is widely rumoured that direct flights from Europe will begin soon and an economic boom will surely follow.

Another well kept Caribbean secret is the small island of Curacao---part of the Netherland Antilles---and renowned to be the most Dutch of this small chain of five islands. With this European influence it is a charming and unique get-away and has only just been discovered by North Americans.

With a very stable government and an economy based on tourism, the real estate prices are higher than some other Caribbean Islands but the future looks very good for continued economic growth.

Perhaps the overall hottest new global destination is South America where the Latin experience is taking off. Europeans have known this for some time and have been investing heavily in vacation homes and apartments and more recently Canadians have discovered the region's advantages. With a very low cost of living---a good bottle of wine for just two dollars or a T-Bone steak for one dollar at the supermarket---although the journey is a little longer the end rewards are far greater. In Buenos Aires a studio apartment in the city can be found for just around US$90,000 or a coastal property in Chile for less than US$150,000 or in Uruguaya condominium overlooking the ocean for US$250,000 making Latin America worth considering before the prices rise further. Surprisingly American investors are in the minority here and this may be due to the fact that only about five percent of the population speak English and Americans tend to prefer to dialogue in their mother tongue.

Although Canadians are leaving their footprints around the globe, when it comes to a vacation home their number one choice is still close to home. Maritimers don't want to leave the ocean and many other residents from Canada's major cities like Montreal and Toronto cannot resist the lure of the Atlantic coast. Last year real estate prices rose in this region by an average of ten per cent with the exception of Saint John, New Brunswick which was spurred by the energy sector to over forty percent. In Western Canada the hot spot has become Saskatchewan which has seen a fifty percent appreciation in real estate prices again due to the booming energy sector. Perennial favorites like the Rocky Mountain ski resorts and Vancouver Island have seen an average of just over ten percent increase in value.

Travel itself may be less pleasant than it was a few years ago but once you find your own ultimate holiday paradise the rewards of vacation home ownership are immeasurable. More than just a financial investment the perfect get-away residence will prove to be worthwhile just for stress relief and relaxation in the fast paced world we have to deal with every other day of the year.

And perhaps the most fun part is searching for your own perfect second home that meets your personal needs and that you can make your retreat as you deal with the everyday hassles of urban life. Price may be important but peace of mind is priceless.