Following the boom seen in recreational properties during the pandemic, high borrowing costs and reduced demand are helping to bring balance back to the market.
While the aggregate cost of recreational homes surged in many regions over the past several years, 2023 is seeing price declines in all markets except Alberta. That’s according to a Royal LePage report based on feedback from over 200 brokers and real estate representatives from across Canada and data compiled from 50 recreational markets.
In 2023, the aggregate price of single-family homes in Canada’s recreational regions is predicted to decline by 4.5% to $592,005, as market activity lessens. This reduction is attributed to reduced demand, economic uncertainty and low housing inventory.
But while a modest decrease is anticipated this year, the national aggregate price will still be over 32% higher than 2020 levels, following two consecutive years of double-digit price growth in the recreational real estate sector.
“After two years of relentless year-round competition, Canada’s recreational property markets have slowed and returned to traditional seasonal sales patterns,” Phil Soper, president and CEO of Royal LePage, said in a release.
“Buyers who are active in today’s market appear willing to wait for the right property—a sharp contrast to what we experienced during the pandemic,” he added.
The future of the recreational housing market
The following are Royal LePage’s forecasts for the change in aggregate price of a single-family recreational property throughout 2023:
• Atlantic Canada is expecting a modest 3% decrease to $271,503
• Quebec is expecting a decrease of 8% to an aggregate price of $343,528
• Ontario is expected to see a decrease of 5% to $603,060
• The Prairies are anticipating a modest decrease of 3% to $263,161
• Alberta is the only region expecting to see an increase, and it is anticipated that the aggregate price will rise by 0.5% to $1,171,328
• British Columbia is expected to see a modest decrease of 2% to $1,049,874
Ontario
This year, 52% of experts in the region reported that Ontario’s recreational market is showing less demand than 2022, and 61% said there were fewer properties on the market.
“Recreational Property sales are down slightly year over year, but they have not been effected as much as residential,” Samantha Garrod, a mortgage broker based in the Muskoka region, told CMT.
Reduced demand can be attributed to buyer fatigue, high borrowing costs and lack of inventory. Overall, the market in Ontario is trending to return to normal levels over the summer months with sales becoming more in line with historical norms, Royal LePage notes. For those still looking to buy, they’re willing to wait for a suitable property to come along.
“Muskoka has always been a desirable area for cottagers, and I don’t foresee that changing anytime soon,” says Garrod.
British Columbia
Most experts in British Columbia’s recreational housing regions have reported less inventory in 2023 compared to the last two years. While many prospective buyers are happy to wait on the sidelines until a suitable property becomes available and borrowing costs become more affordable, passive demand combined with low inventory has created a lot of pent-up demand, according to Royal LePage.
Inventory in British Columbia’s prime recreational regions like Pemberton and Whistler are expected to rise slightly over the year, but not enough to alleviate pent-up demand in the market.
Lack of inventory is partially due to people relocating to what were traditionally recreational regions full-time, the report adds. Fifty-four per cent of experts in the region say that for those who relocated to the region full-time during the pandemic, returning to urban life was not common, exacerbating inventory shortage. Further, many prospective buyers in this area include retirees who may be looking to stay in the region full-time. It’s expected that some properties will be bought up over the summer, however, there likely won’t be alleviation until borrowing costs go down and inventory increases, according to Royal LePage.
Alberta
Alberta is the only recreational market that’s expected to see an increase in aggregate prices in 2023. Alberta’s prices are heavily influenced by properties in the Canmore area, near Banff National Park. High prices can be attributed to a shortage of inventory while demand has stayed relatively stable, if not more sought after than previous years.
Many people moved to Alberta’s mountainside recreational properties during the pandemic, however, 65% of recreational property experts around this area reported that homeowners moving back to urban areas afterward was not common, further exacerbating the inventory shortage.
Ultimately, due to low inventory and high demand, Alberta’s recreational market—especially around Banff and Canmore—is becoming some of Canada’s most expensive and coveted real estate, the report notes.
Quebec
The average price of a recreational property in Quebec is expected to decrease more this year than any other market in Canada. Recently, both demand and inventory have decreased due to high borrowing costs and economic uncertainty. Like other regions, people who are looking to buy aren’t in a rush and are happy to wait for the right property to come along. For this reason, Quebec is seeing many multiple-offer scenarios on well-maintained properties that are listed at a fair price, says Royal LePage.
Experts in the area report that inventory is steadily increasing as sellers are becoming more open to reducing their initial asking price. In the next few months, it’s expected that more properties will come on the market as mortgages come up for renewal at significantly higher interest rates.
Atlantic Canada
Throughout the pandemic, many Canadians migrated to the East Coast to enjoy a slower pace of living at more affordable prices. However, after the pandemic, many people moved back to urban areas after relocating full-time, Royal LePage notes.
Recently, Atlantic Canada’s recreational market has seen less inventory and less demand as those looking to sell their property wait for market prices to increase while prospective buyers sit back and wait for the right property to come along. Demand is likely to increase as borrowing costs moderate, the report projects.
The Prairies
During the pandemic, the recreational market in the Prairies thrived while buyers from nearby urban areas opted to buy vacation properties in-province rather than something farther away or south of the border.
Like other areas, prospective buyers are being cautious with the uncertain economic conditions and are happy to wait on the sidelines until a good property comes along. Recently, inventory in the Prairies has been decreasing while demand has stayed constant, keeping recreational prices high.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
