One of the hottest areas in Canadian real estate these days is the recreational property market, as boomers and younger Canadians race to buy prime properties with waterfront or mountain views. Tight market conditions are expected to continue in Canada, with new inventory remaining scarce and few existing cottage and chalet owners planning to put their properties on the market.
According to a report commissioned by Royal LePage Real Estate Services Ltd. , the average price of waterfront recreational property in Canada with road access is $380,507, while the average price for a ski chalet is $413,694. These prices exceed the average price for a two-storey home in Canada (which is about $341,000). Popular destinations such as Grand Bend, Georgian Bay, Wasaga Beach, the Muskoka area and the Kawarthas in Ontario, and Cranbook, Kelowna, Vernon, the Okanagan and Fernie in British Columbia, are seeing recreational properties sell for $500,000 to more than $1 million.
The most expensive market is B.C., in which the average price for a waterfront cottage is $996,900; the least expensive is New Brunswick, where prices average $91,875. In B.C. the average cost of a mountain chalet is slightly more than $370,000.
While prices are high, one-quarter of Canadians surveyed for the Royal LePage report would be willing to spend more on their recreational property than on their main family residence, with more than half of this group saying they would spend $50,000 to $150,000 more.
“Escalating recreational property prices are evident in the majority of markets across the country,” says Phil Soper, president of Royal LePage. “The rising prices are not surprising, given that there is a convergence of buyers entering the market — urban professionals, young families and baby boomers all vying for properties with similar features. Right now, there is a big bubble of people coming into the market. We can’t create more waterfront, so there’s far more demand than supply.”
If your clients are considering a recreational property and want something that will hold its value, the survey indicated the most popular features (in descending order) are: waterfront location, mature trees offering privacy, a large dock on the water, full bathrooms, modern amenities such as a large kitchen, a structure less than 15 years old, open-concept design, solar power, Internet access and a guest house. Almost 70% of respondents wanted four-season usage.
Soper warns that, in a real estate slow-down, recreational properties tend to be hit harder because they are luxury items.
“Liquidity in recreational properties can be an issue if there is a recession, and it can take a long time to sell when people are not spending on luxuries,” he says. “If you’re going to use and enjoy the property, it can be a wonderful investment as it appreciates over time. But if it’s strictly a speculative investment, you may have to be lucky.”
While the desire for cottages is strong, they are not easy to come by. The survey showed only 15% of cottage owners are likely to sell their properties in the next three years, which limits the resale properties on the market; 60% plan to leave their cherished retreats to family members in their wills. — JADE HEMEON