Iris Win
Province
A lakeside property that can generate joy beats out the RRSP as a place to park retirement money.
As real-estate prices rise sharply, more boomers seem to be focusing on property as an investment vehicle.
According to the most recent Statistics Canada Survey of Financial Security, “a significant change in the composition of assets during this six-year period was growth investments in real estate such as cottages, timeshares, rental properties and other commercial properties.”
The value of real-estate holdings, excluding principal residences, increased by 80.5 per cent between 1999 and 2005. This, notes the survey, was “by far the largest rate of growth of any asset type.”
Other buyers buy and sell without renting, speculating the market will continue to rise, as it has done over the past decade.
Vacation property investment option for golden years
Inherited wealth being put back into the land
OTTAWA — As baby boomers look toward retirement, many are investing in real estate, often purchasing vacation properties.
According to an Angus Reid Strategies poll conducted in May, one in seven Canadians currently owns a vacation property and one in four would like to purchase recreational real estate in the future.
Forty-one per cent of vacation-property owners surveyed are over the age of 55, at the top end of the baby-boomer bracket.
baby boomers will go on buying vacation homes until the end of the decade, while the next group of boomers is likely to continue the trend until 2014.
“Luxury recreational property sales are set to soar as affluent baby boomers drive demand for upscale product from coast to coast,” says the 2007 RE/MAX recreational-property report.
Particularly for the most prosperous boomers looking to invest their wealth, concerns about stock-market fluctuations are among the main reasons they choose real estate, says Ottawa-based ScotiaMcleod director and senior investment executive David Cork.
A boomer himself, Cork specializes in the impact of demographics on social and economic life.
The co-author of The Pig and the Python: How to Prosper from the Aging Baby Boom, Cork says “the stock market blows real-estate markets out of the water over time, but doesn’t work out for a lot of investors because they see its volatility and don’t handle it very well. With real estate, it’s out of sight, out of mind, and you get to hang out in it, too.”
Other factors also steer the boomers toward the lakefront property or ski lodge.
“It’s a natural time for people to want to own that cottage and they can afford it,” says Cork.
“It is also a time when boomers’ parents are starting to pass away [with] positive implications from a financial perspective, in that they are starting to inherit.
“Significant amounts of wealth have been created in this country since the end of the Second World War and we are now seeing the results. A massive wealth transfer is taking place.
“So, there’s the element of wealth storage. When you have excess wealth, what do you put your money into?”
He says the four main investment possibilities are cash, bonds, stocks and real estate.
“Obviously, some of your money goes into RRSPs, but that brings you no joy,” says Cork.
“I work in this business and I don’t think people are able to build a family outing around their RRSPs.“.
© The Vancouver Province 2007
