What to know
- A RE/MAX Canada survey found 45 per cent of prospective buyers are considering recreational properties as a path into homeownership, with interest especially high among Canadians aged 18 to 34.
- One expert says falling prices, growing inventory and stronger rental potential in cottage markets are making recreational homes more appealing than traditional urban properties.
- Some buyers are choosing to rent in the city while purchasing recreational properties elsewhere to build equity, generate rental income and invest for long-term wealth.
A new report suggests many young people in Canada are now viewing recreational properties as an entry point to homeownership and long-term wealth, rather than just an occasional vacation spot.
While a cottage in the countryside or lake house might be great for a vacation away from home, many Canadians are starting to view these properties as an alternative to a full-time home downtown.
As affordability challenges continue across major cities like Toronto and Vancouver, some young Canadians are increasingly looking beyond traditional urban condos and homes. Instead, recreational properties, once viewed primarily as vacation getaways, are now emerging as an alternative entry point into the housing market and a potential strategy for long-term wealth building.
The conclusion comes from a recent Leger survey by RE/MAX Canada, which found that 45 per cent of prospective buyers across the country are now planning on purchasing a recreational home as a way to get into the market.
Meanwhile, 59 per cent of respondents also said they would use their recreational property year-round rather than during certain times of the year.
“Recreational properties are no longer viewed solely as discretionary purchases, but instead as a foothold into homeownership with long-term value potential,” President of REMAX Canada Don Kottick said in a statement shared with Now Toronto.
The trend appears to be even more prominent among young Canadians, with 54 per cent of surveyed people aged between 18 and 34 saying they are eyeing recreational properties as part of their future real estate portfolio. Meanwhile, only 30 per cent of those aged 35 and older said they’d do the same.
Why are Canadians eyeing recreational properties?
Although home prices have been dropping across Canada in the last few months, as many homebuyers hesitate on jumping in amid global economic uncertainty, prices remain steep across major markets in the country.
In Toronto, for instance, the average home selling price in April was $1,051,969, according to the Toronto Regional Real Estate Board (TRREB). Similarly in Vancouver, the average price was $1,209,774, according to Wowa.
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In Ontario, price increases and intense competition for recreational properties became common after the pandemic, but the market is now readjusting.
Inventory is growing across many regions, with many properties also sitting on the market longer, giving buyers the upper hand for negotiations.
Prices appear to be getting more balanced across the province, with double-digit declines being recorded across several markets, including Orillia, Simcoe County, and Kawartha Lakes.
Conrad Zurini, a broker with RE/MAX at Escarpment and Niagara, says recreational properties often follow an up-and-down trend, in which prices tend to go up in some periods and then drop during others.
Right now, prices have reached their lowest levels, and many buyers are hoping to take advantage of the moment to jump in.
“They’re timing it quite well, and they’re saying, ‘Look, my capital investment is probably the lowest it’s going to be, so I’ll have capital growth in the medium to long term,” he explained.
At the same time, Zurini says long and short-term rental income for these properties are usually significantly higher than in urban properties, allowing buyers to rent these properties out and capitalize on them.
With many companies now pushing for a return-to-office, many buyers are also considering commutes and other lifestyle transitions over short-term flexibility.
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However, some might choose to still rent in the city they work in while renting out their recreational properties to build equity, according to the broker.
Is this a realistic option for long-term wealth?
The report also found that 60 per cent of property owners surveyed said their recreational properties are a part of their long-term investment strategy.
Zurini says this could be a successful strategy for many to enter the market and create long-term wealth, considering that rent prices are higher in many of these properties. In addition, buyers might also wait for prices to increase again before re-selling the properties for profit.
“Let’s say you’re working in Toronto, and if you were to buy a condo versus renting, the rental is still your better bet right now in Toronto because you have condo fees and taxes and interest, so your cost to rent is a lot cheaper,” he said.
“So, if they’re going to do something in the real-estate field, I [wouldn’t] buy where I work, but I [would] buy where I play. And the numbers are working, they’re working real well.”
At the same time, the broker points out that a lot of buyers now have higher expectations when buying a property compared to years ago.
According to the report, 61 per cent of respondents also said they would prefer to buy a property that’s been recently renovated.
This comes as many try to avoid additional costs, with two out of five respondents saying they worry they wouldn’t be able to manage maintenance costs.
Zurini says the higher expectations come as buyers are now older on average than a few years ago, and more inclined to considering their options more carefully. While the average age for homebuyers in 2010 was 28 according to him, now it is 38.
“When I’m in my 20s, I’ll take a lot in terms of living through a rental or whatever, but when I’m waiting, I’m building up a down payment, I’m entering the market at a different level… I’m going to enter the market at a different level than I used to in the past,” he added.
