From the RE/MAX Network:
A flood of listings hasn’t hit Canada’s recreational property market this spring, and is unlikely to transpire this year, according to insights fromRE/MAX Canada’s 2024 Cottage Trends Report.Despite the affordability challenges and higher interest rates that characterized the 2023 real estate market, Canada’s cottage owners are choosing to hold on to their properties in 2024 rather than selling off – a trend that’s likely influenced by the desirable quality of life alongside the prospect of future returns on recreational property ownership.
The report examines market activity in22 recreational markets nationwide– includingMuskoka and Haliburton. The report finds an anticipated 6.8 per rise in national recreational property prices for 2024, an increase in sales in 61.9 per cent of markets and that 64 per cent of Canadian cottage owners have decided not to sell this year.
It also analyzes the potential impact the recent change in the capital gains tax could have on recreational owners across the country before the June 25 deadline.
InMuskoka and Haliburton, key insights include:
- Muskoka and Haliburton are experiencing balanced markets. There is currently an increase of inventory.
- Average sale prices are likely to increase by three per cent in Muskoka and six per cent in Haliburton by the end of 2024.
- Number of sales are likely to increase by five per cent in Muskoka and eight per cent in Haliburton by the end of 2024, due to high inventory and many buyers still looking for recreational properties.
Looking ahead, RE/MAX brokers and agents in Canada are anticipating an increase in recreational prices by 6.8 per cent. Meanwhile, the number of sales is expected to rise in the majority of regions analyzed (61.9 per cent), increasing between three per cent upwards of 50 per cent this year.
Demographic shift in the market
According to RE/MAX brokers and agents, families and young couples have become a significant driver of activity in 59 per cent of recreational markets across Canada. Historically, sales have primarily been propelled by retirees, who were the dominant demographic in 91 per cent of markets analyzed by RE/MAX in 2018.
This shift can be attributed to the lifestyle and flexibility afforded by hybrid and remote work. According to a Leger survey commissioned as part of the report, the quality of life found in recreational markets, and the ability to work remotely, have prompted more than one third of Canadian recreational property owners (38 per cent) to spend more time at these secondary properties than they did before the pandemic. The rate is higher among younger buyers: 55 per cent among Gen Z (ages 18-24), and 57 per cent among Millennials (ages 25-39).
To view the full report, please clickhere.
“Years of research* have shown that Canadians consistently see value in real estate ownership – both as a necessity and an investment. Those who have already gained a foothold in the recreational property market are determined to hold on to this asset, despite mounting affordability concerns across the country,” says Christopher Alexander, President, RE/MAX Canada.
“Even the change to the capital gains tax, that will take effect on June 25, won’t spark a wide-spread flood of new listings and sales by cottage owners trying to get in under the wire given the narrow window,” continues Alexander. “That said, RE/MAX brokers and agents in some regions have reported a recent uptick in listings that may be tied to the new change, it could also prompt some Canadians to have estate planning discussions earlier, so work with an experienced, local real estate agent, who can advise you of current conditions in your given market.”
Recreational market policy and regulation influences
In an effort to improve the availability of housing supply, short-term rental bans have begun to materialize in some provinces across the country, while others look to introduce new measures to limit allowances. In the wake of this, the Leger survey commissioned by RE/MAX found that these restrictions have not swayed recreational property owners to sell, with 58 per cent remaining steadfast in their investment. By comparison, only 29 per cent are looking to sell, due to the inability to generate the rental income initially anticipated when they purchased their recreational property.
Canadians are split on whether these policies have made buying and selling more complicated, and whether they’ll buy/sell as a result (35 per cent say they won’t; 31 per cent say they will).
Regional Deep Dive into Canadian Recreational Markets
RE/MAX Canada brokers and agents were asked to provide an analysis of their local market activity for the first quarter of 2024, as well as an outlook for the rest of the year. Overarching regional trends pinpointed by the RE/MAX network include:
- Families and couples are the primary drivers of activity in the recreational property market –82 per cent and 68 per cent respectively, retirees at 59 per cent, and investment buyers at 41 per cent .
