Royal LePage: Canadian recreational house prices forecast to increase 15% in 2021

Highlights:

• A house in Ontario’s and Atlantic Canada’s recreational property markets expected to see highest price gains in 2021, rising 17%; Quebec and British Columbia recreational markets forecast to increase 15% and 13%, respectively
• 91% of recreational experts in Canada reporting lower inventory than typical for respective regions as demand continues to outpace supply
• 46% of recreational experts reporting an increase in inter-provincial migration, as many Canadians choose cottage country over cityscapes as the backdrop to their home offices
  

 March 23, 2021 – According to Royal LePage, the aggregate price of a house in Canada’s recreational regions is forecast to increase 15 per cent in 2021 to $502,730, as demand continues to rapidly outpace inventory. The company revised its 2021 recreational property forecast, released in November 2020, upward to reflect the increasing unmet demand from potential buyers who are actively looking for properties.

“From coast to coast, the line between primary residence and recreational property is blurring,” said Phil Soper, president and CEO, Royal LePage. “The trend began last summer when the option of traveling abroad was taken away, and continued to gain popularity as it became clear that with access to high speed internet, many people can do their jobs from just about anywhere.”

The aggregate price of a house in Canada’s recreational property regions increased 16.0 per cent year-over-year to $437,156 in 2020 compared to 2019. During the same period, the aggregate price of a waterfront property increased 9.8 per cent to $813,385 and the aggregate price of a condominium rose 10.5 per cent to $310,257.

Houses in the recreational regions of Ontario and Atlantic Canada are forecast to see the highest price appreciation in the country this year, set to increase 17 per cent, while prices in Quebec and British Columbia are forecast to increase 15 per cent and 13 per cent, respectively. According to a survey[1] of 190 Royal LePage recreational real estate professionals across the country, 91 per cent said that their market has less inventory than typical for their respective regions, including 72 per cent that reported significantly less inventory available.

In many areas, supply shortages are forcing buyers into multiple-offer situations, which often result in properties selling above the asking price. In Ontario, 87 per cent of recreational real estate professionals said that more than half of properties available on the market are selling above the asking price. In Quebec and British Columbia, 65 and 52 per cent respectively reported the same.

“The low inventory, high demand scenario that is defining Canada’s current real estate landscape can be frustrating for buyers and their agents,” continued Soper. “Without enough supply to meet demand, prices continue to increase at above normal rates. And with so few listings to choose from, owners are concerned they will have nowhere to go if they sell before buying, so they hesitate to list. This cycle makes it difficult for anyone to move ahead.

“Life during the pandemic has made cottage country and country living more desirable than ever, in every part of Canada. The flexibility provided by working remotely, excess savings from months sitting at home, and low interest rates have left Canadians young and old alike to seek properties with more space, easy access to nature, and the ability to achieve that ever-elusive work-life balance. And, an increasing number of new owners intend to use these escapes for both weekend play and Monday to Friday work.”

Royal LePage real estate professionals in Western and Atlantic Canada have reported an increase in out-of-province buyers over the past year. All experts in the recreational regions of the Maritimes and more than two-thirds (68%) of those in British Columbia reported seeing a boost in inter-provincial migration this year.

The younger generation is a very active segment of buyers. A recent Royal LePage survey released last month[2] on real estate trends among Canadians aged 25 to 35 found that when given the choice, 47 per cent said they would choose small town or country living, while 45 per cent said they’d prefer to live in a city. Nearly two-thirds of Canadians in this age group (63%), who are employed or seeking employment, say the ability to work for an employer that allows the option of remote work is important. Fifty-two per cent said the availability of remote work has increased their likelihood to move further from their current or future place of work. Overall, 39 per cent of this cohort are considering a move from their current home to a less dense area as a result of the pandemic, while 46 per cent said the pandemic had no impact on their desire to move to a less dense area.

“According to our research, access to high speed internet and the ability to work remotely are among the top criteria for those seeking properties in Canada’s recreational regions, followed closely by four-season usability,” said Soper. “There is no doubt the pandemic has had an impact on our lifestyle, but also our mindset. The more time Canadians spend in their homes, the more apparent their needs and priorities become.”

Royal LePage 2021 Spring Recreational Property Price Forecast and 2020 Price Data Chart (national and regional): rlp.ca/table_2021springrecreationalpropertyreport

British Columbia

The aggregate price of a house in British Columbia’s recreational regions is forecast to increase 13 per cent in 2021 to $781,918. In 2020, the aggregate price of a house in the province’s recreational markets increased 12.9 per cent year-over-year to $691,963 compared to 2019. During the same period, the aggregate price of a waterfront property increased 2.7 per cent to $1,784,872, while the aggregate price of a condominium increased 3.9 per cent to $340,812.

According to a Royal LePage survey of recreational property experts, 68 per cent of respondents in British Columbia reported an increase in the number of buyers from other provinces, compared to previous years. Forty per cent of experts in the region representing buyers reported that their clients are making four to seven offers on average before transacting.

Meanwhile, 40 per cent of those working primarily with sellers say that their clients’ properties are receiving four to seven offers on average. Eighty-eight per cent of regional experts reported a significant decrease in inventory in B.C.’s recreational property market compared to what is typical for their respective regions.

“Our biggest challenge right now is extremely low inventory and increased buyer demand,” said Francis Braam, broker, Royal LePage Kelowna. “I expect we’ll see double digit price gains in Central Okanagan this spring. Canadians will be spending another summer at home, further propelling their interest in the recreational property market.”

In Whistler and Pemberton, remote work and low borrowing costs remain a driving force behind increasing prices.

“I am anticipating a brisk spring market with lots of activity,” said Frank Ingham, associate broker, Royal LePage Sussex. “We should see a boost in supply, although it still won’t be enough to satisfy demand at the rate it is increasing. Every buyer has their own motivation, but overwhelmingly Canadians are shifting their mindset and their priorities. They want more space and more fresh air, with access to nature and wildlife.”

According to the Royal LePage 2021 Demographic Survey released last month, 35 per cent of those aged 25 to 35 in the province of British Columbia say the pandemic has increased their desire to move to a less dense area, and 63 per cent say it is important to work for an employer that allows them to work remotely.

Royal LePage 2021 Spring Recreational Property Price Forecast and 2020 Price Data Chart (national and regional): rlp.ca/table_2021springrecreationalpropertyreport

About the Royal LePage Recreational Property Report

The Royal LePage Recreational Property Report compiles insights, data and forecasts from 51 markets. Median price data was compiled and analyzed by Royal LePage for the period between January 1, 2020 and December 31, 2020 and January 1, 2019 and December 31, 2019. Data was sourced through local brokerages and boards in each of the surveyed regions. Royal LePage’s aggregate home price is based on a weighted model using median prices. Data availability is based on a transactional threshold and whether regional data is available using the report’s standard housing types. Aggregate prices may change from previous reports due to an increase in the number of participating regions.