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Canada’s recreational real estate market continues ‘gold rush fever’ into 2024, despite supply challenges

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Recently, real estate firm Royal LePage described the country’s recreational real estate market in 2023 as going through a “gold rush fever.”

The demand has continued into 2024 with a strong market forecast for the rest of the year in key recreational areas across the country.

 

Canmore, Alta.: Lots of interest from broader pool of buyers

 

Brad Hawker, associate broker, Royal LePage Solutions in the mountain resort of Canmore, Alberta, says the higher end of the market has been relatively strong. 

“There’s a lot of interest. It’s not typically affected by (elevated) interest rates,” Hawker explains. “It’s not an interest rate-sensitive end of the market. Most people are paying cash. 

We’ve just come out of what would typically be a quieter time of the year but entering into a more active time of the year now. So we’re seeing things pick up.”

Hawker says that buyers in the market have broadened over the last few years. He’s been selling real estate for 32 years in the Canmore area, and his first 20 years were predominantly all Albertans. But over the last seven or eight years, especially since COVID, there has been an expansion of buyers interested in the market. 

“Seniors are a lot more active now … Retirees now are rock climbing, mountain biking and downhill skiing. They’re doing it all. Still quite a few from Alberta but provinces east (like) Saskatchewan, Manitoba, Ontario and Quebec have really picked up since the pandemic as well as British Columbia,” explains Hawker.

 

Supply: The biggest challenge

 

The biggest challenge for both realtors and potential buyers is supply. This is supported by Re/Max finding that 64 per cent of Canada’s cottage owners are holding on to their properties rather than selling.

Hawker notes that sales for the luxury end of the market are reasonably consistent with past years, but, ”It would be a little stronger if we had some additional inventory.”

In fact, this issue is reflected in national statistics. A Royal LePage survey of 150 recreational real estate market professionals across Canada shows that 41 per cent reported less inventory compared to the same time in 2023 and 33 per cent said their region has similar inventory levels, yet 64 per cent reported similar or increased buyer demand for recreational homes.

 

Lakelands North, Ont.: Low sales, strong prices

 

Derek Stevens of Engel & Völkers, based in Port Carling in the Muskoka, Ont. area, works in the second home, waterfront market. 

“Anyone who is coming into this market, buying waterfront is a luxury. This is not just trying to put a roof over your head,” says Stevens. “For us, the luxury market is everybody. Muskoka is known for super high-end properties, and that’s what a lot of people think sometimes when they think of luxury.

Stevens works in Lakelands North, which he explains covers a fairly large area because of the fact that they don’t sell that many homes compared to other regions. He says Lakelands North (which includes Muskoka, Parry Sound and Haliburton) only had 775 waterfront sales in 2023.

“I say ‘only’ because that’s the kind of market we work in. We don’t sell that many (properties). That’s actually a reduction of about seven per cent over 2022’s volume. But with that said, our average pricing is actually up. On 775 transactions, we did over $1 billion — that’s nothing to sneeze at; it’s a lot of money. That creates an average price for waterfront properties of $1.388 million.”

 

Getting creative: ‘They’re not making any more waterfront’

 

Stevens says land values have increased substantially in the last few years and homes being built are bigger to accommodate family and friends who may want to visit. In 2022, there were four transactions over $10 million in the area and that number doubled last year.

“While volume is going down in some segments, you look at the over $10 million segment that’s going up because these properties, which are very expensive to start with, can support a high-end build.”

In that market, there are a number of celebrities and athletes who are looking for property there as well as people who have done very well in business.

“They’re not making any more waterfront. We’ve got what we’ve got and that’s it. There’s a lot of buyers that have been on the sidelines in 2023 and they’re waiting to come back into the market, waiting for a market correction. I’m not sure that’s going to happen,” Stevens points out.

He thinks they might be disappointed but generally speaking, the most desirable properties have already been developed and now people are becoming more creative in the types of properties they’re developing.

For example, “With advances in technology and engineering, people can do certain kinds of blasting and build on properties that were maybe previously thought of as being too steep or too rocky,” he explains.

 

Mont-Tremblant, Que.: Less impact from financing & interest rates helps with sales

 

Steve Lafave of Engel & Völkers, based in Mont-Tremblant, Quebec, says interest rates have slowed down the mid-range recreational real estate market in that region but the luxury segment of the market is very robust.

“Families are still aspiring to own secondary homes and the lifestyle that brings. When we talk about an average secondary homebuyer, I think they would typically require financing. However, when we’re at the top end of the market in luxury properties, we’re seeing buyers, as we always have, that are acquiring without financing,” he points out.

“We’ve been able to hedge the sales absorption and activity by the fact we’re less impacted by financing and interest rates.” 

Lafave says that Baby Boomers reaching retirement are looking for places to remain active. Also, the line between primary and secondary homes is becoming increasingly blurred with professionals working from home. 

Buyers in Mont-Tremblant continue to come from Montreal and the Eastern Ontario region. He notes the Canadian market comprises about 75 per cent of buyers, and the other 25 per cent is international.

 

Whistler, B.C.: Seasonal residents settling in full-time

 

In B.C., the Royal LePage survey of recreational property experts found that 50 per cent of respondents reported less inventory this year compared to last, and 46 per cent saw similar demand. 

“Although we have not experienced a material increase in sales over the past year, we feel that buyer demand is building in the wings, waiting for news of interest rate cuts. We are expecting a seasonal boost of inventory in the spring, and new provincial short-term rental restrictions may also prompt some investors to offload their recreational properties, adding to that supply,” explains Vancouver-based Frank Ingham, associate broker, Royal LePage Sussex, in a statement.

He explains that thanks to high-speed internet and remote working, seasonal residents have settled into the Whistler area full-time to take advantage of the area’s year-round recreational options.

“Whistler is a very unique (luxury) market — rising interest rates have little effect on the buyers who purchase in the seven- and eight-figure price range. However, a drop in rates will give consumers greater confidence in the overall market and economy, prompting them to step off of the sidelines.”

 

National price forecasts

 

Royal LePage forecasts the median price of a single-family home in Canada’s recreational regions to rise by 5 per cent this year to $678,930, compared to 2023.

The company believes all of Canada’s provincial recreational markets are expected to see an increase in single-family home prices in 2024, with Ontario forecasting the highest price jump at eight per cent.

Re/Max expects something similar, with recreational property prices jumping by 6.8 per cent.

 


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