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Cottage home prices sizzle in Ontario and the Atlantic as city folk eye rural havens

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‘Once people got the idea that they can work from home, they started casting their eyes farther afield’

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Can Canadian real estate get any hotter? Yes, according to a forecast by Royal LePage on Canada’s cottage and vacation home market.

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The brokerage firm is predicting average prices for a recreational home in the country to increase by 15 per cent to just above $502,000, as Canadians continue to leave once-bustling cities for more space outside of urban centres, in a report published Tuesday.

The biggest price increases, Royal LePage predicts, will be in Ontario and Atlantic Canada, at 17 per cent. Quebec and British Columbia are poised to see the second and third highest increases, at 15 and 13 per cent, respectively.

“COVID-19 has opened people’s eyes to the prospect of working from home,” Phil Soper, president of Royal LePage, told the Financial Post. “Once people got the idea that they can work from home, they started casting their eyes farther afield and (thought) home could be on a lake, far from the city.”

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In the Maritimes, where the average cottage price is expected to jump from $194,000 to $255,000, the market has seen an uptick in out-of-province buyers, especially from Ontario and Quebec. There has even been a small trend of buyers purchasing recreational homes without first visiting the property, though it’s rare, Soper said.

One of the main reasons buyers from Ontario and Quebec are going eastward, he said, is because of their proximity to their potential buy. Without a pandemic restricting travel, like the Atlantic bubble, it could take two days for a family in Ontario to get to their cottage in P.E.I., he said.

“Affordability and beauty” is another reason. “(The Maritimes) are gorgeous and the cost of recreational property in Atlantic Canada is maybe a third to half of what you pay in Ontario.”

The expected price surge in cottage country this year comes after prices had shot up 17 per cent in 2020 compared to the year before.

The pandemic, which helped pad Canadians’ savings and fuelled historically low interest rates, spurred new buying trends.

One of those trends was bidding wars. “Multiple offers are not the norm but they’ve become the norm during the pandemic,” Soper said. Now, sellers are seeing about 10 offers at a time on cottages.

As well, the speed at which cottages were selling surprised Soper. “Typically it takes weeks, if not months, to sell recreational property without bidding wars.” Now, it take days.

Soper expects these trends to continue, but recognizes that the high price points for recreational homes will price some out of the market and cool demand.

Because of this, the market for cottages hasn’t yet reached a bubble, said Diana Petramala, a senior economist at the Centre for Urban Research and Land Development.

However, “I do think think the risks of a potential bubble are rising,” she said. “There’s still time for governments to step in and bring the market back down to more normal levels.”

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