The family cottage may no longer be an affordable expense
To the Expositor:
NEMI (Northeastern Manitoulin and the Islands) can’t understand why six times more properties have unpaid taxes (72 vs. historic 12 per year).
Perhaps this is why:
Finances of Canadian families are stretched to the point of breaking. The household savings rate as a percentage of disposable income has dropped from 30 percent in 1980 to be at or near zero for the last number of years. For BC residents, they average -7 percent savings rates (ie. they’re living off credit cards and lines of credit to pay monthly expenses).
With 10,000 full-time residents and 50,000 or so seasonal residents, Manitoulin has a 5:1 seasonal home utilization.
On a Canada-wide basis, about 12 percent of Canadian families have a secondary or seasonal home (ie. camp, cabin, cottage, ski chalet, hunting property, etc.). That is about a 1:10 ratio.
Therefore, Manitoulin is about 50 times more exposed to the seasonal residence real estate market than the rest of Canada (ie. 5:1 for Manitoulin vs. 1:10 for Canada).
If people can barely afford their principal residence in Sudbury, Toronto, London, Ohio, etc., what will they do with granddad’s cottage they inherited, yet only get to use for two weeks to two months per year?
Soon, as interest rates begin to rise, and the sky-high Canadian real estate bubble deflates, we may see a flourish of desperate “For Sale” signs on Manitoulin. More and more families may try to liquidate optional assets to pay down the debt on essential assets such as the family’s principal residence.
It isn’t too far in the past that many Manitoulin properties sat on the “For Sale” list for a year or two, awaiting the arrival of an interested buyer. What will happen this time around?
As property taxes go unpaid for three or more years, municipalities may have to borrow more and more money at rising interest rates in the bond market so as to pay their monthly expenses. That can add significant expenses to strained municipal budgets.
Will fewer and fewer buyers show up at municipally forced sales for delinquent taxes? What then?
Glenn Black
Process Quality Associates Inc.
Providence Bay
