Tag: recreational property

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Cottage Life

Experts predict a price drop for Canadian cottage regions in 2023

Photo by Shutterstock/Alessandro Cancian

After two years of soaring cottage prices, the real estate market is starting to stabilize. In its Spring Recreational Property Report, Royal LePage forecasted a 4.5 per cent dip in cottage prices across the country in 2023, dropping the aggregate price from $619,900 to $592,005.

“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,” said Phil Soper, president and CEO of Royal LePage, in the report.

A return to in-office work has also caused the market to slow. During the pandemic, cottages offered an alluring escape from the city, especially with the introduction of high-speed internet in rural locations. But now, with many employees required to return to the office a few days per week, and shops, venues, and events back in full swing, buying a cottage has dropped in priority.

But despite the market stabilizing, buying a cottage is still expensive. Across the country, prices remain 32 per cent higher than pre-pandemic levels. To better understand the cottage market, here’s a breakdown of what’s happening in each province:

Cottages in Ontario

In 2022, the aggregate price of a waterfront property in Ontario increased by 8.9 per cent to $1,006,600, compared to 2021. Southern Georgian Bay was the most expensive region with a 7.1 per cent price increase to $1.5 million, followed by Orillia, which saw a 22.4 per cent increase to $1,377,000, and then Muskoka, which saw a 15.7 per cent decrease to $1,062,500.

Muskoka’s price drop may be indicative of a more significant trend. According to a Royal LePage survey of Ontario realtors, 52 per cent of respondents reported less demand this year than last year. The entire province is forecasted to see a five per cent decrease in recreational property prices.

“Activity in the recreational market came to a comparative standstill in the last half of 2022. Rising interest rates, buyer fatigue, and lack of inventory all played a role,” said John O’Rourke, a broker at Royal LePage Lakes of Muskoka. “Early signs this spring point to a more balanced market where inventory levels and sales are trending in line with historical norms.”

The market in Quebec

In 2022, the aggregate price of a waterfront property in Quebec increased 17.3 per cent to $480,200, compared to 2021. Memphrémagog topped the price list after a 24.6 per cent increase to $860,000, followed by Les Pays-d’en-haut with a 4.3 per cent increase to $600,000, and then Les Laurentides with a 25.3 per cent increase to $530,000.

Despite its major price jump in 2022, Quebec is forecasted to have the biggest price drop in 2023 at eight per cent. Similar to Ontario, this price drop is due, in part, to lack of demand. In a Royal LePage survey of Quebec realtors, 76 per cent of respondents reported less demand this year than last year.

“Buyers are more patient; they’re negotiating, and they’re taking time to carefully assess their needs and financial capacity before taking the plunge,” said Véronique Boucher, residential real estate broker at Royal LePage Au Sommet. “Conditional offers to purchase, which were practically unheard of during the pandemic real estate boom, made a big comeback in the latter half of 2022, a sign of a much more balanced and fair cottage market.”

Waterfront property in British Columbia

In 2022, the aggregate price of a waterfront property in B.C. increased 5.6 per cent to $1,065,000, compared to 2021. Invermere was the most expensive region with a 26.6 per cent increase to $2,025,000, followed by the Comox Valley, Denman Island, Hornby Island, and Mt. Washington areas with a 4.4 per cent increase to $1,350,000, and then the East Kootenays with a 0.2 per cent increase to $774,500.

In a Royal LePage survey of B.C. realtors, over half reported that cottage owners remained full time in the area rather than moving back to urban settings after the pandemic. This trend has caused a shortage in supply, keeping prices relatively high. But Royal LePage expects B.C. cottage prices to drop by two per cent in 2023.

