Gen X fuels demand in cottage country

Cottage Country Real Estate (Sotheby's International Realty) — Cottage Country Real Estate (Photo from Sotheby's International Realty)

TORONTO and KELOWNA, BC, April 27, 2023 /CNW/ — Amid the long anticipated $1 trillion transfer of wealth from Baby Boomers, coupled with the search for more-affordable housing markets, Generation X now leads the pack in recreational property transactions, with this buying cohort driving activity in 91 per cent of recreational regions surveyed, according to RE/MAX Canada’s 2023 Cottage Trends Report. Historically, recreational market activity has been driven by retirees, inclusive of both Baby Boomers and Gen X (91 per cent, according to RE/MAX research conducted in 2018).

Following record-setting activity in 2022, the waters have tempered in recreational markets with 50 per cent of regions now experiencing more balanced conditions. Despite demand tapering due to economic uncertainties in the latter half of 2022 and carrying into the first quarter of 2023, RE/MAX brokers and agents anticipate consumer confidence to rise in tandem with the temperature, into “cottage season” and through the remainder of the year. Overall, average residential sale prices are expected to rise by 0.9 per cent.

To view the full interactive report, please click here.

As Canada continues to experience affordability challenges, 51 per cent of Canadians who own or plan to own a recreational property (47 per cent of Gen Xers) pointed to the opportunity to pass down a recreational property to family, as a key motivator to buy one, according to a Leger survey conducted on behalf of RE/MAX Canada.

“It’s interesting to see Gen X gaining more of a foothold in recreational markets across Canada. Demand, coupled with the desire to own and keep these properties in the family, may further impact already low inventory levels in this segment of the market,” says Christopher Alexander, President, RE/MAX Canada. “When it comes to succession planning, recreational properties are always a good addition to any real estate portfolio, especially given the long-term ROI that they typically yield, making them an excellent opportunity for inheritance aspirations as well.”

The Leger survey also found that 42 per cent of current recreational property owners in Canada are holding onto their properties in the hopes of passing them down to family members, while 56 per cent have or plan to put their property in their beneficiary’s name while they are alive. Three-quarters of recreational property owners (74 per cent) also feel confident that with proper succession planning, they will be able to seamlessly pass down their property to family members. In fact, 48 per cent of recreational property owners agree that working with a real estate agent has led them to consider factors such as succession planning for their properties.

According to the Leger survey, the quality of life that recreational markets offer is another appealing factor of recreational property ownership, with 36 per cent of Canadians who own or plan to own a recreational property (45 per cent of Gen X) attracted to recreational markets for the liveability they offer compared to larger city centres – a figure that is higher among prospective buyers, at 55 per cent. The top five “must-haves” among Canadians for recreational properties include affordable purchase price (43 per cent); proximity to water or waterfront (32 per cent); reasonable maintenance costs (29 per cent); proximity to needed amenities (29 per cent); and all-season access to emergency services (27 per cent).

“As the lines between recreational and residential properties become increasingly blurred in a trend that emerged during the pandemic, quality of life has become even more important,” says Elton Ash, Executive Vice President, RE/MAX Canada. “As the warmer weather approaches, and economic conditions begin to stabilize, buyer confidence is returning to recreational markets.”

Regional Deep Dive into Canadian Recreational Markets

RE/MAX Canada brokers and agents were asked to provide an analysis of their local market activity for the first quarter of 2023, as well as an outlook for the remainder of the year. Additional overarching regional trends include:

Retirees, families and couples are the top three consumer segments leading activity in the market – 82 per cent, 68 per cent and 55 per cent respectively.
Waterfront properties (77 per cent) and access to recreational activities (59 per cent) like skiing and water sports, are the most sought-after features of recreational markets.

To view the full regional data table, please click here.

Ontario
Despite most regions favouring sellers last year, following interest rate hikes and ongoing economic uncertainty, a majority (67 per cent) of recreational markets in Ontario are now in balanced conditions. Muskoka, Haliburton and Greater Sudbury, Windsor–Essex, Manitoulin & French River, ON are the outliers that still favour sellers. Ontario recreational market activity is being driven in majority by Gen X buyers – specifically families and retirees showing particular interest in waterfront properties.

According to RE/MAX brokers and agents, residential sale prices in recreational markets are expected to grow by two per cent in Muskoka and Haliburton; four per cent in Peterborough and the Kawarthas; five per cent in Greater Sudbury, Manitoulin & French River; three per cent in Windsor–Essex; 5.8 per cent in Lake Simcoe and two per cent in Prince Edward County. Meanwhile, other regions are expected to cool slightly and anticipate a reduction in residential sale prices, including Rideau Lakes by one per cent; Southern Georgian Bay by 1.5 per cent; and Kenora and Lake-Of-The-Woods by 6.5 per cent. Bruce Peninsula & Sauble Beach foresee a steeper decline in residential home prices of 11.5 per cent which can be attributed to the ongoing demand readjustment, while prices in Grand Bend are anticipated to remain unchanged.

To view individual insights of Ontario regions, please see below.