Study finds rising expenses at odds with cabin ownership
A statewide survey found aging lakeshore property owners and their children are faced with rising cost of living and health care costs, putting intergenerational property transfers at risk.
The survey was conducted last year by the non-profit environmental group Minnesota Lakes and Rivers Advocates. More than 300 lakeshore seasonal property owners and lakeshore homestead property owners participated in the study, including both organization members and non-members.
The survey revealed a trend of an increase in aging owners faced with rising cost of living expenses and escalating healthcare costs while also maintaining and protecting lakeshore and water quality.
"Minnesota is about to experience the largest intergenerational transfer of shoreline property in our history," stated Jeff Forester, Minnesota Lakes and Rivers Advocates executive director, in a news release. "Yet, the next generation will no doubt be stressed to pay for the medical bills and maintain the properties that will come into their ownership in the next decade.
"Simply put, the kids of lake shore and cabin owners are going to face a 'Sophie's choice'—looking at low cash reserves to pay for medical care for elderly parents and the family preservation a parcel of land. That land—if subdivided and redeveloped—will produce significant revenue but cause major community, familial and heritage disruptions."
The study updated previous studies done in 2005 and 1999, finding that most lakeshore and cabin homes are family-based and were either purchased for recreational and retirement use or inherited versus being purchased solely for investment.
Nearly three-quarters of respondents purchased their seasonal property for recreational and retirement use, while 20 percent of seasonal property owners inherited their property or purchased it from a family member. Just 8 percent of respondents purchased their property as an investment and 2 percent sell the property to make a profit.
The survey's most telling finding, according to the release, reflected age of owners, average annual income and net worth. Today, the average annual household income of a seasonal property owner in Minnesota is $58,000, and the average age of lake home and cabin property owners is 68 years old. In 1999, the average age was 58, and in 2005, the average age was 62. The average household income has not changed appreciatively during that time.
"Lake shore or cabin ownership of 34 years on average is one of the highest in the Midwest. These places are viewed as heirlooms, not assets," Forester stated in the release. "By and large, lake home and cabin owners in Minnesota have average-to-low cash reserves, but probably higher than average net worth due to property they own. "However, they are of an advanced age and are about to face the highest health care costs of their lives.
"Simultaneously, as owners and the state both struggle to protect the healthy lakes in Minnesota while working to restore the 40 percent of waters that are degraded, very hard decisions are coming in the short term."
The survey also addressed other issues, including the state's walleye population and access to broadband.
Sixty-nine percent of lake home and cabin property owners believe there should be an organization to protect walleye fishing in Minnesota. A number of them remarked that they thought that was one of the purposes of the Minnesota Department of Natural Resources.
Almost two-thirds—64 percent—of cabin and lake property owners would be interested in more state investment in bringing high-speed broadband internet to greater Minnesota. Many reported problems with cellphone and internet coverage and would welcome lower-cost coverage, the release stated.
Visit https://tinyurl.com/h5a5fle for more information on the study.