High-interest rates and affordability concerns fail to shake the strong hold on cottage markets
Cottage owners aren't rushing to sell despite economic pressures and higher interest rates, according to a new RE/MAX Canada report.
Elevated rates and affordability concerns have not been enough to dislodge cottage owners, who are choosing to hold onto these properties for quality-of-life reasons and faith in long-term returns.
"Those who have already gained a foothold in the recreational property market are determined to hold on to this asset despite mounting affordability concerns across the country," said RE/MAX Canada president Christopher Alexander.
Determined owners
The report revealed a noticeable absence of a listings flood so far this spring season, bucking expectations of a sell-off wave. RE/MAX brokers anticipate just a 6.8% increase in recreational property prices this year, with sales volumes projected to rise between 3% and over 50% in most regions analyzed.
"Even the change to the capital gains tax, that will take effect on June 25, won't spark a widespread flood of new listings and sales by cottage owners trying to get in under the wire given the narrow window," Alexander said.
Younger buyers overtake retirees
The recreational property market is seeing a shift. Traditionally dominated by retirees, families and young couples, it now drives significant activity in 59% of recreational markets nationwide.
“The quality of life found in recreational markets and the ability to work remotely has prompted more than one-third of Canadian recreational property owners to spend more time at these secondary properties than before the pandemic,” RE/MAX Canada wrote.
The ability to work remotely has also been a key driver, with 38% of owners spending more time at their cottages post-pandemic based on a Leger survey - a figure rising to 55-57% among Gen Z and Millennials.
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Additionally, new policies and regulations affecting short-term rentals have been introduced in some provinces as a measure to improve housing supply availability. Despite these changes, 58% of recreational property owners are standing firm, choosing not to sell their properties even though these changes could impact their potential rental income.
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