Intergenerational wealth transfer gives Gen X means to fuel demand in cottage country: RE/MAX

Amid the long anticipated $1 trillion transfer of wealth from Baby Boomers, coupled with the search for more-affordable housing markets, Generation X now leads the pack in recreational property transactions, with this buying cohort driving activity in 91 per cent of recreational regions surveyed, according to RE/MAX Canada’s 2023 Cottage Trends Report.

Historically, recreational market activity has been driven by retirees, inclusive of both Baby Boomers and Gen X (91 per cent, according to RE/MAX research conducted in 2018), said the real estate company.

Following record-setting activity in 2022, the waters have tempered in recreational markets with 50 per cent of regions now experiencing more balanced conditions. Despite demand tapering due to economic uncertainties in the latter half of 2022 and carrying into the first quarter of 2023, RE/MAX brokers and agents anticipate consumer confidence to rise in tandem with the temperature, into “cottage season” and through the remainder of the year. Overall, average residential sale prices are expected to rise by 0.9 per cent, it said.

Christopher Alexander

“It’s interesting to see Gen X gaining more of a foothold in recreational markets across Canada. Demand, coupled with the desire to own and keep these properties in the family, may further impact already low inventory levels in this segment of the market,” said Christopher Alexander, President, RE/MAX Canada. “When it comes to succession planning, recreational properties are always a good addition to any real estate portfolio, especially given the long-term ROI that they typically yield, making them an excellent opportunity for inheritance aspirations as well.”

As Canada continues to experience affordability challenges, 51 per cent of Canadians who own or plan to own a recreational property (47 per cent of Gen Xers) pointed to the opportunity to pass down a recreational property to family, as a key motivator to buy one, according to a Leger survey conducted on behalf of RE/MAX Canada.

To view the full interactive report, please click here.

To view the full regional data table, please click here.

RE/MAX REPORT

Western Canada
Mirroring the conditions across the country, regions in Western Canada have either transitioned to balanced or remained favouring sellers. Specifically, Albertan cottage markets (Canmore and Sylvan Lake and surrounding areas) and Whistler, BC skew towards sellers, due to demand outpacing supply. Meanwhile, in British Columbia both Tofino and Ucluelet can attribute balanced conditions to buyers becoming more reserved and releasing pressure on demand.

Adhering to the prevailing national trend, Gen X and more specifically families, couples and retirees propel demand in Western Canada. Although sales activity has decreased across all regions, residential sale price is anticipated to remain unchanged in Sylvan Lake and surrounding areas, AB; Tofino, BC; Ucluelet, BC and Whistler, BC for the remainder of 2023. While properties in Canmore, AB may experience a rise of up to eight per cent in average residential sales prices in the remainder of 2023, due to dwindling inventory and rising consumer optimism.

To view individual insights of Western Canada regions, please see below.

• Canmore, AB – please click here.
• Sylvan Lake and surrounding areas, AB – please click here.
• Tofino and Ucluelet, BC – please click here.
• Whistler, BC – please click here.

Ontario 
Despite most regions favouring sellers last year, following interest rate hikes and ongoing economic uncertainty, a majority (67 per cent) of recreational markets in Ontario are now in balanced conditions. Muskoka, Haliburton and Greater Sudbury, Windsor–Essex, Manitoulin & French River, ON are the outliers that still favour sellers. Ontario recreational market activity is being driven in majority by Gen X buyers – specifically families and retirees showing particular interest in waterfront properties.

According to RE/MAX brokers and agents, residential sale prices in recreational markets are expected to grow by two per cent in Muskoka and Haliburton; four per cent in Peterborough and the Kawarthas; five per cent in Greater Sudbury, Manitoulin & French River; three per cent in Windsor–Essex; 5.8 per cent in Lake Simcoe and two per cent in Prince Edward County. Meanwhile, other regions are expected to cool slightly and anticipate a reduction in residential sale prices, including Rideau Lakes by one per cent; Southern Georgian Bay by 1.5 per cent; and Kenora and Lake-Of-The-Woods by 6.5 per cent. Bruce Peninsula & Sauble Beach foresee a steeper decline in residential home prices of 11.5 per cent which can be attributed to the ongoing demand readjustment, while prices in Grand Bend are anticipated to remain unchanged.

To view individual insights of Ontario regions, please see below.

• Bruce Peninsula & Sauble Beach, ON – please click here.
• Grand Bend, ON – please click here.
• Greater Sudbury, Manitoulin & French River, ON – please click here.
• Haliburton, ON – please click here.
• Kenora and Lake-of-the-Woods, ON – please click here.
• Lake Simcoe, ON – please click here.
• Muskoka, ON – please click here.
• Peterborough and the Kawarthas, ON – please click here.
• Prince Edward County, ON – please click here.
• Rideau Lakes, ON – please click here.
• Southern Georgian Bay, ON – please click here.
• Windsor Essex (Belle River/Lake St. Clair), ON – please click here.

Atlantic Canada
Unlike Ontario and Western Canada, the majority of regions in Atlantic Canada – with the exception of Charlottetown Area, PEI – including St. John’s; Central PEI; Annapolis Valley, NS; and Sydney & Cape Breton, NS continue to favour sellers due to limited inventory. Despite the number of sales decreasing year-over-year in most cottage markets of the Atlantic, many regions including Sydney & Cape Breton, NS; St. John’s, NL; Charlottetown Area, PEI and Annapolis Valley, NS experienced modest year-over-year sale price appreciation – 15.3 per cent, three per cent, 9.2 per cent and 3.5 per cent respectively. This can be attributed to the magnetism these markets continue to have for out-of-province buyers – a unique factor to the region, as well as low inventory, specifically in Sydney & Cape Breton, NS.

In contrast to other regions across Canada, Atlantic recreational property sale prices are anticipated to increase – St. John’s, NL and Annapolis Valley, NS both anticipate a modest increase of five per cent for the remainder of the year, while prices are forecasted to rise 8.6 per cent by the end of the year in Sydney & Cape Breton, NS. Like in Western Canada, Gen X buyers are the majority stakeholders driving demand in the Atlantic – specifically retirees and couples. The region continues to attract families and out-of-province buyers due to the relative affordability their market provides, in comparison to Ontario and Western Canada.

To view individual insights of Atlantic Canada regions, please see below.

• Annapolis Valley, NS –please click here.
• Central PEI, PEI – please click here.
• Charlottetown Area, PEI – please click here.
• St. John’s, NL – please click here.
• Sydney/Cape Breton, NS – please click here.

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)