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The rapid increase in interest rates has pushed residential home buyers to the sidelines but hasn’t dissuaded recreational buyers
The icy conditions that have kept some outdoor enthusiasts from purchasing recreational properties appear to be thawing – at least slightly.
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Popular ski regions across the country have posted double-digit year-over-year price appreciation since the beginning of 2022 but house prices are expected to dip three per cent over the next 12 months, with recreational property experts predicting more balanced conditions and an increase in inventory compared to 2021, according to the Royal LePage Winter Recreational Property Report.
In the first 10 months of this year, the median price of a single-family detached home increased 15.1 per cent year-over-year to $1,042,700. Among regions surveyed, Big White, B.C. posted the highest gain in that segment at 45.5 per cent. Quebec’s Mont-Tremblant region reported the highest median price increase in the condominium segment at 44.4 per cent.
Here in Ontario, the median price of a single-family detached home in Southern Georgian Bay’s recreational market increased 11.3 per cent to $890,000 in that same period.
The median price of a condominium rose a modest 1.3 per cent to $679,000, following a whopping increase of more than 50 per cent year-over-year. Total sales were down 27 per cent following historic sales volumes in 2021.
The rapid increase in interest rates, which began in March, has pushed many would-be residential home buyers to the sidelines but hasn’t dissuaded recreational buyers – especially those in high-end markets, according to Pauline Aunger, broker of record, Royal LePage Advantage Real Estate in Smiths Falls.
“Additionally, many buyers of secondary properties are able to leverage equity from their primary residence or may not require financing at all,” she says.
Though recreational markets recorded double-digit declines in the number of homes sold in the first 10 months of 2022 compared to the same period last year – when demand for properties reached historic highs – that shouldn’t sound any alarm bells.
“For most Canadians, owning a recreational property is a nice-to-have lifestyle option,” Aunger says. “In the current economic environment, it is not surprising that sales have declined. With recreational homes in greater supply and most staying on the market longer, those that remain in the market are facing less competition compared to last year.
“While activity has moderated from the exuberant levels seen during the pandemic boom, demand for recreational properties remains healthy – both as primary and secondary residences,” she says.
The predicted three-per cent price drop over the next 12 months would bring the national median price of a recreational property to $1,011,451. The relative affordability of recreational properties in Canada, together with the strength of the U.S. dollar, have drawn buyers from south of the border.