“Come springtime, I anticipate that supply levels will rise as more sellers move into the market, but I don’t expect there to be a huge wave of relief,” said Frank Ingham, associate broker at Royal LePage Sussex. “Many buyers continue to wait on the sidelines for prices to fall or for borrowing costs to become more affordable, especially those purchasers who are buying for their retirement or for their adult children to enjoy. This trend is creating more pent-up demand on the sidelines and is causing properties to stay on the market twice as long as last year. However, as the spring market gains momentum, I expect more homes that have been sitting on the shelves will start to move into the hands of buyers.”

What’s happening with housing in Alberta?

In 2022, the aggregate price of a waterfront property in Alberta decreased by five per cent to $641,900, compared to 2021. Wabamun Lake was the most expensive area at $820,200, a 7.7 per cent decrease from 2021; Pigeon Lake at $674,500, a 0.7 per cent decrease; and then Lac St. Anne at $534,700, a 10.9 per cent decrease.

Alberta is experiencing a lack of turnover in its cottage markets, keeping properties in demand and prices high. That’s why, despite the decrease in 2022’s waterfront prices, Alberta is the only province in Canada forecasted to see a price increase of 0.5 per cent in 2023.

The market in the Prairies

In 2022, the aggregate price of a waterfront property in Saskatchewan and Manitoba increased by six per cent to $271,300, compared to 2021. North Central Saskatchewan topped the list with a 20.9 per cent increase to $688,000, followed by Lac du Bonnet in Manitoba with a 10 per cent increase to $550,000, and then Interlake, Man. With a 0.4 per cent decrease to $450,000.

“Business is faring as usual in our recreational markets. Demand and inventory are proportional to one another, creating balanced market conditions. Reduced supply has kept recreational property prices buoyant,” said Lou Doderai, broker and owner of Royal LePage Icon Realty in Prince Albert, Sask.

Despite a stable market, the aggregate price of a recreational property in the Prairies is forecasted to drop by three per cent in 2023.

The market in Atlantic Canada

In 2022, the aggregate price of a waterfront property in Nova Scotia, Newfoundland, New Brunswick, and Prince Edward Island increased by 17.2 per cent to $279,900, compared to 2021. Despite an 18.4 per cent decrease, Shediac, N.B., was the most expensive region in 2022 at $464,500, followed by South Shore, N.S., with a 22.4 per cent increase to $450,000, and then Cape Breton, N.S., with a 22.1 per cent increase to $427,500.

Nearly half of the respondents in a Royal LePage survey of Atlantic Canada realtors reported a decrease in demand this year compared to last year. As a result, Royal LePage forecasted that the aggregate price of a recreational property in Atlantic Canada will drop by three per cent in 2023.

“Parties on both sides of the transaction are waiting for a better deal—recreational buyers are sitting on the sidelines waiting for more inventory to become available, while sellers are holding out for higher offers and competitive bids. But the multiple-offer scenarios and homes selling over asking are not as common today as they were during the pandemic boom,” said Corey Huskilson, sales representative at Royal LePage Atlantic in South Shore, NS. “As we enter the spring market, I expect activity to pick up but prices to stay stable as supply and demand remain relatively balanced.”

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Cottage Life

A new demographic could be driving up recreational property prices in Alberta

Photo by Pixx Imaging/Shutterstock

Same as the rest of the country, Alberta isn’t exempt from Canada’s rising recreational property prices, says Royal LePage’s Recreational Property report. Alberta’s average price will continue to go up in 2022 at a nine per cent clip to an average of $1,170,660. Average prices in Alberta had already soared in 2021 by 31.5 per cent to $1,074,000.

Waterfront property isn’t as widely available in the western provinces. Instead, its ski chalets and mountain retreats that are driving up the price. “All properties have been selling extremely well,” says Brad Hawker, the associate broker with Royal LePage Solutions in Canmore, Alta. “It’s not limited to one segment or another.”

