Recreational real estate market revival on the horizon: Royal LePage

The national median house price is forecast to increase 5.0% in Canada’s recreational market in 2024 as re-engaged buyers compete for limited supply, says a new report released Wednesday by Royal LePage.

The report said all of Canada’s provincial recreational markets are expected to see an increase in single-family home prices in 2024, with Ontario forecast to see the highest level of price appreciation at 8.0%

The weighted median price of a single-family home in Canada’s recreational property market decreased modestly by 1.0% year over year to $646,600 in 2023, added the report.

Nationally, the weighted median price of a single-family waterfront and condominium property decreased 7.9% and 1.5% year over year, respectively, in 2023. Condominiums in Atlantic Canada’s recreational property market recorded the highest provincial year-over-year weighted median price appreciation in 2023, rising 16.9%

And the report said 41% of recreational property market experts across the country reported lower inventory than last year in their respective regions.

Royal LePage

PRESS RELEASE

TORONTO, March 20, 2024 /CNW/ – According to Royal LePage^®, the median price of a single-family home in Canada’s recreational regions is forecast¹ to increase 5.0 per cent in 2024 to $678,930, compared to 2023, as a boost in consumer confidence will bring sidelined buyers back to the market. All of Canada’s provincial recreational markets are forecast to see an increase in single-family home prices in 2024. Ontario is forecasting the greatest price appreciation, at 8.0 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,” said Phil Soper, president and CEO, 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.

“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,” continued Soper.

In 2023, the weighted median price² of a single-family home in Canada’s recreational property regions decreased 1.0 per cent year over year to $646,600. This follows a year-over-year price decline of 11.7 per cent in 2022. When broken out by housing type, the weighted median price of a single-family waterfront property decreased 7.9 per cent year over year to $1,075,500 in 2023, and the weighted median price of a standard condominium decreased 1.5 per cent to $420,300 during the same period. Despite a modest decrease over the past year, the national weighted median single-family home price remains 59 per cent above 2019 levels.³

“Demand has been building quietly on the sidelines,” said Soper. “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.”

As homebuyers sought out more space, privacy and access to nature during the height of the COVID-19 pandemic, many recreational real estate markets experienced a deep cut to their available home supply as buying activity soared. Although demand has since leveled off from historical highs, markets continue to grapple with low inventory levels.

According to a survey of 150 Royal LePage recreational real estate market professionals across the country,⁴ 41 per cent of respondents reported less inventory compared to the same time last year; 33 per cent of respondents said that their region has similar levels of inventory. However, 64 per cent reported similar or more demand from buyers for recreational homes. This sustained and growing demand for a limited number of available properties is expected to put upward price pressure on Canada’s recreational market.

Interest rate cuts could trigger market revival

Royal LePage recreational property advisors predict that buying activity will intensify when the Bank of Canada begins to make cuts to the overnight lending rate. Sixty-two per cent of experts said they believe demand will increase slightly in their region when interest rate cuts are made, while 21 per cent expect demand will increase significantly.

“Cash plays a larger role in the purchase of recreational property than with urban homes, yet the vast majority of buyers finance at least part of their purchases,” noted Soper.

According to the survey, 78 per cent of experts said that recreational property buyers in their region typically obtain financing, such as a loan or mortgage.

“Recreational property purchases are not as heavily impacted by mortgage rates as those in the residential market. 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.”

Recreational lifestyle remains attractive to Canadians

Nationally, 59 per cent of recreational real estate experts surveyed said that homeowners in their region typically use their properties as a secondary residence or vacation home. A smaller cohort, 21 per cent, said that owners tend to use their recreational homes partly as a vacation home and partly as a rental property. The majority of buyer demand for recreational properties comes from those aged 50 to 64, according to 57 per cent of experts.

“Though recreational trends are specific to the individual regions, we can confidently say that most Canadians who own a cottage or cabin use it for their own life-enriching purposes,” added Soper. “It’s a testament to our recreational communities and the lifestyle they afford Canadians that most of those who relocated to cottage country during the pandemic are staying put.”

While some homeowners relocated full-time to a recreational region during the pandemic, 55 per cent of recreational experts nationally said that it is not a common trend for those homeowners to return to urban or suburban communities as a result of changes to their remote work capabilities or preference in lifestyle. There are several recreational regions in Canada that are home to lively year-round communities.

“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,” concluded Soper.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Atlantic Canada

In 2023, the weighted median price of a single-family home in the East Coast’s recreational property market increased modestly by 1.0 per cent year over year to $275,600, compared to 2022. During the same period, the weighted median price of a single-family waterfront property increased 2.7 per cent to $399,800, while the weighted median price of a standard condominium increased 16.9 per cent to $339,000.

According to a Royal LePage survey of recreational property experts, 54 per cent of respondents in Atlantic Canada reported less inventory this year compared to 2023, and 76 per cent reported similar or less demand. In the region, 46 per cent of experts said that the average days on market has increased slightly since this time last year.

