Recreational property markets have greater resistance to increasing mortgage rates and on a national level, recreation markets close to ski areas, downhill and cross country, have posted double-digit year-over-year price increases since the beginning of 2022, says the Royal LePage Winter Recreational Property Report.."While the rapid rise in interest rates has caused many would-be buyers in the residential market to move to the sidelines, some recreational property purchasers, most notably in higher-end markets, have demonstrated a greater tolerance to increasing monthly mortgage costs," said Pauline Aunger, broker of record, Royal LePage Advantage Real Estate.."Additionally, many buyers of secondary properties are able to leverage equity from their primary residence or may not require financing at all.".All recreational regions surveyed recorded double-digit declines in the number of homes sold during the first 10 months of 2022, compared to the same period last year, when demand for properties reached historic highs. Royal LePage recreational property market experts across the country report more balanced conditions and an increase in inventory, compared to 2021. It is widely anticipated further price growth is unlikely, as activity levels are expected to continue their decline.."For most Canadians, owning a recreational property is a nice-to-have lifestyle option," said Aunger. "In the current economic environment, it is not surprising sales declined. With recreational homes in greater supply and most staying on the market longer, those that remain in the market are facing less competition, compared to last year.” .“While activity has moderated from the exuberant levels seen during the pandemic boom, demand for recreational properties remains healthy, both as primary and secondary residences. Even as offices reopen and international travel resumes, buyers with the ability to work remotely continue to permanently relocate into recreational communities in search of better work-life balance and access to the outdoors.".The federal government’s two-year ban on non-Canadian citizens and non-permanent residents from purchasing residential property in the country, which becomes effective on Jan. 1, 2023, appears to have pushed purchases ahead for US buyers..A Royal LePage survey of US citizens living in border states, conducted by Leger, found 75% of those who own a recreational property in Canada said that they made their purchase after the ban was announced. .Of those who purchased following the announcement, 77% said the potential impacts of the ban on their ability to buy real estate in Canada influenced their decision to purchase before the end of this year..The primary reasons for buying recreational property in Canada are the strength of the US dollar (67%) multi-season usability (39%), for retirement purposes (38%), and for investment purposes (37%).."Canada's winter recreational regions are a draw for our neighbours to the south who are looking for a place to live and play in the winter months,” said Aunger..Royal LePage measured recreational markets across the country, including the town of Canmore, one hour’s drive west of Calgary..“The median price of a single-family home in Canmore over the first 10 months of the year increased 23.6% year-over-year to $1,588,900,” said Brad Hawker, associate broker, Royal LePage Solutions. “The median price of a condominium increased 5.9% to $663,400.”.Sales are down 41% year-over-year.."After a record year in 2021, sales have trended back towards long-range historic norms. We’ve been in a seller’s market for several years, but have begun to show signs of edging towards a more balanced market in some segments," said Hawker.."Inventory has remained at similar levels this past year, which is still well below typical numbers, putting continued upward pressure on prices. Sellers can be reluctant to list their homes in the region, as there is limited inventory of recreational properties to upgrade into.".Canmore real estate benefited from remote workers buying homes..“Although relocation inquiries have reduced, as offices recall employees back to fully-in-office or hybrid work arrangements, the work-from-home option will exist for the foreseeable future, adding pressure to the market alongside increased demand from retirees,” said Hawker..Rising interest rates have less influence on recreation markets.."Many Canmore buyers do not require financing. As a result, rising interest rates are not having as significant an impact on our market compared to other regions. While I do expect prices to soften over the coming year, declines will be modest," said Hawker. "The impact of higher borrowing costs on the overall economy, however, is causing some buyers to take a wait-and-see approach. .“Most buyers in this market have the luxury of time and are waiting to see how things unfold.".Royal LePage forecasts the median price of a single-family home in Canmore will decrease 4% over the next 12 months, taking it to $1,525,344. A 4% decline in the standard condo price would take it to $636,864.
