From luxury properties to townhomes, the Canadian real estate market has witnessed monumental growth over the last year. Across the country, sales activity and home valuations have been climbing at levels never seen before, buoyed by strong demand, low inventory and historically low interest rates. These are the dominant trends, whether you’re house-hunting in the Okanagan Valley, British Columbia or Halifax, Nova Scotia.
But one of the most riveting developments in the Canadian real estate market since the beginning of the coronavirus pandemic has been the substantial price increases for cottage properties. While cottage country markets across the country have typically witnessed high demand during the summer months, evolving consumer trends are pointing to sustained interest throughout the year in rural communities.
Since more people are working from home, professionals are setting their sights on lakefront cottages, chalets in the mountains or cabins in the woods, away from the hustle and bustle of major urban centres. But as homeowners cash in on their big-city properties, they are using their high equity to outbid buyers (including local residents and their fellow out-of-town buyers) and driving up cottage prices in the process. Many forecasts suggest that this impressive growth will continue through 2021 and potentially heading into 2022.
Has the Canadian real estate market been permanently altered as more households shy away from hyper-dense metropolitan areas to embrace the charm of quiet small-town life? The answer might be reflected in the numbers across multiple recreational housing markets from coast to coast.
Prices for Cottage Properties in Canadian Real Estate Market Soar
If you are currently trying rent a cottage in rural Ontario, you may be out of luck as the vast majority are fully booked for the rest of 2021. Similarly, if you’re keen to buy a cottage in Atlantic Canada, be prepared to put up a fight thanks to swelling levels of demand as a result of out-of-province buyers and cheap borrowing costs.
Here are some of the figures of what homebuyers can expect to face as they seek shelter in Canada’s recreational property markets:
Kawartha Lakes, Ontario (March 2021 / year-over-year)
- Residential non-waterfront sales: +87.7%
- Residential waterfront sales: +223.1%
- Median price for residential non-waterfront properties: +44.7% to $606,000
- Median price for residential waterfront properties: +64.5% to $872,000
Georgian Bay, Ontario (March 2021 / yoy)
- Residential sales: +106.1%
- Benchmark price for single-family homes: +43.6% to $617,900
Sunshine Coast, British Columbia (December 2020 / yoy)
- Residential sales: +82%
- Median price of residential properties: +7.8% to $830,000
Prince Albert, Saskatchewan (March 2021 / yoy)
- Residential sales: +79.2%
- MLS® Home Price Index (HPI): +12.1% to $183,100
Prince Edward Island (March 2021 / yoy)
- Residential sales: +81.7%
- Average price of homes sold: +21.9% to $330,121
Lethbridge, Alberta (March 2021 / yoy)
- Single-detached home sales: +59.6%
- Median sale price for single-detached homes: +14% to $335,000
What to Expect for Cottage Real Estate Moving Forward?
Whether you desire to go fishing on a lake or sip coffee on the patio of your waterfront property, be prepared to open your wallet wide. Cottage country prices are still expected to increase, especially now that the busy spring and summer home-buying season has arrived. This historically active period is anticipated to be busier than ever before. At the very least, prices are expected to continue rising.
Like Toronto or Vancouver, cottage areas are experiencing low inventory. A dramatic supply imbalance is leading to bidding wars for active and new listings. While this was unheard-of just a few short years ago, it has become the norm in many recreational communities across Canada. Work-from-home arrangements, the demand for less-densified areas and larger living spaces paired with ultra low interest rates are the key drivers of this unprecedented growth within destinations that would be difficult to spot on a map.
As the Financial Post wrote in February, “Cottage country is the new battleground for housing bidding wars.” Although cottage country housing will still appeal to city slickers following the COVID-19 pandemic, the market could eventually normalize, write Murtaza Haider, a Ryerson University professor, and Stephen Moranis a real estate industry veteran.
“Once more housing is made available by prospective sellers, who have been patiently watching the markets from the sidelines, cottage country markets are likely to return to calmer conditions to match the serene and tranquil environments that distinguish them,” they said.
Until then, cottage country is no longer just the focus of retirees searching for the quiet life in their golden years, or families seeking fun in the summer sun. Young professional couples who only need a reliable Internet connection to work are expected to become a key driver of the cottage country housing market for the foreseeable future, whether in the Sunshine Coast or Atlantic Canada.
