More Canadians snapping up vacation homes

Due to low interest rates, more Canadians are purchasing recreational property, finds new Royal LePage data.

It reveals 82% of those who have second homes that they rent out or use occasionally—including those who plan to acquire property in the next five years—were primarily influenced by low rates while deciding to buy.

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It adds half of existing dual homeowners predict the prices of recreational properties will increase over the next twelve months, while one-third says prices will remain the same.

Of those who haven’t yet made a vacation home purchase, the majority (76%) are more inclined to buy a property in Canada than in the U.S.

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“Despite financial and economic uncertainty, or perhaps because of it, we’ve found he enduring value of recreational properties is widely recognized by Canadians,” says Phil Soper, president and chief executive of Royal LePage.

He adds, “The recreational property market has remained remarkably stable and resilient, while large urban centres [saw] home prices shoot up in recent years before rapidly cooling in 2013.”

Soper continues, “I don’t recommend real estate as an investment to the typical family. Shelter is, after all, primarily consumption. In Canada today, however, we see virtually no return on bonds and other forms of modest risk savings.”

This is why people are considering recreational property in a new light, though he warns they should also factor in their lifestyles, investment needs, and other potential costs like insurance.

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The survey finds the majority of current recreational property owners plan to keep their properties over the long-term, with 60% stating it’s unlikely they’ll sell their second homes upon retirement.

Almost two-thirds (64%) aren’t planning to use their recreational homes as their primary residences upon retirement. For those who are, however, they favour the affordable purchase prices (56%) and reasonable maintenance costs (39%) compared to the costs they cover on their primary residences.

When it comes to recreational property, they enjoy waterfront access (37%). But they do say the homes must be close to town (33%), medical facilities (26%) and their current primary residences (22%).

Though properties on a lake are most popular, some buyers also look at homes in the mountains or woods (17%), as well as at condos in recreational communities (13%).

If Canadians had to make changes to their lifestyles to afford a dream property, the survey says most (31%) would rent their properties out during the year.

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Other strategies include: reducing discretionary spending (25%); downsizing their primary residences (24%); purchasing a fixer-upper (23%); and purchasing a shared home with friends or family (22%).

Read: Beware when clients co-sign mortgages

The chart below shows the typical price range for standard waterfront, land-access properties across Canada:

2013 Recreational Property Price Summary Average Price Range by Province
For a standard waterfront, land-access cottage Size: 1,000 square feet, with 3 bedrooms and an 100 foot lot.
PROVINCE	AVERAGE PRICE RANGE 2013
Prince Edward Island	$120,000-to-$300,000
Newfoundland	$150,000
New Brunswick	$175,000-to-$180,000
Nova Scotia	$180,000
Quebec	$125,000-to-$1,000,000
Ontario	$75,000-to-$625,000
Manitoba	$300,000-to-$370,000
Saskatchewan	$250,000-to-$800,000
Alberta	$110,000-to-$650,000
British Columbia	$290,000-to-$2,000,000
NATIONAL AVERAGE	$177,500-to-$625,500