“We have seen some buyers choose to hold back on their purchase entirely until more inventory comes online. Due to higher mortgage carrying costs, today’s recreational buyers are more selective when shopping for a property. This has caused demand to continue building on the sidelines over the past year,” said Corey Huskilson, sales representative, Royal LePage Atlantic in South Shore, Nova Scotia. “Our market continues to struggle with a shortage of recreational home inventory, though we do anticipate a seasonal boost in supply in the coming months as the spring market gains momentum. When interest rates drop, I expect we’ll see a surge in activity. As buyers jump in to take advantage of lower borrowing costs, sellers will also feel more confident to list their properties.”

The East Coast recreational property market was a hot spot for out-of-province buyers who relocated to the region during the height of the pandemic, Huskilson added. Over the past year, the region has witnessed a small number of these residents who could not adapt to a rural lifestyle move closer to urban centres, though not necessarily back to their city of origin.

According to the survey, 85 per cent of recreational property experts in Atlantic Canada said that buyers in their respective regions typically obtain financing when making a purchase. Sixty-nine per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made.

“Following two years of record-breaking sales volume during the pandemic, our market experienced a reversion to more normal sales levels throughout 2023. The Central Newfoundland market, akin to others in the Maritimes, has seen reduced activity over the past year, partly due to sellers’ expectations and those holding out for pandemic-era prices,” said Mike Turner, broker and owner, Royal LePage Turner Realty, in Gander, Newfoundland and Labrador. “Vigorous market activity in 2021 and 2022 drastically reduced the inventory of recreational homes, dropping from a surplus of over a year’s worth of supply, to less than six months’ worth. The market has since realigned with its typical seasonal trends, and we expect the spring to introduce a fresh influx of homes. Despite these changes, however, we forecast that, unless there’s a considerable drop in interest rates to invigorate buyer competition, price growth in 2024 is likely to be modest.”

The median price of a single-family home in Atlantic Canada’s recreational regions is forecast to increase 4.5 per cent in 2024 to $288,002.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Quebec

In 2023, the weighted median price of a single-family home in Quebec’s recreational property market increased 2.6 per cent year over year to $396,900, compared to 2022. During the same period, the weighted median price of a single-family waterfront property decreased 8.3 per cent to $424,900, and the weighted median price of a standard condominium increased modestly by 1.0 per cent to $328,100.

According to a Royal LePage survey of recreational property experts, 45 per cent of respondents in Quebec reported demand for recreational properties has weakened in their respective regions compared to 2022, while 39 per cent said it has remained stable and 13 per cent believe it has increased. Among experts surveyed, 42 per cent noted an increase in the number of properties on the market, while an equal number (42%) reported similar supply levels as last year. Another 13 per cent noted a decrease in inventory in their region.

“In the greater Laurentians region, the spring market has already kicked off,” said Éric Léger, chartered real estate broker, Royal LePage Humania. “The early return of warm weather is bringing a little more activity to real estate listings every week, and the supply of properties is growing. We’re gradually getting back to balance: buyers have been on the sidelines as interest rates have risen, waiting for their personal finances to improve, and sellers have been more flexible on pricing. If the Bank of Canada goes ahead with its first rate cut this spring, this pent-up demand will be quickly released. Prices are expected to continue to rise, as supply remains insufficient in relation to demand, but this appreciation will be moderate.”

According to the survey, 87 per cent of recreational property experts in Quebec said that buyers in their respective regions typically obtain financing when making a purchase. Eighty-one per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made.

“Recreational markets in the Eastern Townships held their own in 2023, despite higher borrowing costs and inflation,” said Véronique Boucher, residential real estate broker, Royal LePage Au Sommet. “Prices held firm, but days on market increased, prompting sellers to negotiate down from the list price. Given the reduced purchasing power of buyers, a slowdown in demand was felt, particularly in the mid-range property segment. In the entry-level market, demand remains strong, and it’s becoming difficult, especially for our first-time buyers, to find something within their budget, as competition remains tight.”

The median price of a single-family home in Quebec’s recreational regions is forecast to increase 2.0 per cent in 2024 to $404,838.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Ontario

In 2023, the weighted median price of a single-family home in Ontario’s recreational property market decreased 5.2 per cent year over year to $613,100, compared to 2022. During the same period, the weighted median price of a single-family waterfront property decreased 8.2 per cent to $934,000, while the weighted median price of a standard condominium decreased 2.6 per cent to $509,400.

According to a Royal LePage survey of recreational property experts, 44 per cent of respondents in Ontario reported less inventory this year compared to 2023. Additionally, 44 per cent of respondents reported similar demand. In the region, 36 per cent of experts said that the average days on market has increased slightly since this time last year.

