With the gyrations of the stock market raising your blood pressure quicker than trans-fats, perhaps you've thought about cashing in part of your tattered portfolio and investing in more real estate. Maybe, you figure, now's the time to make the leap to a vacation home that agrees with your lifestyle-and that just may appreciate in value. But when you shop for property at America's premier resorts, the sky-high prices might send you fleeing back to the flatlands. You want ski-in, ski-out? Then dig deep and shell out.
Or you can go north of the border. Suddenly, in a trend that has escalated since 9/11, quiet and unassuming Canada has become the Great White Hope of second-home buyers from the U.S. A large, two-bedroom condominium with a view of the slopes in winter and fairways in summer looks appealing at $300,000. But then you realize that the price is in Canadian dollars-that lovely lavender money-and you get to knock off one-third, like an instant rebate. Two-hundred grand for a piece of paradise-yowee!
With its boundless resources and scant population, there's plenty of cheap land left-and not that many residents chasing it. New ski areas are still being built, small resorts are morphing into big ones, and the provincial and federal governments are clearly on board to finance the infrastructures to support them. Property transactions are easier and cheaper than in the U.S., and interest rates are typically one to two points lower.
For Joel Brody of Chicago, a 57-year-old controller for a health care corporation, buying real estate at Mont Tremblant, Que., was a no-brainer. Although Midwesterners typically migrate west for their ski vacations, Brody and his wife went east. "We fell in love with Tremblant; the village was colorful, with friendly people and wonderful French restaurants," he says. And though he considers the slopes only so-so, the low altitude (Tremblant's summit is just 3,000 feet) makes skiing less fatiguing. Then there's nearby Montreal, with its boutiques, festivals and historic dining districts. "It's like being in Europe without crossing an ocean," he says.
The Brodys have become avid newcomers, to say the least. They own a two-bedroom condo at Equinox, a luxury property that overlooks Lake Tremblant and, with other family members, they co-own one-bedroom units at the Westin Tremblant, a five-star hotel, and La Tour des Voyageurs, an upscale condominium-hotel.
Clearly, Americans are finding Tremblant as appealing as a creamy French tart. Historically, U.S. buyers represented only about 10 percent of the real estate market here. But last season, more than half of the 260 new units that went up for sale were bought by American citizens, says Neal Vinet, the resort's director of sales and marketing, who adds that American holdings now represent about one-fifth of all units in the village. With the resort poised to triple in size during the next few years, under plans already announced by Tremblant developer Intrawest, American buyers are looking at the company's real estate success in Whistler, B.C., and are wondering if lightning can strike twice.
Whistler may be out of reach for many U.S. buyers, even with the current favorable exchange rate (one greenback was worth $1.56 Canadian at this writing). But there are literally mountains of opportunities in the interior of the country, especially in the Canadian Rockies. Most American skiers still haven't discovered resorts such as Sun Peaks, Fernie, Kimberley, Kicking Horse, Panorama, Big White and Silver Star. But the early adopters are already on the prowl, with checkbooks in hand, for what they see as bargain real estate. And the remoteness of these ski areas doesn't seem to faze them.
Nicholas Sette and his wife, Gritli, both 50-somethings from Paramus, N.J., bought the largest unit they could get at Fernie's Snow Creek Lodge, an elegantly rustic condominium-hotel that is next to the lifts. To reach their two-bedroom hideawway, they're willing to fly a convoluted route through Minneapolis to Kalispell, Mont., where they rent a car for the two-hour drive north across the border. "We bought here to go skiing, not as an investment," says Nicholas, who spent 25 years in the ski retailing business. "Fernie is like Aspen was 50 years ago-quaint, natural and uncrowded."
With prices of finished vacation units ranging from $150 to $265 (U.S.) per square foot throughout much of Canada (compared to $600 to $4,000 at elite resorts in the States), the American migration northward is likely to accelerate. And the drive-up markets seem to be the most robust, a trend that realtors attribute to the changing travel patterns created by the events of 9/11.
At Sun Peaks, an emerging resort with an attractive village in the Kamloops region east of Vancouver, B.C., buyers are flocking here from nearby Washington, with driving times averaging five to six hours. "Right now we have 4,000 beds at the resort," says Sales and Marketing Manager Francis Argouin, "but our permit allows for 24,000, so we have a lot of room left for development." Prices range from $200,000 Canadian ($134,000 U.S.) for a 1,200-square-foot, two-bedroom condo or cottage to $400,000 ($266,000 U.S.) for an 1,800-square-foot, four-bedroom unit. Nearly 60 percent of the units in the newest and most upscale condominium project, called McGillivray Creek, were sold to Americans, most of them from the Pacific Northwest.
There are a few wrinkles in Canadian real estate transactions and ownership that Americans must adjust to. For example, on new real estate (not resales), if you are buying for personal use only, you'll be assessed a GST (federal Goods and Services Tax) and a provincial tax, which together can represent as much as 15 percent of the purchase price. However, if you put your unit into a rental pool, thus qualifying it as commercial, and you don't occupy it for more than about a month each year, those taxes are deferred indefinitely.
Also, Canadian mortgages work differently than those in the U.S. Typically, your amortization for a loan will be 20 to 25 years, with the interest rate recalculated every three to five years. That essentially makes it an adjustable mortgage, which most Americans would not opt for in these days of record-low 30-year fixed mortgages. However, Canada's interest rates tend to be substantially lower, hovering at about 5.35 percent at this writing, and the refinancing intervals are usually perfunctory and painless. Finally, there are no loan origination fees or large closing costs in Canada like there are in the States. You'll pay a transfer tax (about 1 percent of the first $200,000 and 2 percent on the balance over that) and $1,000 in attorney's fees (yes, you must hire a lawyer, and the realtor can easily connect you with one).
Is it worth the effort to buy in Canada? Just ask Kermit and Tracy Ecklebarger of Redmond, Wash., who bought a one-bedroom condo at Sun Peaks for the grand sum of $86,000 U.S. and frequently make the drive there with their two children. "We don't need crowds and nightlife," says Kermit, a housing contractor who turns 40 this year. "We just want good snow and a place where we can feel safe with our kids. And how can you beat the exchange rate?"