The real estate company is predicting a 5.8 per cent average increase in vacation home values across Canada by the end of September with higher prices in popular areas such as Ontario and Alberta balancing declines in British Columbia, Atlantic Canada and Manitoba.
The recreational property market in Ontario has been softer than city real estate for about a decade but now there’s a lot of urban equity flowing into resort communities despite a slowdown in Toronto-area real estate, said Royal LePage CEO Phil Soper.
Even though the average selling price of city homes has dropped (6.6 per cent year over year in May, according to the Toronto Real Estate Board) that’s more a reflection of the mix of homes that is selling, he said.
“We’ve got people sitting on detached properties rather than selling them in a slow market. So we’re selling many more condos, and it makes it look like prices are declining because we’re selling a lot of lower-priced properties. But people haven’t actually lost any equity, and they’ve done extremely well over the last decade. We had home prices rising by more than 20 per cent per annum,” said Soper.
“If you’re a cottager, you think that it’s your job as a parent to get your kid on a lake somewhere, or they’ll become a PlayStation-addicted basement dweller,” he said. “In addition, we have this very wealthy — the wealthiest generation — who are more active than past generations at retirement age, who appear to be interested in retiring in greater numbers than in previous generations to cottage country.”
Technology and updated vacation properties, including townhouses and condos that feature mod cons such as dishwashers and air conditioners, are making it more comfortable to live outside the city.
“You don’t have to do the whole Walden Pond thing completely. You’ve got your Netflix and (you) FaceTime your grandkids. It’s almost like the best of both worlds,” said Soper.
The Royal LePage report is based on an online survey between May 15 and June 1 of 200 of the company’s realtors specializing in vacation properties. The forecasts are based on anticipated growth between Jan. 1 and Sept. 30, 2017, and the same period this year.
Ontario is the only province in which Royal LePage doesn’t anticipate an increase in vacation home inventory this year. Royal LePage sees the strongest price growth in popular Toronto-area destinations including Niagara-on-the-Lake, Bruce Peninsula and Orillia.
British Columbia, Atlantic Canada and Manitoba are expected to see a decline in vacation property values, according to the Royal LePage report.
In British Columbia a new speculation tax is expected to prompt many vacation homeowners to sell their cottages and chalets prompting prices to fall this summer, says the report. Albertans, who are traditionally a big segment of the B.C. vacation home market, are expected to look at properties in their home province, which should push up prices in resort areas such as Canmore and the Rockies.
Royal LePage is forecasting the largest price declines in Atlantic Canada, where there is a trend to tearing down older properties to build dream homes, keeping prices low. The relative affordability of those seaside communities is attracting retirees and international buyers. Forty per cent of the survey respondents forecast foreign purchases of vacation homes in Eastern Canada to increase from 5 to 10 per cent this year.
Forecast for Ontario lakefront values this year:
Bruce Peninsula: +14.9% to $485,000
East Kawarthas: +6.7% to $560,000
Haliburton Highlands: +5.3% to $500,000
Honey Harbour: +7.7% to $700,000
Kawartha Lakes: +14.3% to $800,000
Muskoka: +10% to $1.65 million
Niagara-on-the-Lake: +16.7% to $1.4 million
Orillia and South Muskoka: +14.8% to $821,000
Parry Sound: +6.3% to $425,000
Rideau Lake: +5.9% to $450,000
Southwestern Ontario: +12.8% to $670,000
Sudbury: flat at $275,000
St. Joseph Island and Lake Huron: flat at $160,000
Source: Royal LePage