‘It’s wild’: Demand for homes in recreational markets outpacing supply, brokers say
When Jamie Robinson thinks about the number of properties available in and around Alberta’s mountain mecca Banff, one word comes to mind: “horrendous.”
“Basically, anything that’s for sale at this moment is selling fairly quickly, and so supply is definitely an issue,” said the real estate agent.
Cities close to the mountains, beach or lake have long had hot real estate markets.
But Robinson and other real estate agents say the ability to work remotely during the COVID-19 pandemic and a wave of people taking up outdoor hobbies have supercharged demand for recreational homes — and supply isn’t keeping up.
“It’s going to get busier, it’s going to get bigger, it’s going to get more expensive,” Robinson said.
As the heart of the spring market nears and the summer sun seems closer than ever, he’s noticed desirable properties in Canmore, 20 minutes from Banff, being snatched up within 72 hours.
Many are flocking to the area because it sits just outside the gates of Banff National Park, where Parks Canada has restricted home ownership to people who live in the area to ensure housing is available to community members and isn’t swallowed up vacationers or second-home owners.
Robinson’s clients tend to live in Calgary and Edmonton but want a second place to serve as a mountain retreat now that they are permanently working from home or heading to the office only a few days a week.
Others are fleeing Toronto and Vancouver’s elevated prices or hoping to pad their incomes with a rental property in the shadow of the Rockies.
Such buyers have driven the aggregate price of a single-family home in Alberta’s recreational markets up 13.3 per cent year over year to $1,165,500 last year, according to Royal LePage. Condos in those areas were up 17.7 per cent to $646,000 over the same time period.
While the aggregate price of single-family waterfront properties dropped five per cent to $641,900 since last year, a Royal LePage surveyof 202 brokers in Marchfound 59 per cent of Alberta respondents reported less inventory this year. About 71 noted even less inventory than there was pre-pandemic.
The report added the aggregate price of a single-family home in the national recreational property market increased 11.7 per cent year-over-year to $619,900 in 2022. More than half of the real estate representatives surveyed reported lower inventory than last year in their respective regions, and 65 per cent have seen inventory reduced from pre-pandemic levels.
The COVID-19 pandemic exacerbated supply issues because people no longer had to visit a workplace and were thus looking to be “right on the doorstep of the mountains,” Robinson said.
They’re being joined by a wave of immigrants and others seeking affordable homes.
“I talked to a gentleman from Toronto looking around here and he was like, Jamie, I can sell my bungalow in Toronto for $2 million, $2.5 million, come to Canmore and pick up a really nice house for about $1 million, $1.5 million and still have some money left over,” said Robinson.
“So even though our prices are fairly high, especially in the Canmore area, if you compare it to Toronto or Vancouver, we’re actually a bargain.”
The Canadian Real Estate Association found February’s average Greater Toronto Area home price was $1,095,637, while the Greater Vancouver Area hit $1,219,919.
Two hours north of Toronto in Muskoka, where model Cindy Crawford and actors Goldie Hawn and Kurt Russell are rumoured to own cottages, prices are even steeper.
Statistics broker Kelly Fallis crunched from her local real estate board’s data and the Information Technology Systems Ontario platform show the average price of a waterfront Muskoka property is now just shy of $1.5 million.
Waterfront homes in Ontario’s recreational markets climbed 8.9 per cent to $1,006,600 between 2021 and 2022, Royal LePage said.
However, the firm forecast the national average home price in recreational regions will decrease 4.5 per cent in 2023 to $592,005 as “Canada’s recreational real estate rush comes to a close.’
Fallis, a 45-year cottager, scoffs at the thought of Muskoka seeing a price drop.
“It’s really bloody expensive and it’s just happened so quickly,” she said.
“One of my clients was telling me it’s appreciated faster than secondary homes in the south of France…That’s wild.”
Part of the blame for prices lies in the lack of waterfront property around lakes Muskoka, Rosseau and Joseph, where she said the average price is now just shy of $3.5 million.
“You can’t make any more inventory because it’s around a pond,” Fallis said.
Homeowners on the lakes rarely relinquish their homes and those that do often pass their cottages down to family members. Fallis’s data shows 123 waterfront properties on the three lakes traded hands last year.
She is convinced the pandemic only exacerbated demand, pushing some to act on long-held dreams of cottage life and others to uncover the joys of life on a lake for the first time.
Few are relinquishing their pandemic discoveries either.
“I think the tagline is: Once discovered, never forgotten, or something,” Fallis said.
Mary Jane Webster, a real estate agent in Charlottetown has similarly noticed the pandemic driving people to buy year-round and second homes near Prince Edward Island’s sandy beaches.
“If they’re able to do a hybrid model of working, it really makes a lot of sense for them, rather than to drive an hour each day to commute an hour and a half by airplane every second week,” she said.
The influx in such buyers has pushed up prices. A cottage in the area now sells for $260,000, Webster said.
“We’ve seen our prices grow in the last three years more than we see them grow in the last 20 years,” she said.
“We historically have never outpaced inflation, but in the last couple of years for the first time we’ve done that.”
A succession of interest rate hikes and climbing mortgage rates will likely temper that pace of growth, but Webster feels demand will still be high.
“We’re just not going see the 20 per cent year-over-year growth again for a little bit and that’s OK. We’re overdue for a little plateau.”
This report by The Canadian Press was first published April 3, 2023.