Since May 2011, Canada has been experiencing a rapid outburst of recreational property purchases. Most big real-estate companies believe that this trend is going to continue throughout next year as well, barely dropping at all. According to a nationwide survey of Canadian attitudes toward recreational property ownership commissioned by Royal LePage Real Estate Services and run on the Angus Reid Forum, most Canadians believe that the purchase of a vacation home is a good long-term investment.
Confidence of Canadians in Recreational Properties on the Rise
The aforementioned survey found that nearly 90 per cent of prospective buyers and current owners agree with the notion of the recreational property market being the best in which to invest. According to the survey, 92 per cent of Albertans, 91 per cent of Ontarians, 87 per cent of British Columbians, and 81 per cent of Quebecers are confident that investing in this type of property will grant them considerable financial return.
Phil Soper, president and chief executive of Royal LePage Real Estate Services, commented on the situation:
“Canadians’ confidence in recreational property values is mirroring what we have been seeing in Canada’s urban centres. This spring, the horror stories from some fundamentally flawed international housing markets that had dampened demand for cottage-type living during the recession era, are being shrugged off. Canada’s traditionally buoyant recreational property market appears to have found its groove once more.”
Canadians aren’t afraid of either reduction of their personal spending accounts or rising interest rates. Although the weather has delayed the start of the 2011 recreational property buying season, other regions show a steady rise in consumer confidence in the market. The weather just delayed the action, not the intention. According to the report, real-estate agents should be expecting the boom in luxury and higher-end segments.
An increasing number of buyers plan to use their recreational property as a rental. This will allow more and more families to reach the recreational property of their dreams without a need to buy it and allow the owner to finance a mortgage or get the investment returned partially. However, the majority of purchases are still made as lifestyle choices rather than financial investments.
What is Important for Buyers in Different Regions of Canada?
As you’ll see, BC residents don’t differ from the rest of Canada much. They find all-year usage, quiet surroundings, and the proximity of amenities crucial. British Columbians also stated that renting potential is important to them.
Average price range in 2011: $330,000-$1,000,000
According to Ontarians, it is extremely important for the recreational property to be suitable for all-year usage, it has to be quiet, and nearly one quarter said that rental potential is also a decision factor. Over 60 per cent of them answered that they would like to buy a property next to a lake.
Average price range in 2011: $150,000-$750,000
Respondents from Alberta found all-year usage similarly important as Ontarians. They also tend to look for quiet properties located close to amenities. Nearly all of the respondents stated that “a recreational property is a great way to bring family together.”
Average price range in 2011: $350,000-$400,000
The majority of Quebecers stated that whether or not the place is quiet has a great influence on their decision. Nearly half of them are only willing to drive one hour from their permanent residence to their vacation house. Up to 14 per cent will use their recreational property more than once a week.
Average price range in 2011: $250,000-$1,000,000
Ideal Conditions for a Purchase Are Here
“Buyers who held off during the recession are back in recreational property markets from coast to coast. Their patience has been rewarded with more affordable recreational values and greater inventory levels. It’s the perfect storm, as ideal market conditions dovetail with wealth recovery,” says Pamela Alexander, CEO, RE/MAX Ontario-Atlantic Canada.
The situation is profitable also for Americans who bought a recreational property in Canada when the dollar fell to 65 cents. They are now selling with much greater revenue, taking advantage of currency exchange and the appreciation of prices.
According to the RE/MAX Recreational Property Report 2011, surprisingly, even in such a strong market as British Columbia, prices are at or near the bottom. Softer values are largely boosting sales in the west, where prices have risen in nearly sixty per cent of markets, beating the national average by far. Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada, commented on the situation:
“Opportunities that haven’t been seen in years are now presenting themselves, especially on the West Coast, prices are down as much as 20 per cent from peak levels reported in 2006-2007, bringing ownership within reach to many potential purchasers.“
According to the report, the composition of recreational properties continues to change as well. Whereas, in years past, traditional cottages were the object of desire of purchasers, desire for the year-round lifestyle continues to boost renovation and new construction activity of more luxurious properties.