Year-over-year increase of recreational property price in Alberta in 2021

When it comes to Alberta, most of the province’s recreational property market is clustered around Edmonton, at least in terms of waterfront properties. Lac Ste. Anne saw the largest recreational property price increase, rising 44.2 per cent from $416,000 to $600,000; Pigeon Lake rose 20.4 per cent from $565,000 to $680,000; and Wabamun Lake rose 16.7 per cent from $762,000 to $889,000. In terms of non-waterfront properties, Canmore had the biggest jump, rising 32.7 per cent from $1,025,000 to $1,360,000.

Who are the buyers?

Canmore broker Brad Hawker has been selling properties in the Canmore area for 30 years. Twenty-eight of those years he’s sold to the same demographic: young people looking for a welcoming community where they can raise a family. Most often, they’re from Western Canada and are also looking for a recreational location. But in the last two years, he’s started to get a lot more interest from Ontario and Quebec retirees.

“A lot of their kids have relocated to Alberta. So, when they look to retire, where do they want to be? Close to their kids and grandkids. Edmonton and Calgary would be nice, but they also want to be active.” he says. “They want to come out to the mountains and ski and hike and mountain bike. That’s been a big part of our market.”

Similar to the rest of the country, Hawker adds that Canmore has also seen its share of millennial families who now work remotely and are looking to get away from the city.

Whereas Alberta’s lake district tends to be popular with Edmonton residents due to its proximity. “Since pandemic restrictions have limited Canadians’ ability to travel abroad, that demand has skyrocketed. Line-ups at boat launches and campgrounds are longer than ever,” says Tom Shearer, a Royal LePage broker with Noralta Real Estate, in the company’s report.

What’s selling and what isn’t?

The short answer is that everything’s selling. This includes waterfront cottages around Alberta’s lakes, as well as mountain retreats in Canmore. However, Canmore tends to be a unique situation. Similar to the rest of Canada, the area is seeing low inventory rates, but this is exacerbated by Canmore’s geography.

“We have very limited inventory, very limited construction, and very limited approval for new projects,” Hawker says, “so, we’re not even getting any relief on the supply side.”

Canmore is located in a valley between two mountain ranges. Both slopes of the mountain ranges have strict no-building policies, the area being used as a wildlife corridor to let animals pass unhindered. To the west, the town has Banff National Park, and to the east is Bow Valley Provincial Park.

“Getting a new land area approved for development takes an extremely long time because of the environmental side of things,” Hawker says. He predicts that within the next 15 years, all of Canmore’s available land will be developed.

Future predictions for Alberta real estate

Both waterfront property and chalet prices are expected to remain high in 2022. “Strong demand for waterfront properties continues to put upward pressure on prices in the region, and I don’t expect there will be any relief this spring,” Shearer said.

The same can be said for Canmore. In 2021, the town saw a record year in real estate sales, but despite the soaring prices, Hawker says he doesn’t expect them to keep rising at the same rate. In fact, he’s already seeing some levelling off. “You can’t keep having record year after record year of sales volume.” Already the first quarter of 2022 has been slower than 2021. Keep in mind, that 2022 sales volume is still 64 per cent higher than the first quarters of the four years preceding the pandemic.

As for what could be causing the levelling off, Hawker points to rising interest rates on mortgages. He expects the rates to start easing back to pre-pandemic levels. And if the pandemic causes a recession, people might not be able to afford their mortgages, making more properties available.

Regardless, Hawker expects that the lack of available land in Canmore will keep supply low, meaning that for the time being, demand will stay high, keeping prices competitive.

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Cottage Life

‘You’re not buying a $4 million property unless you have a lot of dough.’ B.C. recreational property prices skyrocket

Photo by Shutterstock/Protasov AN

It’s no secret—similar to the rest of the country, Western Canada’s cottage prices are on the rise. According to Royal LePage’s Recreational Property report.  B.C. is expected to see the average price of a cottage jump in 2022—a 12 per cent increase to a $1,029,280 average. This trend has continued from 2020, as the average price of a recreational property in B.C. increased by 22.4 per cent to $919,000 in 2021.