“Lower levels of inventory continue to dampen market activity, as buyers take their time and wait for the right recreational home to come along. Although sales volume is down on an annual basis, we have seen an increase in activity in the high-end segment of the market, especially in the $8-million-and-up market,” said John O’Rourke, broker, Royal LePage Lakes of Muskoka. “Strict short-term rental legislation has made it tougher for investors to break into the Muskoka market, making traditional cottage end-users the most dominant type of buyer in the area. Typically, our average buyer is someone from the Greater Toronto and Hamilton Area with a connection to the region.

“We expect an uptick in supply over the coming months, which will give eager buyers more selection. Although Muskoka attracts wealthier buyers who are less impacted by interest rate changes, a drop in borrowing costs could still ramp up market activity later this year,” added O’Rourke.

According to the survey, 84 per cent of recreational property experts in Ontario said that buyers in their respective regions typically obtain financing when making a purchase. Fifty-nine per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made; 27 per cent said demand will increase significantly.

“A boom in cottage country is coming. Sidelined buyers sense an impending drop in interest rates, and are slowly moving back into the market. However, many of them are looking for a specific type of recreational home and won’t settle for just any property, a sentiment that is keeping a lid on sales for now. Sellers have adjusted their expectations away from high pandemic-era prices and are becoming increasingly motivated to sell,” said Pauline Aunger, broker of record, Royal LePage Advantage Real Estate. “Finding that special vacation home is tricky in a market where inventory still falls short compared to demand, meaning buyers will need to make compromises as property prices rise and competition heats up. We anticipate an active spring market as buyers continue to adjust to the current interest rate environment and move forward with their real estate purchase plans.”

The median price of a single-family home in Ontario’s recreational regions is forecast to increase 8.0 per cent in 2024 to $662,148.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Prairies

In 2023, the weighted median price of a single-family home in the Prairie provinces’ recreational property market decreased modestly by 0.9 per cent year over year to $285,500, compared to 2022.

According to a Royal LePage survey of recreational property experts, 56 per cent of respondents in the Prairie provinces reported less inventory this year compared to 2023, and 67 per cent reported similar demand. In the region, 33 per cent of experts said that the average days on market has increased slightly since this time last year; an equal number of respondents (33%) said that the average days on market has decreased slightly.

“Recreational buyers tend to come out of hibernation at the first sign of a spring thaw, after which inventory and sales activity start to climb. A warmer-than-normal winter will likely contribute to an earlier spring market in 2024. Although we are expecting a seasonal boost to home supply levels, inventory may climb higher than anticipated as homeowners who are over-leveraged, due to more costly mortgage renewal rates, seek to offload their recreational properties,” said Rolf Hitzer, broker and owner, Royal LePage Top Producers Real Estate in Winnipeg, Manitoba. “Rising interest rates have contributed to a market slowdown this past year as mortgage payments and the cost of living have risen. However, there is quiet optimism that affordability will improve when borrowing costs are reduced, allowing buyers who had to step out of the market to return.”

According to the survey, 89 per cent of recreational property experts in the Prairie provinces said that buyers in their respective regions typically obtain financing when making a purchase. Forty-four per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made.

“The North Saskatchewan real estate landscape is unique – though this market is small and has been slow to expand, we see a wide range of recreational buyers in this region. On one hand, we see local families looking for weekend getaway properties, and on the other, luxury shoppers with a connection to the area seeking high-end vacation homes,” said Lou Doderai, broker and owner, Royal LePage Icon Realty in Prince Albert, Saskatchewan. “Given the small number of listings, the turnover of properties tends to be low – it is common for homes here to be passed down through generations. This past year, activity has tapered due to a shortage of inventory, keeping price growth in the mid-single digits. Though the seasonal spring market will bring a small uptick in supply, in the long-term, we are not expecting a meaningful rise in inventory as a result of little development and rising construction costs. We are, however, expecting a modest increase in prices this year as potential interest rate cuts prompt some buyers to try their hand at the listings that are available.”

The median price of a single-family home in the Prairies’ recreational regions is forecast to increase a modest 0.5 per cent in 2024 to $286,928.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Alberta

In 2023, the weighted median price of a single-family home in Alberta’s recreational property market increased 4.7 per cent year over year to $1,238,900, compared to 2022. During the same period, the weighted median price of a single-family waterfront property decreased modestly by 0.7 per cent to $604,700, while the weighted median price of a standard condominium increased 4.9 per cent to $633,100. As a large and popular recreational destination, Canmore’s real estate market has a significant impact on prices in Alberta, with its luxury properties in proximity to Banff National Park.

According to a Royal LePage survey of recreational property experts, 56 per cent of respondents in Alberta reported less inventory this year compared to 2023, and 56 per cent reported similar demand. In the region, 33 per cent of experts said that the average days on market has increased slightly since this time last year.

