Weekend or vacation getaways to “the mountains” or “the lake” are still popular with Calgarians but shifting demographics, generation gapping, the economy and technology are having a significant impact on recreational properties.
Although consumer confidence and lifestyle choices drive most real estate markets, the past few years have made the Alberta situation challenging compared to other regions in Canada.
The 2018 Re/Max Recreational Property Omnibus Survey highlights:
• 58 per cent go to relax with friends and family
• 46 per cent consider recreational property a getaway home
• 41 per cent enjoy activities (like hiking and fishing) they can’t do in the city
• 33 per cent consider it an investment property
The wants and needs of specific demographics, particularly boomers and millennials, are important influencers of recreational property perspectives. There is consistent demand for recreational properties, for generationally different reasons.
Regardless of age-specific quirks, likes and dislikes, more than 68 per cent are willing to travel up to two hours, and fewer than 30 per cent are willing to travel three or more hours. In addition to affordable purchase price and maintenance costs, desirable features include waterfront access, proximity to town and a reasonable distance from their primary residence.
Although the Re/Max survey crunched national recreational property numbers, it highlighted consistently popular Western Canada hot spots like Sylvan Lake, Canmore, the Shuswap in B.C. and Saskatchewan’s Qu’Appelle Valley.
For Calgarians, Sylvan Lake (less than a two-hour drive and halfway between Calgary and Edmonton) boasts one of Canada’s Top 10 beaches, water activities, spectacular northern lights watching, golf, great restaurants and ice-fishing and snowmobiling.
Heading west, Canmore is stunningly beautiful and popular in summer and winter. And the Shuswap (500 kilometres from Calgary) is well known for its lakes and water sports, vibrant music festivals, luxurious houseboats and golf courses. The communities dotting this region are becoming increasingly popular amongst retirees looking for an active lifestyle.
At a time where seniors are outnumbering children for the first time in Canada, older generations are also holding most of the purchasing power – and driving a surge – in the recreational real estate market. The Re/Max survey indicates that recreational properties are experiencing a spike in pricing, with 78 per cent of regions surveyed showing a higher median price in 2018 compared to 2017.
The median price of recreational properties, driven primarily by boomers – including waterfront, non-waterfront, water access and ski-in properties – has increased by 13 per cent across Canada. The survey also shows that while overall demand and prices are surging, the economic slowdown in the Prairies – combined with stricter mortgage qualifications – has made the recreational property market a bit more sluggish, although there are signs of gradual, post-downturn recovery-mode positivity.
A quarter of the survey respondents indicated they would consider purchasing a recreational property as an investment vehicle to help finance retirement. And despite irresistible options like Airbnb for generating rental income, money experts are urging a 2.0 version of the standard caution that recreational properties are risky and poor investment choices.
Most financial planners and investment consultants, like Douglas Gray, a retired lawyer and respected author of 25 books, including The Complete Guide to Buying and Owning Recreational Property in Canada, are unanimous that, in terms of dollars and cents (unless a person’s situation allows the use of a cottage on a lake or a condo in the mountains as a primary residence), a recreational property doesn’t make much investment sense.
“A recreational property purchased specifically for investment purposes implies a rental revenue plus capital gain objective,” Gray warns. “Careful research has to be done to ensure that an investment goal can be realistically achieved. There are many variables. Whether it’s buying a vacation home for rental purposes only, a combination of personal use and periodic or seasonal rentals, or personal use with a long-term hold plan, there are key aspects to consider and the projected financial numbers have to work.”
Gray emphasizes that after pleasure factors are weighed, there are tax, legal and estate planning issues that must be dealt with.
Elton Ash, regional executive vice president, Re/Max of Western Canada, is a plugged-in real estate insider on Western Canada’s recreational property market.
Although he is an expert on stats, analyzing market trends and sales-to-listings ratios, he also has unique expertise regarding shifting family dynamics, human factors, consumer trends and the various social and lifestyle aspects that impact real estate – and, in this case, the recreational property market.
“In their own ways, retiring boomers and driven millennials are both redefining the supply and demand of recreational properties,” he notes. “There are new consumer trends and attitudes about recreational properties. Of course, it is still very much about family and enjoyment, but it’s also about contemporary life and lifestyles.”
He explains that when it comes to recreational properties, what makes the two distinct generations different also makes them similar: lifestyles.
“On one hand, retired or retiring boomers are still driving the market. About 10 years ago, it was all about legacy and opportunities for their kids and grandchildren. In the past year or so, especially younger boomers were recovering from the Alberta recession and many started to re-evaluate their own lives and lifestyles.
“The senior population is the largest ever and many retired or almost-retired boomers are selling their city homes and using the equity for the purchase of a recreational property they will use as their primary residence.”
On the flip side, Ash is enthusiastic when it comes to tracking the subtle but significant impact of millennials on recreational property trends. “Millennials are sometimes maligned and often stereotyped about outlooks, attitudes, instant gratification and chasing multiple jobs. Reality is that they are as motivated a generation as we have seen.”
He adds technology is a key factor in the millennials’ interest in recreational properties, citing how mobile communications has bridged the divide between city offices and working by remote.
However, the issue of urban affordability is trickier. “For millennials, it’s more about opportunity and ability. They have a fresh approach and a drive for life balance. It’s about working hard but also about getting out, being active and getting the kids away from the computer screen.”
He notes the popular millennial concept of “the sharing economy,” in which tech-savvy millennials leverage their assets (cars, parking spaces, condos) to offset costs and make extra money to buy a recreational property. Others are renting in the city and purchasing their primary residence out at the lake or in the mountains.
Whatever the draw to purchase a recreational property, the Re/Max report confirms: more than a quarter of Canadian families (28 per cent) say they would consider selling their primary homes in the city to purchase a cottage, cabin or ski chalet.