Prices for recreational property in Canada increased leading up to the 2019 spring market, with Ontario and Alberta having higher greater aggregate price increases than other provinces, and Royal LePage is forecasting another year of solid gains.
Recreational property prices rose 5 per cent to $411,471 compared to the previous year and Royal LePage expects the trend to continue. The company is forecasting a 4.7 per cent increase in the aggregate price of a single-family home in the recreational regions of Canada by spring 2020, rising from $411,471 to $429,714.20. The company points to high demand in Ontario and Quebec that continues to put upward pressure on prices, offsetting weaker market conditions in British Columbia. Demand is high in Ontario and buyers have not been put off by late spring weather, rain or even flooding, so Royal LePage is expecting the aggregate price of a single-family home in the province’s recreational regions to rise an additional 8 per cent over the next twelve months to $424,905.
Phil Soper, president and CEO of Royal LePage, said that with the youngest baby boomers a decade away from retirement and their older peers even closer, the company is seeing high demand for cottage, cabin and chalet-style retirement properties.
“Young families have traditionally made up a significant portion of the demand for recreational property, as they look to create a special place for children to grow up,” Soper said. “Today they find themselves having to compete with their parents for that spot on the water, with boomers leveraging the significant equity from their existing urban homes. In Ontario and Quebec, this has resulted in exceptional demand and upward pressure on prices. In Western Canada, it has supported demand and stabilized prices.”
Low inventory in Ontario and weak demand in British Columbia were the main factors in an 8.3 per cent decline in Canadian recreational property sales, according to Royal LePage, but most provinces have witnessed a year-over-year decline in recreational property sales. The exception is Quebec, which had a 6.3 per cent year-over-year sales increase in single-family properties in reporting recreational communities as supply met demand.
While sales are down 7.9 per cent among reporting recreational regions across Ontario, the aggregate price for a single-family home rose 7.2 per cent to $393,253, according to Royal LePage. The reason for the price increase that is most often cited by Royal LePage recreational property experts is low inventory as retirees compete with young families for a respite from the city.
“In Muskoka, we are seeing people in their 50s and 60s cashing out with significant amounts of money, as well as those who are coming into money and want to get out of the rat race,” said Bob Clarke, sales representative for Royal LePage Lakes of Muskoka. “A 300-foot lot on southern Lake Joe once would be about $1.6 million. Now, if I found one west-facing it would likely be $3.0 million. That puts pressure on 100- and 200-foot lots.”