- 54.5 per cent of regions in Western and Atlantic Canada have experienced increased inter-provincial migration activity, while Ontario witnessed increased intra-provincial migration activity.
To view the regional data table, clickhere.
Ontario
Similar to RE/MAX report findings in2023, there’s a nearly even split among Ontario markets analyzed that are favouring buyers (Grand Bend, Peterborough, The Kawarthas and Southeast Georgian Bay, Honey Harbour and Port Severn), sellers (Sudbury, Manitoulin, French River and Kenora/Lake-of-the-Woods) or experiencing balanced conditions (Muskoka, Haliburton County and Simcoe County). While most Ontario recreational property owners are holding onto their cottages, even amid affordability challenges, RE/MAX brokers in regions such as Muskoka and Haliburton County – two of the most popular cottage markets in the province – have reported a flood of sales, compared to other Ontario regions.
Demand for cottages in Ontario is driven primarily by families in nearly all markets surveyed, with the exception of Grand Bend. This is followed by young couples (in 63 per cent of markets including Muskoka, Haliburton County, Peterborough and The Kawarthas, Southeast Georgian Bay, Honey Harbour, Port Severn, Lake Huron Area (Bayfield, and Goderich)) and Kenora/Lake-of-the-Woods); and retirees (in 54 per cent of markets including Peterborough and The Kawarthas, Southeast Georgian Bay, Honey Harbour and Port Severn; Grand Bend, Lake Huron Area (Bayfield and Goderich) and Kenora and Lake-of-the-Woods).
While out-of-province buyers are an increasing trend in recreational markets in Atlantic Canada and Alberta, Ontario’s cottage buyers are generally local to the province, with the exception of Kenora and Lake-of-the-Woods, which sees interprovincial buyers primarily from Manitoba, due to its proximity to the neighbouring province.
When it comes to amenities, waterfront properties are in highest demand in Ontario, followed by properties with lots of outdoor and green space, and good Wi-Fi access.
Year-over-year, 54 per cent of Ontario’s cottage markets saw average prices decline between five and 28.7 per cent, including Muskoka (down five per cent, from $1,487,265 Q1 2023 to $1,412,237 in Q1 2024); Kenora and Lake-of-the-Woods (down seven per cent, from $389,066 in Q1 2023 to $361,852 in Q1 2024); Grand Bend (down eight per cent, from $912,135 in Q1 2023 to $839,476 in Q1 2024); Sudbury (down 16.1 per cent, from $688,750 in Q1 2023 to $577,862 in Q1 2024); andSoutheast Georgian Bay, Honey Harbour and Port Severn (down 28.7 per cent, from $1,272,917 in Q1 2023 to $906,967 in Q1 2024).
Meanwhile, regions that experienced price increases include Manitoulin & French River (up 3.4 per cent, from $396,241 Q1 of 2023 to $409,591 in Q1 2024); Simcoe County (up 10.2 per cent, from $1,800,000 in Q1 2023 to $1,983,333 in Q1 2024); Haliburton County (up 18.7 per cent, from $816,112 in Q1 2023 to $968,794 in Q1 2024); and most notably, Peterborough and The Kawarthas (up 93.1 per cent, from $465,000 in Q1 2023 to $898,000 to Q1 2024).
RE/MAX brokers and agents in Ontario are anticipating cottage prices to increase in 72 per cent of recreational markets by the end of 2024, to the tune of up to 33 per cent. The outlier is Simcoe County, where prices are expected to stay level due to the interest rate climate.
On the sales side, some Ontario markets are showing promise, with significant year-over-year increases in the first quarter of 2024. Sales in Grand Bend were up 11.5 per cent (from 26 sales in 2023 to 29 in 2024); up 41.7 per cent in Haliburton County (24 sales in 2023 to 34 in 2024); up 50 per cent in Simcoe County (six sales in 2023 to nine in 2024); and up a whopping 800 per cent in Peterborough and The Kawarthas (from one sale in 2023 to nine in 2024). The sales outlook for the remainder of the year remains focused on growth in all regions surveyed, with an anticipated year-end sales increase of between three to 50 per cent, except for Sudbury, which is anticipating prices to remain steady.
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