Recreational Market Revival Coming 2024: Royal LePage®

National median house price forecast to increase 5.0% in Canada’s recreational market in 2024 as re-engaged buyers compete for limited supply. 

Highlights:

  • All of Canada’s provincial recreational markets expected to see an increase in single-family home prices in 2024, with Ontario forecast to see the highest level of price appreciation at 8.0%
  • The weighted median price of a single-family home in Canada’s recreational property market decreased modestly by 1.0% year over year to $646,600 in 2023
  • Nationally, the weighted median price of a single-family waterfront and condominium property decreased 7.9% and 1.5% year over year, respectively, in 2023
  • Condominiums in Atlantic Canada’s recreational property market recorded the highest provincial year-over-year weighted median price appreciation in 2023, rising 16.9%
  • 41% of recreational property market experts across the country reported lower inventory than last year in their respective regions

TORONTO, ON, March 20, 2024 – According to Royal LePage®, the median price of a single-family home in Canada’s recreational regions is forecast[1] to increase 5.0% in 2024 to $678,930, compared to 2023, as a boost in consumer confidence will bring sidelined buyers back to the market. All of Canada’s provincial recreational markets are forecast to see an increase in single-family home prices in 2024. Ontario is forecasting the greatest price appreciation, at 8.0 %.

“Across the nation there was a sizeable rise in demand for all types of housing during the pandemic, but nothing could match the ‘gold rush fever’ that occurred in recreational property markets,” said Phil Soper, president and CEO, Royal LePage. “With city offices closed and the wide availability of high-speed internet allowing people to take video meetings on lakefronts and mountain tops, excess demand pushed recreational property prices to unprecedented heights.

“Inflation reared its ugly head, interest rates soared and the economic downturn that followed pushed cottage, cabin and chalet prices off those pandemic peaks, yet the fundamental demand for recreational living has not abated. We believe that this market segment will see a resurgence of activity in 2024,” continued Soper.

In 2023, the weighted median price[2] of a single-family home in Canada’s recreational property regions decreased 1.0 % year over year to $646,600. This follows a year-over-year price decline of 11.7 % in 2022. When broken out by housing type, the weighted median price of a single-family waterfront property decreased 7.9 per cent year over year to $1,075,500 in 2023, and the weighted median price of a standard condominium decreased 1.5%  to $420,300 during the same period. Despite a modest decrease over the past year, the national weighted median single-family home price remains 59% above 2019 levels.[3]

“Demand has been building quietly on the sidelines,” said Soper. “Our regional experts tell us that buyer interest is steadily ramping up as the spring market approaches. With hybrid office and work-from-home business models being the norm now, many working people see the opportunity to make much better use of country properties.”

As homebuyers sought out more space, privacy and access to nature during the height of the COVID-19 pandemic, many recreational real estate markets experienced a deep cut to their available home supply as buying activity soared. Although demand has since leveled off from historical highs, markets continue to grapple with low inventory levels.

According to a survey of 150 Royal LePage recreational real estate market professionals across the country, including Susan and Mark Benson, in the Muskoka region[4] 41% of respondents reported less inventory compared to the same time last year; 33% of respondents said that their region has similar levels of inventory. However, 64% reported similar or more demand from buyers for recreational homes. This sustained and growing demand for a limited number of available properties is expected to put upward price pressure on Canada’s recreational market.

Interest rate cuts could trigger market revival

Royal LePage recreational property advisers, including Mark and Susan Benson, predict that buying activity will intensify when the Bank of Canada begins to make cuts to the overnight lending rate. 62% of experts said they believe demand will increase slightly in their region when interest rate cuts are made, while 21%  expect demand will increase significantly.

“Cash plays a larger role in the purchase of recreational property than with urban homes, yet the vast majority of buyers finance at least part of their purchases,” noted Soper.

According to the survey, 78% of experts said that recreational property buyers in their region typically obtain financing, such as a loan or mortgage.  Susan Benson notes that "while the recreational market across Muskoka- Kawartha Lakes is not as heavily impacted by mortgage rates as those in the residential market", she feels that,  "consumer confidence in general will get a boost when we see a cut to the Bank of Canada’s key lending rate, expected later this year." As Soper points out, This lift in recreational activity generally will put upward pressure on prices. And, if this coincides with an influx of inventory, we should see a boost in sales as well.”

Recreational lifestyle remains attractive to Canadians

Nationally, 59% of recreational real estate experts surveyed, including Mark and Susan Benson, said that homeowners in their region typically use their properties as a secondary residence or vacation home. A smaller cohort, 21%, said that owners tend to use their recreational homes partly as a vacation home and partly as a rental property. The majority of buyer demand for recreational properties comes from those aged 50 to 64, according to 57% of experts.