“Buyer demand in Canmore’s recreational property market continues to be driven by both Albertans and out-of-province buyers from Ontario, Manitoba, Saskatchewan and Quebec. While demand remains strong, we are facing ongoing inventory shortages as new listings remain few and far between,” said Brad Hawker, associate broker, Royal LePage Solutions. “Looking ahead, I expect an active spring and summer season and potential price increases compared to 2023. Interest rate cuts may not have a major impact on the high-end Canmore recreational market as many transactions are cash-based, with few buyers relying on lending.”

According to the survey, about half (56%) of recreational property experts in Alberta said that buyers in their respective regions typically obtain financing when making a purchase. Forty-four per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made.

“We continue to see minimal turnover with properties in the Wabamun Lake and Lac Ste. Anne markets, further contributing to the low level of supply in these recreational regions. As Greater Edmonton’s population continues to expand, there is more pressure on the limited recreational land nearby. Demand for recreational properties in both areas are largely driven by locals who appreciate their close proximity to the city, natural attractions and relative affordability,” said Tom Shearer, broker, Royal LePage Noralta Real Estate. “While interest rate cuts may not immediately spur activity as we enter the spring and summer seasons, I expect to see increased buyer interest and activity this year in comparison to last year, mainly coming from local residents around the lakes.”

The median price of a single-family home in Alberta’s recreational regions is forecast to increase 4.0 per cent in 2024 to $1,288,456.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

British Columbia

In 2023, the weighted median price of a single-family home in British Columbia’s recreational property market increased modestly by 0.3 per cent year over year to $1,086,500, compared to 2022. During the same period, the weighted median price of a single-family waterfront property decreased 8.5 per cent to $2,295,400, while the weighted median price of a standard condominium decreased 6.3 per cent to $415,000.

According to a Royal LePage survey of recreational property experts, 50 per cent of respondents in British Columbia reported less inventory this year compared to 2023, and 46 per cent reported similar demand. In the region, 42 per cent of experts said that the average days on market has increased slightly since this time last year.

“Although we have not experienced a material increase in sales over the past year, we feel that buyer demand is building in the wings, waiting for news of interest rate cuts. We are expecting a seasonal boost of inventory in the spring, and new provincial short-term rental restrictions may also prompt some investors to offload their recreational properties, adding to that supply,” said Frank Ingham, associate broker, Royal LePage Sussex. “Thanks to high-speed internet and remote working, seasonal residents have settled into the Whistler area full-time to take advantage of the area’s year-round recreational options.

“Whistler is a very unique market – in this luxury market, rising interest rates have little effect on the buyers who purchase in the seven- and eight-figure price range. However, a drop to rates will give consumers greater confidence in the overall market and economy, prompting them to step off of the sidelines,” added Ingham.

According to the survey, 50 per cent of recreational property experts in British Columbia said that buyers in their respective regions typically obtain financing when making a purchase. Fifty-four per cent of experts said they expect demand to increase slightly in their region when interest rate cuts are made.

“The Okanagan region is settling into balanced market territory, thanks to stable buyer demand and healthy levels of inventory that have produced minimal price fluctuations. Year over year, sales are down only marginally,” said Francis Braam, broker and owner, Royal LePage Kelowna. “Locals and residents from the Lower Mainland make up the majority of purchasers in this market. Tighter restrictions on short-term rentals mean fewer opportunities for investors in the region. The biggest question we’ve yet to answer in this market is what will happen with interest rates. We see pent-up demand lingering on the sidelines as buyers wait for the first highly-anticipated rate cut by the Bank of Canada. We expect the pace of the spring market to be stable, returning to seasonal norms. That could quickly change as an interest rate cut will spark higher levels of activity.”

The median price of a single-family home in British Columbia’s recreational regions is forecast to increase 5.0 per cent in 2024 to $1,140,825.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

The Royal LePage Spring Recreational Property Report compiles insights, data and forecasts from 50 real estate markets. Median price data was compiled and analyzed by Royal LePage for the period between January 1, 2023, and December 31, 2023, and January 1, 2022 and December 31, 2022. Data was sourced through local brokerages and boards in each of the surveyed regions. Royal LePage’s national and provincial weighted median home prices and forecasts are based on a weighted model using sales in each region. Methodology is consistent with previous reports, which used the label ‘aggregate’. Data availability is based on a transactional threshold and whether regional data is available using the report’s standard housing types. Prices may change from previous reports due to a change in the number of participating regions.

A national online survey of 150 brokers and sales representatives serving buyers and sellers in Canada’s recreational property regions. The survey was conducted between February 24, 2024 and March 12, 2024.

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage^® Shelter Foundation™, which has been dedicated to supporting women’s shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services^® Inc. company, a TSX-listed corporation trading under the symbolTSX:BRE. For more information, please visit www.royallepage.ca.

Mario Toneguzzi