After a surge of Canadians rushed to buy lakeside cottages and cabins at the start of the pandemic, demand for recreational properties is expected to dip this year as buyers wait for more inventory and economic stability, according to a new report.
A press release by Royal LePage on Tuesday said it expects the national aggregate house price to drop 4.5 per cent in the recreational market this year.
Royal LePage forecasted the price of a single-family recreational home will fall to $592,005, from $619,900 in 2022.
"After two years of relentless year-round competition, Canada's recreational property markets have slowed and returned to traditional seasonal sales patterns," Phil Soper, president and chief executive officer of Royal LePage, said in the release.
"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."
In 2022, the average price for home in Canada’s recreational property regions increased 11.7 per cent. This followed a year-over-year price increase of 26.6 per cent in 2021.
The only recreational real estate market that’s expected to see an increase in demand this year is Alberta, with a forecasted rise of 0.5 per cent. The real estate organization is anticipating that Quebec’s single-family recreational market will drop the most by eight per cent in 2023.
MOVING BACK TO THE CITY
The report found that some of the real estate trends that emerged during the pandemic are also waning.
Twenty-eight per cent of property experts Royal LePage surveyed said homeowners that moved to recreational regions full-time during the pandemic are moving back to urban or suburban communities.
"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," Soper said.
"With high-speed internet now readily available in many rural markets, families flocked to recreational regions to put extra space between themselves and their neighbours and to take advantage of nature; particularly when cultural and sporting venues, shops and restaurants in cities were closed.”
Soper added that the rise of companies asking workers to head back into the office is also impacting the number of Canadians living at their recreational property.
“Many urban businesses now require employees to be in the office at least a few days a week, making long commutes challenging,” he said.
“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."
Royal LePage Recreational Property Report
The Royal LePage Recreational Property Report compiles insights, data and forecasts from 50 markets. Median price data was compiled and analyzed by Royal LePage for the period between January 1, 2022 and December 31, 2022, and January 1, 2021 and December 31, 2021. Data was sourced through local brokerages and boards in each of the surveyed regions. Royal LePage's aggregate home price is based on a weighted model using median prices. Data availability is based on a transactional threshold and whether regional data is available using the report's standard housing types. Aggregate prices may change from previous reports due to a change in the number of participating regions.
Royal LePage Recreational Property Advisor Survey
A national online survey of 202 brokers and sales representatives serving buyers and sellers in Canada's recreational property regions. The survey was conducted between March 1, 2023 and March 18, 2023.