Greater Toronto Area and Greater Vancouver residential market trends seep into B.C. and Ontario recreational property markets
Alberta continues to post the highest average recreational property prices, due to limited supply and increasing demand around major city centres
TORONTO, June 20, 2017 /CNW/ – According to the 2017 Royal LePage Canadian Recreational Housing Report released today, the majority of recreational property markets across Canada have seen year-over-year price and sales volume increases, although in a number of regions, trends differ markedly. While recreational property trends remain mixed in the majority of oil-producing provinces, high-priced competitive environments have intensified in British Columbia and Ontario’s recreational segment, with characteristics stemming from Greater Vancouver and the Greater Toronto Area emanating into the provinces’ recreational markets.
Nationally, the report, which compiles information from a cross-Canada survey of the company’s recreational property specialists, found that recreational property prices increased in the majority of regions in the month of May, with nearly two-thirds (63 per cent) of advisors stating that prices have jumped year-over-year1. For the same period, over half (58 per cent) of respondents have seen a year-over-year increase in sales volumes in their area, coupled with 54 per cent who reported a drop in inventory levels – putting further upward pressure on prices, particularly in a number of areas in Quebec, Ontario and British Columbia. Looking ahead, the majority of respondents (54 per cent) expect sales activity in their region to rise this year when compared to levels achieved in 2016.
“The Canadian recreational property market had a resounding start to the year, with the majority of markets nationwide witnessing healthy increases in both sales activity and pricing,” said Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited. “Looking ahead, we expect this trend to continue for the remainder of the year, as warmer weather heats the market, constraining inventory levels across the country.”
As of May 2017, the national aggregate2 price of a recreational property in Canada was $439,000. However, when broken down, there were noticeable price differences from coast to coast. Of the regions studied in the report, the most expensive properties were found to be in Western Canada, with Alberta topping the list with a provincial aggregate price of $816,700. Prices in the region were driven primarily by the province’s limited availability of lakefront property in close proximity to major city centres, and an increase in demand stemming from an uptick in the energy sector and consumer confidence.
“Unlike many other oil producing provinces, where home values have remained constrained, in part due to the impact of commodity prices, recreational properties near Calgary and Edmonton have held their value remarkably well in the face of the recent economic downturn, especially when compared to other market segments,” said Somers. “With a significant lack of recreational property stock around the province’s largest metropolitan areas, even an average amount of demand for waterfront property has managed to buoy pricing within the region. As consumer confidence continues to rise, and more Albertans elect to look for recreational properties inside of the province, this trend may very well intensify, creating a sellers’ market in certain regions.”
On the opposite side of the country, the least expensive recreational properties were found in New Brunswick, with a provincial aggregate price of $179,500. Within the province, buyers could fetch a lakefront property near Fredericton for a mere $86,700 – roughly 6 times less than what one would expect to pay for the same property type on Canada’s westernmost coastline.
“As seen in other home segments, price differences for recreational properties from region-to-region can vary quite remarkably,” said Somers. “What remains relatively consistent across the country is that demand within many recreational markets is very much alive, with communities seeing an emergence of new builds and homes designed for multi-season use. Buyers are seeking properties that allow them to maximize their time away from the bustle of the city, often with the plan of making the home a primary residence in the future.
“The lifestyle of a home surrounded by the striking beauty of lakes, forests or mountains enjoyed with loved ones is an irreplaceable experience, and one that remains part of the Canadian dream for many,” added Somers.
The high-priced competitive environment seen in the Greater Toronto Area and Greater Vancouver residential real estate markets have seeped into the provinces’ recreational property segment, putting upward pressure on pricing and sales activity levels. According to over three-quarters (78 per cent) of Ontario and British Columbia advisors surveyed, prices in the recreational property areas they service have been influenced by the neighbouring Toronto or Vancouver real estate markets. The same proportion (78 per cent) stated that these markets have also impacted sales volumes in their areas.
“The radiating heat of the Greater Toronto Area and Greater Vancouver real estate markets has been flowing beyond the boundaries of the suburbs and nearby cities, to reach what have traditionally been recreational regions,” Somers explained. “Many cottage communities in Ontario and B.C. have seen unprecedented levels of sales activity and property price increases, driven largely by Toronto and Vancouver city-dwellers leveraging their home equity to purchase a recreational sanctuary – often with immediate or future retirement in mind.
“In some areas, recreational properties are seeing multiple offers. This situation is a rare phenomenon among cottage transactions, as the sales process can often be very protracted,” continued Somers. “Despite the introduction of new governmental policies slightly slowing the market, we expect sales activity within both provinces to continue to grow for the balance of 2017, as demand from Gen Xers and Baby Boomers, determined in their lifestyle aspirations, are met with limited property inventory in the most desired regions,” concluded Somers.
According to roughly two-thirds (65 per cent) of respondents, many retirees across the country have increasingly begun to look to cash in on their home equity and purchase a recreational property as their primary residence. These purchasers will often hold onto the property for a number of years until they can no longer keep up with its associated maintenance, either passing it on within the family or selling it, and downsizing. While this tends to be more prevalent in provinces like British Columbia and Ontario, where home values are generally higher than the rest of the country, the trend can be witnessed nationwide, including in Alberta, Quebec and New Brunswick.
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