Royal LePage report expects all provinces to have higher prices compared to last year
Owners of homes in Canada’s recreational property markets should see gains in their asset values in 2024, according to a new report.
Royal LePage’s outlook, published today (March 20), expects an annual increase in the median price of a single family home in all provinces’ recreational markets of 5% to $678,930. However, regional variations range from as little as 0.5% in the Prairies to 8% in Ontario.
Last year saw some challenges for recreational markets with the weighted median price of a single family home down 1% nationally year-over-year, with those on waterfronts down almost 8% and condos down 1.5%. And this was following a significant decline in 2022 from the surge in demand in the previous two years.
But with rising consumer confidence buyers are expected to return from the sidelines as the spring buying season gathers pace.
Phil Soper, president and CEO of Royal LePage reflected on the ‘gold rush’ that occurred during the pandemic years, with city offices closed and the lure of attractive surroundings, supported by technology that allowed easy working from home, boosting the market until economic factors interrupted.
“Inflation reared its ugly head, interest rates soared and the economic downturn that followed pushed cottage, cabin and chalet prices off those pandemic peaks, yet the fundamental demand for recreational living has not abated. We believe that this market segment will see a resurgence of activity in 2024,” he said. “Our regional experts tell us that buyer interest is steadily ramping up as the spring market approaches. With hybrid office and work-from-home business models being the norm now, many working people see the opportunity to make much better use of country properties.”
Rate cut impact
Although there is no certainty of when it will happen, rate cuts from the Bank of Canada are expected to fuel further demand for recreational homes, despite a greater tendency for cash to be involved in buying these properties.
“Cash plays a larger role in the purchase of recreational property than with urban homes, yet the vast majority of buyers finance at least part of their purchases,” noted Soper. RLP’s research shows that 78% of its experts say buyers typically obtain a loan or mortgage for their purchase.
Some economists believe the resurgence of the broader spring housing market may cause the Bank of Canada to reconsider the timing of anticipated interest rate cuts.
“Recreational property purchases are not as heavily impacted by mortgage rates as those in the residential market,” added Soper. “That said, consumer confidence in general will get a boost when we see a cut to the Bank of Canada’s key lending rate, expected later this year. This lift in activity will put upward pressure on prices. And, if this coincides with an influx of inventory, we should see a boost in sales as well.”
The RLP survey asked regional experts what buyers of recreational properties typically use them for with 60% saying that second homes or vacation homes are the most common reasons, 21% said partly own use as a vacation home and partly rental.
Most buyers – cited by 57% of experts – are in the 50-64 age range and there is a significant share of owners who choose to relocate permanently to a home in a recreational market.
“Whether it's for retirement or a summer vacation destination, we anticipate that more Canadians will look to embrace recreational living this year as lower borrowing costs bring their recreational home aspirations closer within their reach,” concluded Soper.