The closure of international borders during the pandemic drove cottage prices up as many Canadians sought domestic retreats. But even with international borders reopening, the prices continue to rise.

Unlike Ontario and Quebec, B.C. and Alberta don’t have well-defined “cottage countries.” Any waterfront properties that the provinces have are on the ocean or on a few specific lakes.

Since the areas where you can buy a recreational property in B.C. and Alberta are limited compared to central Canada, the surge in demand during the pandemic has kept inventory low and prices high.

Year-over-year increase of recreational property price in B.C. in 2021

All of British Columbia’s landlocked recreational properties saw an average price increase in 2021. Invermere, near the Alberta border, saw the largest change with an 88.1 per cent increase from $354,000 to $666,000. This was followed by the Comox Valley area, which saw a 28.7 per cent increase from $610,000 to $785,000. And then Pemberton, 25 minutes north of Whistler, increased 24.7 per cent from $1,000,000 to $1,247,000.

In terms of waterfront properties, Central Okanagan saw the biggest jump, with a 20.2 per cent increase from $1,955,000 to $2,350,000.

Who are the buyers?

The people buying waterfront recreational properties in B.C. right now are wealthy families, says Francis Braam, a Royal LePage broker in Kelowna. “Nobody else can afford it. You’re not buying a $4 million property to use on the weekend unless you have a lot of dough.” The same holds true for ski chalets, Braam says.

Interestingly, what Braam isn’t seeing lately is foreign buyers. He points to Big White Ski Resort in Kelowna as an example. “At Big White, we used to have a lot of foreigners who bought property—Europeans, Australians, Americans, they’re gone. It’s 100 per cent a Canadian market now,” he says. “They couldn’t get in for the last two years. Will they ever return? I don’t know. It’ll take time.”

What’s selling and what isn’t?

The average price of a recreational property in B.C. tends to balloon thanks to a couple exclusive areas, namely Whistler and Okanagan Lake. In 2021, the average price of a recreational property in Whistler increased by 14 per cent to $2,738,000. Whistler’s considered one of the best ski resorts in Canada, making chalets close to the hill extremely desirable.

The same applies to Okanagan Lake, which stretches 135 kilometres in length and is home to around 400,000 people. Although, many of the properties on Okanagan Lake are permanent homes, not just cottages, Braam notes. Since Royal Lepage isn’t able to discern what the property’s being used for, these waterfront homes are included in the company’s report, driving up the aggregate price of recreational properties in the area.

Another peculiarity with the report is that it recorded a drop in price for North Okanagan waterfront properties. Out of every cottage market in Canada, this is the only one to see a decrease in price, dropping 3.8 per cent from $1,403,000 in 2020 to $1,350,000 in 2021.

“That would be an anomaly,” Braam says. “If you took a house that sold 18 months ago on the water and then put it on the market today, it’d be worth more money.” What likely happened is that the more affordable properties on the lake sold in the last 18 months or in the last quarter, skewing the aggregate price, he says. “There’s no way the price of that product has gone down.”

Future predictions for B.C. real estate

In the real estate market around Kelowna, Braam says he’s already seeing prices settle. “I don’t think prices are going to drop, but we’re not going to maintain the same pace of two to three per cent per month the way it’s been going up for the last 18 months.”

Thanks to the province’s limited supply of available cottages, Braam doesn’t expect the market to crash. Even now, he only has a month’s worth of available listings. Supply in B.C. is likely to stay low. When you look at the province’s geography, Braam says development is restricted by lakes and mountains. Plus, B.C. has an agricultural land reserve, where large swaths of land are devoted to agriculture.

This means that the province is often restricted to tearing down old homes and building new ones, which is more expensive than developing on available land, Braam says.

“Thirty years ago, we could build a house in 90 days. That same house takes nine months to build now or a year,” he says. “It’s more complicated to build, the consumer has demanded more, they’re not as simple houses to build, and the building code has also made it much more difficult.”