Buyers Seize Opportunities in Flourishing Recreational Property Market
2015 Recreational Property Report from Royal LePage shows stronger demand nationwide
Toronto, ON, June 4, 2015 – For the second consecutive year, the recreational property market got off to a slow start in 2015, as harsh weather delayed sales activity in most regions until well into the spring buying season. Brokerages and agents that specialize in cottage, cabin or chalet properties are now experiencing a rush of activity as buyers make up for lost time, according to the 2015 Royal LePage Recreational Property Report released today. Unlike 2014, when the extended winter dampened total sales volumes, increased activity levels in mid to late spring 2015 show that buyers had merely delayed purchase decisions this year versus putting them off entirely. The exception to this is in Alberta, some border areas of eastern B.C. that cater to Albertans, and in Newfoundland, where a depressed energy sector has reduced activity levels and put downward pressure on prices.
The Royal LePage Recreational Property Report compiles information from a cross-Canada survey of brokers and agents who specialize in the recreational real estate market. Advisors across the country are reporting a surge of interest from buyers who have already absorbed a good deal of the available inventory, including many listings that sat unsold last year. In spite of another long winter, buyers have come out in droves in late spring, encouraged by asking prices that have remained relatively flat, year over year. However, brokers warn that prices could begin to climb again as new inventory has not kept up with sales volumes.
“The dream of recreational property ownership is very much alive and well across the country,” observed Phil Soper, president and chief executive of Royal LePage. “Dominated primarily by buyers in their 40s and 50s with families, these are people who are seeking to re-create the idyllic weekends and summers of their youth. Looking ahead, many see their current weekend getaway as a future full-time residence, both as a base for ‘work from home’ arrangements as they become empty-nesters, and onward into retirement.”
“Today’s low interest rate environment has supported discretionary, aspirational purchases in a number of sectors,” continued Soper. “Our agents that serve the urban luxury home market have been extremely busy this year. Further, adult Canadians have accumulated considerable wealth. They are buying luxury automobiles and products like expensive smartwatches in record numbers. While a cottage is clearly a non-essential purchase, in many ways it’s less selfish, as the benefits of a country get-away accrue to the entire family.”
“In a roundabout way, the fall in oil prices is supporting the recreational property market this year,” concluded Soper. “Cheaper gasoline makes the prospect of a weekend commute to the lake a more affordable proposition. And cheap oil means a lower Canadian dollar, which has more people looking at Muskoka, Tremblant and the B.C. interior and fewer casting covetous glances at Florida and Arizona. We are even seeing money making its way north, particularly in British Columbia, Alberta and Atlantic Canada, as the strong U.S. currency has increased American buying power.”
The 2015 report shows that all property types have experienced a strong start to the recreational property buying season. Consistent with previous years, the demand for waterfront properties continues to produce the greatest price appreciation. Experienced agents are quick to point out that waterfront is finite and there is only so much property to go around.
While each community has its own unique characteristics, the brokers and agents who specialize in the sector agree fully on one important factor when searching for a recreational property: the need to do your homework before purchasing. From understanding shorelines to septic systems, owning a cottage is a different proposition to that of a city property. Each region has its own regulations that cover renovations; your ability to rent the property to others; and environmental obligations. While banks will provide financing to purchase a second residence, the requirements and loan terms will be different. It is highly recommended that buyers take their time to assess what is most important to them, from commute times to sun exposure to affordability. To do all this, it is essential to engage an agent that specializes in the local recreational property market who can walk buyers through the complex process.
The Royal LePage Recreational Property Report is an annual market analysis of recreational property prices, trends and activity in select leisure markets across the country and the full report can be found here.
2015 Recreational Property Report
Source: RoyalLepage.ca Press Release June 4, 2015