Market trends: Cottage prices to drop
Author of the article:
Linda White • Special to Postmedia Network
Published Apr 26, 2023 • 2 minute read
The price of recreational real estate across the country is expected to dip this year, with the biggest price drops in Ontario and Quebec.
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“After two years of relentless year-round competition, Canada’s recreational property markets have slowed and returned to traditional seasonal sales patterns,” says Royal LePage President and CEO Phil Soper.
“While interest rate hikes have less of an impact on the recreational market than homes in urban settings because families typically put more money down and borrow less, general consumer inflation combined with a severe lack of inventory has dampened sales activity. 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.”
According to Royal LePage’s 2023 Spring Recreational Property Report and Forecast, the aggregate price of a single-family home in Canada’s recreational regions is expected to dip 4.5 per cent compared to last year to $592,005. Prices in Ontario are forecast to drop five per cent to $603,060.
In 2022, the aggregate price of a single-family home in Canada’s recreational property regions increased 11.7 per cent year-over-year to $619,900. That follows year-over-year price gains of 26.6 per cent in 2021. The aggregate price of a single-family waterfront property increased 9.5 per cent year-over-year to $736,900 in 2022, while the aggregate price of a condominium rose 16.6 per cent to $432,000 during the same period.
In Ontario, the aggregate price of a single-family home in the recreational market in 2022 increased 7.3 per cent to $634,800 compared to 2021. In that same period, the aggregate price of a single-family waterfront property increased 8.9 per cent to $1.006 million while the aggregate price of a condo increased 15.1 per cent to $510,900.
Sixty-one per cent of Royal LePage recreational property agents in Ontario report less inventory this year compared to 2022 and 59 per cent report less inventory compared to typical pre-pandemic levels. Fifty-two per cent say demand is down this year compared to last year but 39 per cent peg demand at higher than a typical pre-pandemic year.
“Traditional cottage buyers – end users that plan on enjoying their property – are still engaged and seem eager to jump back into a market in which they are not competing with the investment-focused buyer; a prominent player during the pandemic boom,” says John O’Rourke, broker, Royal LePage Lakes of Muskoka.
Thirty-five per cent of recreational property experts in Ontario say the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic was somewhat common, while 49 per cent say that trend is not common in their area.
“During the pandemic, with offices closed and people working from home, Canadians discovered that a recreational property could double as a principal residence, complete with capital gains exempt status,” says Soper.
“Many urban businesses now require employees to be in the office at least a few days a week, making long commutes challenging. For many, living in cottage country full-time has lost its romantic shine, meaning we are back to viewing the cottage, cabin and chalet as a weekend and summer escape from urban living.”
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