According to a recent survey conducted by RE/MAX brokers, retirees were the main players in 91% of Canadian recreational property markets. This covers established recreational areas such as Comox Valley and Prince Edward County. More Canadian retirees and individuals nearing retirement are buying recreational properties further away from the cities to be used as retirement homes. This phenomenon has helped blur the line between residential and recreational properties.
Elton Max, the Regional Executive Vice president of RE/Max Western Canada said that in the previous year, the number of retirees and baby boomers selling their residential units in major urban cities such as Toronto and Vancouver shot up. Many put the equity from these sales into purchasing a recreational property away from the busy city life. To get a good overview of the Toronto real estate industry, let’s compare the residential and recreational property markets.
In case you are wondering what qualifies as a recreational real estate, it is simply a property that is often utilized for recreational purposes including (but not limited to) fishing, hunting, jet skiing, boating, camping, four wheelings and a host of other recreational activities. Examples include ranch lands utilized for raising animals, lake or river-front luxury properties, fishing properties complete with a fishing pond, country living and so on.
Living the “Canadian Dream” means spending time with friends and family occasionally out in the cabin in the woods. Most Canadians desire this and although not all have such properties, they often rent it. Residential properties, on the other hand, are zoned for multi-family or single-family living units such as townhouses, apartments, co-ops, and condominiums.
Another survey showed that 54% of Canadians who have a residential property or who are thinking of having one would rather use their savings as their main source of funding. Of this, about 20% said they can consider taking a loan, another 20% would use home equity, and only 11% would depend on an inheritance. Those buying residential units are often financially-strained and have fewer to zero savings. As a result, they resort to mortgages and other loans to purchase their residential homes.
There’s no denying the fact that recreational properties in Toronto are currently experiencing increased prices. An increased median price experienced in 2018 compared with 2017 is largely to blame for this surge. Recreational properties have risen as much as 13% in median income since 2017 including non-water front, waterfront, ski-in, and water access. This, combined with the explosion of the Canadian senior population whose desire is to use their recreational facilities for retirement purposes, has seen a surge in prices of these properties. On the opposite side of the spectrum, the Toronto residential market is stabilizing. Gone are the days of ridiculous price increases and fierce bidding wars. With the approval of Laneway housing, there’s more hope for affordable rental prices on most (if not all) residential properties.
The Toronto recreational property market is increasing in value as more retirees and baby boomers purchase more recreational homes to be converted into retirement homes later. A huge percentage of them prefer using their savings to buy these properties as opposed to asking for land. On the residential side, there’s a healthy balance in prices and understandably, buyers make use of mortgages to acquire a property.