Recreational property markets
After an extended period of extraordinary growth, more balanced market conditions have emerged in recreational property markets across the country, according to a report released today by Re/Max The Re/Max Recreational Property Report found that a substantial increase in the supply of recreational properties listed for sale, combined with fewer buyers overall, characterized most recreational markets this year. Of the 45 markets surveyed, 91 per cent (or 41 markets) were in the transition stage, moving from strong sellers into balanced market conditions.
The only exceptions were Salt Spring Island, two markets in Saskatchewan—Last Mountain Lake and Qu’Appelle Lakes and Lakes Candle, Emma, and Waskesiu — and Newfoundland’s East Coast —where inventory levels were relatively low. Affordability was a primary factor in 35 per cent of markets surveyed, given serious upward pressure on recreational values in recent years.
“Market conditions have shifted, but don’t expect to see bargain basement prices or fire sales,” says Michael Polzler, Executive Vice President and Regional Director, Re/Max Ontario-Atlantic Canada. “The recreational market continues to experience solid demand — a trend that is expected to continue throughout 2008. The influx of new listings has yet to translate into downward pressure on recreational property prices. Prime waterfront properties, while more plentiful than in year’s past, will still command top dollar.”
Adverse winter weather conditions during the first four months of the year hindered recreational activity. Sixty-seven per cent of markets reported softening in the number of sales year-to-date, while average prices remained stable or experienced moderate increases over 2007 levels for the same period. Economic concerns, fueled by negative GDP growth in the first quarter and soaring energy costs, have also played a role in the transitioning market.
“We’re coming off the longest period of economic expansion since World War II,” says Elton Ash, Regional Executive Vice President, Re/Max of Western Canada. “Recreational property values have appreciated beyond our wildest dreams across the country. More balanced market conditions are a welcome change for purchasers.”
For the first time in many years, in fact, a good selection of entry-level waterfront is available in markets across the country. Eighteen per cent of those surveyed offer properties under the $200,000 price point, including; Central South Cariboo in British Columbia; Parry Sound, East Kawarthas and Kingston in Ontario; Summerside, PEI; South Shore, Nova Scotia; Shediac, New Brunswick; and the East Coast of Newfoundland.
Recreational property buyers also found themselves divided between two borders this year. The housing market meltdown in the US combined with a Canadian dollar at par created serious investment opportunities for secondary properties in Florida, Arizona, Texas, and California. Some of those very same factors have spurred American recreational property owners in Canada to list their properties for sale, with many looking to take advantage of ideal market conditions here.
“Many Canadians are capitalizing on market conditions in major American centres,” says Polzler. “For some purchasers, the move is strictly a short-term investment strategy with a pay-off at the end of the day, while for others, retirement is the main objective.”
The report also found that younger buyers were a factor in 40 per cent of recreational markets surveyed. “Baby boomers are clearly not the only purchasers that appreciate the recreational lifestyle,” says Ash. “Generation X is quickly becoming a force in the marketplace, spurring demand for condominium product on ski hills, oceanfront properties in good surf locales, and water frontage on trendy lakes with celebrity residents.”
Other highlights:
- Alberta’s red-hot economy has helped boost recreational property markets in British Columbia, Atlantic Canada, and some parts of Ontario.
- Affordability is prompting buyers to consider back lots, riverfront, condominiums, hobby farms and leased land.
- Some purchasers looking to secure an exit strategy are buying recreational properties or secondary homes in residential neighbourhoods in close proximity to the water’s edge.
Canada’s Top Second-Home Spots
The U.S. housing market may be faltering, but thus far, those in Canada haven’t a worry in sight. Canada’s dollar has had its strongest performance in years. From a record low of 62 cents on the U.S. dollar in January 2002, the currency now matches the greenback in value. And the second-home housing market at the high end, in places like Victoria on Vancouver Island and Chester, Nova Scotia, is flourishing.
Who’s buying? Along with affluent Americans unaffected by the recession, Europeans looking for more remote luxury destinations are also finding second homes in Canada. U.K.-based real estate firm Knight Frank is even in the midst of developing a property in Whistler, British Columbia, to attract skiers from across the pond.
In the greater Vancouver area, for example, purchases of homes costing 2 million Canadian dollars and up rose 50% in 2007 (249 units vs. 166 in 2006), according to a report released by RE/MAX of Western Canada in conjunction with RE/MAX Ontario-Atlantic, a Western Canada real estate agency. In Kelowna, purchases of homes at this price point rose 64% (59 units vs. 36 in 2006) in the same time period.
Insulated Market — For Now
Elton Ash, executive vice president with RE/MAX Western Canada, says troubles across the border are bound to affect Canada’s market within the next year. Soon enough, says Ash, Canadian buyers–many of whom work for companies based in the United States–will begin to act more frugally. The two economies are too closely related for there to be no Canadian downturn whatsoever. But he believes luxury real estate will remain insulated from any woes.
“It’s a separate market that drives itself,” says Nash. “And right now, demand for high-end real estate–especially lakeshore property–is huge.”
The hottest spots include Muskoka, Kelowna and the home of the 2010 Winter Olympics, Whistler.
Just two hours north of Toronto, Muskoka has proved a popular spot for Hollywood’s elite, including Steven Spielberg, Tom Hanks and Goldie Hawn, who all own property there. Limited shorefront property attracts the moneyed from the entertainment, banking and media industries, as does the short distance from busy city life.
The place with a bit more activity–but with equal glitz–is Whistler. Whistler and Blackcomb mountains are regarded by some as the best slopes in North America. And much like its counterparts in the Colorado Rockies and European Alps, Whistler is also a playground for high society. Christie’s Great Estates, which houses a luxury real estate database on its Web site, currently lists area homes ranging from $2.25 million to $18 million ($2.22 million to 17.77 million U.S.).
Kelowna, on the other hand, is a little more homegrown. On the Okanagan Lake in Okanagan Valley, the area draws homeowners from around the world with skiing, hiking, vineyards and wineries and its hot, dry summers and cold, snowy winters. Many even call it the “Florida of Canada,” thanks to its lush, diverse countryside with both pine trees and cacti. The area attracts boating and water-sport enthusiasts with seaside homes starting at $1 million ($987,000 U.S.).
Other areas with a limited amount of luxury real estate (but a lot of buzz) include the west coast of Newfoundland and St. Andrews by the Sea, New Brunswick, which is seeing increasing traffic from the U.K. and Ireland, according to Christine Martysiewicz, a spokeswoman for Re/Max Promotions.
Although most homes in these areas don’t reach $1 million in price, they’re attracting attention from European investors who recognize the value. Most of the homes are right on the water, and job opportunities are growing–there is nearly $10 billion ($9.87 billion U.S.) in combined capital works projects pending for Newfoundland and Labrador’s Avalon Peninsula.
Whether you’re looking to invest in a property with potential or enjoy the spoils of an in-demand area, Martysiewicz says Canada’s variety is endless.
“Canada, coast to coast, has an abundance of recreational property areas,” she says. “There is a phenomenal uniqueness from province to province.”