Home sales, average price decline in April from March
Home sales fell 12.5% in April from March, with the average selling price also declining slightly on the month, data from the Canadian Real Estate Association showed on Monday.
The actual national average selling price was C$696,000 in April, falling 2.9% from March but up 41.9% from a year earlier as it was compared with a sharp decline in April 2020 amid the first wave of COVID-19, the industry group said.
Actual sales, not seasonally adjusted, rose 256% from a year earlier, while the group’s Home Price Index was up 23.1% on the year and up 2.4% from March.
(Reporting by Julie Gordon in Ottawa; Editing by Andrew Heavens)
Canada housing starts fall 19.8% on month in April
The seasonally adjusted annualized rate of housing starts fell to 268,631 units from a revised 334,759 units in March, Canada‘s national housing agency said. Analysts had expected 280,000 unit starts in April.
(Reporting by Julie Gordon in Ottawa; Editing by Gareth Jones)
Towns grapple with big-city-like real estate boom
Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the COVID-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services.
The growing demand has led to some small Canadian communities seeing house prices jump more than 75% in one year.
“The small towns are getting hit hard. They’re getting interest like they’ve never had before,” said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city. (Graphic: Annual price gains in select Canadian cities and towns,)
The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends.
The boom in Canada has builders flooding into smaller communities. More homes mean more demand for drinking water and wastewater treatment, forcing some towns to fast-track expensive infrastructure projects.
For locals, the influx of city people is a double-edged sword. New residents are breathing life and diversity into places where – before the pandemic – schools were closing and many businesses struggled through the winter.
But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff.
Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.
“You want people to come here and help build the community. But at what cost to the people who have been here for literally generations?” said Nancy Cherwinka, who lives in Prince Edward County, a peninsula in Lake Ontario known for its wineries and beaches.
MOVE TO THE COUNTRY
Roughly 75,000 people left Toronto and Montreal – Canada‘s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001, according to the latest Statistics Canada data.
For Prince Edward County, about 200 km (125 miles) east of Toronto, that migration has helped drive house prices up 78.5% on the year, putting ownership out of reach for many local residents. The average selling price of a home there in April was C$740,112 ($610,000).
“Now the rental market has gone nuts,” said Chuck Dowdall, executive director of the Prince Edward County Affordable Housing Corporation, with potential home buyers giving up on buying, and renting instead.
The rental crunch is making it difficult for small businesses to hire and retain staff, even if they pay above minimum wage.
It is a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small bunkhouse next to their brewery to house workers temporarily and have even had staff stay with them. This year, they arranged a lease for a three-bedroom home for employees.
“You have to be creative,” said Parsons, adding they still lose out on talent because of the housing challenge.
IF YOU BUILD IT
To tackle the housing crisis, Prince Edward County is planning for more than 3,000 housing starts through 2026, including dozens of below-market rental units.
That boom is putting pressure on municipal services, notably aging water infrastructure. The region is hastening plans to spend C$68 million ($56.2 million) on its water and wastewater system, with developers on the hook for much of the bill.
New-home construction is also surging in other smaller centers across Canada, with rural starts in the first quarter of 2021 at their highest point since 2008. (Graphic: Canada rural housing starts, )
In Collingwood, Ontario, a four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to pause all new-home construction while it sorts out how to address its critical water shortage.
In Nelson, a former mining town in British Columbia’s Kootenay mountains, a pandemic-driven explosion of infill and coach housing is forcing the small city to expand its wastewater and water infrastructure sooner than planned.
“We were heading down that road anyway … but now it’s been accelerated. So that’s going to put us a little bit on our back foot,” said Mayor John Dooley, adding that the sewage treatment plant alone will cost about C$25 million.
Dooley said Nelson hoped to split the costs with the province and federal government.
Back in Prince Edward County, about half the children at a rural daycare are new to the community since the pandemic. At the sister daycare in town, a quarter of students are newcomers. Enrollment at local schools is also up, reversing a trend that had led to closures in previous years.
More young families living in the community will ultimately be beneficial, said Cherwinka, as long as they stick around once life goes back to normal.
“Hopefully they stay, hopefully it’s not just a pandemic solution,” she said. “Hopefully it’s long term.”
($1 = 1.2092 Canadian dollars)
(Reporting by Julie Gordon in Ottawa; Additional reporting by Andy Bruce in London; Editing by Peter Cooney)
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