Real estate prices fluctuate, of course, all around the province but the perceived value of OTG properties seems to fluctuate the most. Most people new-to-the-dream do not understand that and, to be fair, the reasons for such disparities are generally vague and somewhat complicated all at the same time. It is hard for anyone to make sense of OTG real estate prices.
I am gonna take a run at it…….
……well, a second run at it. The first effort to get a handle on it was expanded on in my second book, “Choosing” (albeit not in great detail) and in a passing kind of way now and then in a few blogs.
I was recently prompted to think more about OTG real estate prices for several reasons: one; a British student doing research found my name and asked about it. Two; a few more readers have expressed interest in moving OTG and three; I have a sense that the usual OTG market around me is also changing even more so lately……so here goes.
- That mainstream urban and suburban markets continue to rise or at least remain high transfers to all real estate everywhere in a generally increasing price kind of way.
- That so many people over the next ten years will be leaving the workforce (Baby Boomers retiring) and many will jettison their high-value urban home for retirement capital is also a factor. But they still need a place to live. When you make a ‘retirement/lifestyle change’, many tend to leave the city for the country.
- Construction costs are over-the-top everywhere and have more than tripled – so people look for cheaper land and that also means ‘heading out’. Mind you, construction costs OTG were and still are even DOUBLE that!
- The meme that the world is going to hell in a handbasket is an increasingly common one. There is a general sense of insecurity and fear of maybe even civil disruption that also adds to the desire to “Get out!” There are a lot of forces that suggest all real estate rural and OTG will increase in demand.
A. On the other hand, current inflationary forces seem to hit rural and OTG properties a smidge harder. Distance means fuel and my $1600 fuel-tank-fill (gensets, chainsaw, boats) is now $2500. That’s a significant deterrent.
B. We also employ more product delivery than we used to (because of Amazon, age, time, convenience, etc) and so a loaf of bread has a 15% percent surcharge as does everything else.
C. The OTG burden of NOT having bank-financed mortgages commonly available is also a deterrent as more cash is required for a purchase. Financial services do not want the risk of an OTG property – the market is too small and often too volatile – they do not want to foreclose on a distant property. Plus most OTG properties are next to impossible to insure (no roads, no fire protection, etc). Those forces and many more act as a limit on rural real estate prices.
Put more simply, there are now new forces even stronger than before driving people out and away from living rural or OTG. Living poor now costs a lot of money. Societies around the world have experienced a strong urbanization influence since the Industrial Revolution and that trend has not stopped. And the more people become ‘civilized’ the less capable they are of living away from systems of convenience. A large family in the 1930’s lived simply, independently but not very well on the prairies or on farms. They did not get fat. They did not drive cars with AC or heated seats. Today, few people have the skills, the will, the family size or the attitude to live that way. Rural has lost a lot of appeal for a lot of people.
But so now is urban life seen as becoming more unpleasant. The retirees are fed up with the cost and the stress. Immigrants can’t afford it. Crime, violence, restrictions and rules have replaced the attraction of the gene pool, theatres and Starbucks. A lot of city people now want out. And there are now fewer people to actually want in because the Boomers did not make a lot of babies! Populations are shrinking.
So how does all that affect real estate prices OTG? I cannot make an accurate and related correlation of those influences and end up with even a rough determination. Being smart, informed and analytical is not my thing…I just see the influences and I shared them with the student researcher.
And I know that there are many, many more factors to consider. Honestly, I could list many more pulls and pushes and quadruple the length of this blog.
But here’s one that is counter-intuitive – there is a lot of land rural and OTG available but there is not a lot of exceptional and desirable land for sale….at least not that anyone can find without being in the area. For instance: if you are OTG and intend to utilize solar, you need to have a south-facing lot. You also need to be sure of your ground water. You need to consider the extraordinary cost of access. That list just goes on and on. And the answers to the list are not found unless you are physically on the ground.
Few realtors want to work hard at their job and they are very disinclined to spend a lot of time and money trying for a commission on a lower priced, very distant piece of land. The interested buyer is hard pressed to find a realtor interested in OTG. That synergy is just not available.
Here’s another one: the potential buyer is also somewhat spoiled or limited in their own willingness. They do not want to, or maybe can’t afford to, go looking for a needle in a haystack. Looking is a major task. It’s expensive and very time-consuming. They expect service and there simply isn’t very much of it for rural or OTG property.
When you think about it, it is a HUGE challenge to find a rural or OTG piece of paradise that a retiree can handle and it is also a rare retiree who has the skills, energy and the knowledge to even make the effort.
That may sound a bit egotistical on my part and I apologize if it does…but I was an exception. We bought the land we are on when I was 26. It was all the rage to go ‘back to the land’ in the 70’s. So, we went. But we didn’t stay. We remained urban for the next 30 years and then we went to the island. And we lucked out. Without knowing anything, we had found the right place. Relying on luck is a not a path I recommend.
Anyway…just a rumination, a reflection, a bunch of thoughts prompted by a British student asking a question….