“Though recreational trends are specific to the individual regions, we can confidently say that most Canadians who own a cottage or cabin use it for their own life-enriching purposes,” added Soper. “It’s a testament to our recreational communities and the lifestyle they afford Canadians that most of those who relocated to cottage country during the pandemic are staying put.”

While some homeowners relocated full-time to a recreational region during the pandemic, 55% of recreational experts nationally said that it is not a common trend for those homeowners to return to urban or suburban communities as a result of changes to their remote work capabilities or preference in lifestyle. Mark and Susan Benson have not experienced this trend. There are several recreational regions in Canada that are home to lively year-round communities including Muskoka-Kawartha Lakes regions.

“Whether it’s for retirement or a summer vacation destination, we anticipate that more Canadians will look to embrace recreational living this year as lower borrowing costs bring their recreational home aspirations closer within their reach,” concluded Soper.

Royal LePage 2024 Spring Recreational Property Price Forecast and 2023 Price Data Chart (national and regional): rlp.ca/table_2024springrecreationalpropertyreport

Ontario

In 2023, the weighted median price of a single-family home in Ontario’s recreational property market decreased 5.2% year over year to $613,100, compared to 2022. During the same period, the weighted median price of a single-family waterfront property decreased 8.2% to $934,000, while the weighted median price of a standard condominium decreased 2.6% to $509,400.

According to a Royal LePage survey of recreational property experts, 44% of respondents in Ontario reported less inventory this year compared to 2023. Additionally, 44% of respondents reported similar demand. In the region, 36% of experts said that the average days on market has increased slightly since this time last year.

“Lower levels of inventory continue to dampen market activity, as buyers take their time and wait for the right recreational home to come along. Although sales volume is down on an annual basis, we have seen an increase in activity in the high-end segment of the market, especially in the $8-million-and-up market,” said John O’Rourke, broker, Royal LePage Lakes of Muskoka. “Strict short-term rental legislation has made it tougher for investors to break into the Muskoka market, making traditional cottage end-users the most dominant type of buyer in the area. Typically, our average buyer is someone from the Greater Toronto and Hamilton Area with a connection to the region.

“We expect an uptick in supply over the coming months, which will give eager buyers more selection. Although Muskoka attracts wealthier buyers who are less impacted by interest rate changes, a drop in borrowing costs could still ramp up market activity later this year,” added O’Rourke.

According to the survey, 84% of recreational property experts in Ontario said that buyers in their respective regions typically obtain financing when making a purchase. 59% of experts, including Mark and Susan Benson, said they expect demand to increase slightly in their region when interest rate cuts are made; 27% said demand will increase significantly.

“A boom in cottage country is coming. Sidelined buyers sense an impending drop in interest rates, and are slowly moving back into the market. However, many of them are looking for a specific type of recreational home and won’t settle for just any property, a sentiment that is keeping a lid on sales for now. Sellers have adjusted their expectations away from high pandemic-era prices and are becoming increasingly motivated to sell,” said Pauline Aunger, Broker of Record, Royal LePage Advantage Real Estate. “Finding that special vacation home is tricky in a market where inventory still falls short compared to demand, meaning buyers will need to make compromises as property prices rise and competition heats up. We anticipate an active spring market as buyers continue to adjust to the current interest rate environment and move forward with their real estate purchase plans.”

The median price of a single-family home in Ontario’s recreational regions is forecast to increase 8.0% in 2024 to $662,148.

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About the Royal LePage Spring Recreational Property Report

The Royal LePage Spring Recreational Property Report compiles insights, data and forecasts from 50 real estate markets. Median price data was compiled and analyzed by Royal LePage for the period between January 1, 2023, and December 31, 2023, and January 1, 2022 and December 31, 2022. Data was sourced through local brokerages and boards in each of the surveyed regions. Royal LePage’s national and provincial weighted median home prices and forecasts are based on a weighted model using sales in each region. Methodology is consistent with previous reports, which used the label ‘aggregate’. Data availability is based on a transactional threshold and whether regional data is available using the report’s standard housing types. Prices may change from previous reports due to a change in the number of participating regions.

About the Royal LePage Recreational Property Advisor Survey

A national online survey of 150 Brokers and Sales Representatives serving buyers and sellers in Canada’s recreational property regions. The survey was conducted between February 24, 2024 and March 12, 2024.