April 10, 2011
Canadian recreational property markets have been reinvigorated, with softer values, increased selection, and a rebound in consumer confidence contributing to an upswing in sales in 2012, according to a report released by RE/MAX.
The RE/MAX Recreational Property Report, highlighting trends and developments in 33 markets nationally, found that sales were ahead of last year’s levels in 70 per cent of communities examined, while six per cent were on par with 2011 figures. Greater affordability has been a major impetus, in large part due to rising inventory levels and low interest rates. Downward trending in starting prices was reported in 49 per cent of markets, while 33 per cent experienced no change. Nineteen per cent posted an uptick in starting values year-over-year.*
Recovery is still in its early stages, but there are subtle differences on the recreational property front this year. The gains are more widespread, affecting more markets and regions. Affordability has provided some serious stimulus, but renewed consumer confidence is the true driver. Buyers will simply not move forward if any doubts exist—economic or otherwise. So the demonstration of confidence we see today bodes well for the future.
Inventory levels have climbed in virtually all centres, with some shortages noted at entry-level price points. Activity is exceptionally healthy for recreational properties under the $400,000 threshold, while demand for luxury product over $1 million has also seen renewed interest in several markets, particularly as values have moved more in line with current conditions. The mild winter weather also brought purchasers out earlier in the year in many parts of the country.
While buyers are still cautious, they’re motivated. Current market conditions have placed them firmly in the driver’s seat. While the more favourable climate has factored in, activity has also been fuelled by pent-up demand that’s been building since 2008, when many began waiting it out on the sidelines. Opportunity does exist. Canadians love a good deal, and there’s no question that there are still some to be had in recreational property markets across the country.
The report found that the changing mix of purchasers has also had an undeniable impact on the current momentum, particularly in Western Canada. Activity among the baby boomer demographic over 60 has softened, compared with years past. Enticing prices in the southern U.S. have played a considerable role in rerouting purchases, but some retirees are returning to their own backyard, as prices north of the border have edged downward. Younger families and first-time buyers have stepped in to fill the void in most markets.
Starter waterfront product (three-bedroom, winterized), priced under $350,000, is now offered in 53.5 per cent of all recreational markets, while 58 per cent of recreational centres offer entry-level properties under $400,000—an improvement over 2011. Value markets were identified as Atlantic Canada, the Laurentians and Eastern Townships in Quebec, more than half of Ontario—inclusive of the coveted Muskokas—as well as Lake Winnipeg, Canmore, Harrison Lake and Comox Valley/Mt. Washington in Western Canada.
The mindset of this year’s buyer pool falls firmly into two camps—those willing to compromise, buying back-row properties off the water (happening in larger numbers—reflective of more young families active at the entry-level), and those who are steadfast in their search for the ideal location. While turnkey product is always the preference, it’s rarely a deal breaker, as renovation activity abounds. Teardowns and custom-builds are occurring where possible, but older, rustic cottages and/or vacant waterfront lots, are becoming increasingly scarce.
The good news is that there is something for everyone, regardless of budget, in Canadian recreational property markets. The challenge in the current climate is balancing expectations with market realities—both on the part of the vendor and the purchaser. Yet, deals are coming together, and the start to the season has been encouraging. We’ve had false starts in the past, but this has the hallmarks of a market with promising momentum.
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