The Royal LePage 2024 Spring Recreational Property Report was just released. It includes price data for 50 regions comprising Canada’s cottage and cabin country markets.
The report notes that the median price of a single-family home in Canada’s recreational regions is expected to increase by 5 per cent this year to $678,930, compared to 2023, thanks to more consumer confidence bringing sidelined buyers back to market.
In fact, this year all of Canada’s provincial recreational markets should see an increase in single-family home prices, with Ontario forecasted with the greatest price appreciation, at 8 per cent.
“Across the nation, there was a sizable rise in demand for all types of housing during the pandemic, but nothing could match the ‘gold rush fever’ that occurred in recreational property markets,” says Phil Soper, president and CEO of Royal LePage.
“With city offices closed and the wide availability of high-speed internet allowing people to take video meetings on lakefronts and mountain tops, excess demand pushed recreational property prices to unprecedented heights.”
“Demand has been building quietly on the sidelines”
Soper continues: “Inflation reared its ugly head, interest rates soared and the economic downturn that followed pushed cottage, cabin and chalet prices off those pandemic peaks, yet the fundamental demand for recreational living has not abated. We believe that this market segment will see a resurgence of activity in 2024.”
In 2023, the median price of single-family homes in Canada’s recreational regions witnessed a slight dip of 1 per cent year-over-year, following an 11.7 per cent decrease the prior year. Despite this, the national median price remains significantly (59 per cent) higher than pre-pandemic levels, indicating sustained demand.
“Our regional experts tell us that buyer interest is steadily ramping up as the spring market approaches. With hybrid office and work-from-home business models being the norm now, many working people see the opportunity to make much better use of country properties,” Soper explains.
Low inventory & sustained demand to bring higher prices
During the height of the COVID-19 pandemic, recreational real estate markets experienced a sharp decline in available home supply as buying activity surged. Although demand has since stabilized, markets continue to grapple with low inventory levels, which, coupled with sustained demand, is expected to exert upward pressure on prices.
Royal LePage’s survey of 150 recreational real estate market professionals revealed that a significant portion (41 per cent) reported less inventory compared to the previous year, while demand from buyers remained steady or increased (64 per cent). This demand will likely pressure prices upward.
Source: Royal LePage
Revived market expected once interest rates are cut
The survey also highlighted that recreational property purchases are not as heavily impacted by mortgage rates as those in the residential market. 78 per cent of experts said recreational buyers in their areas usually finance their purchases through a mortgage or other loan.
However, a cut to the Bank of Canada’s key lending rate is anticipated to boost consumer confidence and activity in the recreational property market: 83 per cent of the company’s recreational property advisors anticipate that activity will increase at least slightly in their region once interest rate cuts happen.
“Recreational property purchases are not as heavily impacted by mortgage rates as those in the residential market,” Soper notes. “That said, consumer confidence in general will get a boost when we see a cut to the Bank of Canada’s key lending rate, expected later this year. This lift in activity will put upward pressure on prices. And, if this coincides with an influx of inventory, we should see a boost in sales as well.”
The recreational lifestyle: Very attractive to Canadians year-round
Despite variations in regional trends, a considerable percentage of Canadians own recreational properties for personal use, emphasizing the enduring appeal of the recreational lifestyle. While some homeowners relocated full-time to recreational regions during the pandemic, the majority are likely to stay, indicating a sustained interest in recreational living.
“Whether it’s for retirement or a summer vacation destination, we anticipate that more Canadians will look to embrace recreational living this year as lower borrowing costs bring their recreational home aspirations closer within their reach,” Soper concludes.
Review the full report including regional summaries and forecasts here.
