Canadians Confident in the Investment Potential of Recreational Properties: Survey
Bullish attitude toward recreational properties reflects recent strength of housing market, according to Royal LePage
TORONTO, May 20, 2011 – An overwhelming majority of Canadians who have either purchased or who intend to buy recreational property in the next 24 months believe that buying a vacation home is a good long-term investment, according to a nationwide survey of Canadian attitudes towards recreational property ownership commissioned by Royal LePage Real Estate Services and run on the Angus Reid Forum.
Overall, the survey found that 89 per cent of current owners and prospective buyers agree that recreational properties are a good long-term investment. Broken down by region, this included 92 per cent of respondents from Alberta, 91 per cent of Ontarians, 87 per cent of BC residents and 81 per cent of people surveyed in Quebec.
When respondents were asked to compare recreational properties to the stock market in terms of providing a larger financial return on investment, 50 per cent said recreational properties provided a larger return. Only 29 per cent replied investing in the stock market, while 21 per cent were undecided.
“Canadians’ confidence in recreational property values is mirroring what we have been seeing in Canada’s urban centres,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “This spring, the horror stories from some fundamentally flawed international housing markets that had dampened demand for cottage-type living during the recession era, are being shrugged off. Canada’s traditionally buoyant recreational property market appears to have found its groove once more.”
Interestingly, a majority of respondents (57 per cent) said that the expectation of interest rates rising will not affect their desire to purchase a recreational property. Among this group, 55 per cent of respondents aged 35-54 (and 70 per cent of respondents aged 55+) said an expected rise in interest rates would not affect their desire to purchase a recreational property.
When it came to financial and lifestyle sacrifices to purchase a recreational property, more than a third polled (35 per cent) responded that they were most likely to reduce personal spending throughout the year. The two least favoured strategies were to drive as far as necessary and to make the recreational property a primary residence, both 13 per cent.
“Relentlessly wet and miserable weather has delayed the 2011 buying season in some regions of the country. But while weather delays intent, it doesn’t change it. The Royal LePage Recreational Property Report shows that the steadily improving economy has stoked consumer confidence which should impact demand positively. We expect to see considerable activity in the coming months – especially in higher-end and luxury segments,” added Soper.
More than half (51 per cent) of those polled said they are, or will be, renting out their property to offset their mortgage and other associated costs. However, many of those willing to rent plan to be selective (32 per cent) and only rent their recreational property to someone who have been referred by someone they knew.
“We are seeing more buyers purchase properties with the intent to offer them as rentals. This cost-offset strategy may allow younger families to acquire a cottage earlier in their lives than they would otherwise, and others may be able to buy in a region that would have been out of their reach, price-wise. The purchase motivation for most is not financial planning. It remains lifestyle driven – satisfying the needs and wants of their family,” said Soper. “In fact, 92 per cent of those we polled agreed that a recreational property is a great way to bring family together.”
The survey was commissioned as part of the 2011 Royal LePage Recreational Property Report, an annual market analysis of recreational property prices, trends and activity in selected leisure markets across the country.
The chart below shows the typical price range for standard waterfront, land-access properties across Canada in 2011.
|2011 Recreational Property Price Summary
Average Price Range by Province**
Standard Waterfront, Land Access Cottage
AVERAGE PRICE RANGE 2011
|Prince Edward Island||
$250,000 – $1,000,000
$150,000 – $750,000
$250,000 – $360,000
$450,000 – $500,000
$350,000 – $400,000
$330,000 – $1,000,000
$100,000 – 1,000,000
Selected regional findings:
More than any other region, 73 per cent of those surveyed in Quebec listed quiet as the most important feature of a recreational property, which is more than 20 per cent higher than the national average (51 per cent).
Quebecers like to reside the closest to their recreational properties, with 40 per cent of respondents saying they would be willing to drive less than one hour to reach a vacation home. Fourteen per cent use, or intend to use, their properties more than once a week, more than any other region and eight per cent higher than the national average of six per cent.
The three most important attributes of a recreational property according to Ontario residents are four-season use (47 per cent), quiet (45 per cent) and rental potential (26 per cent).
With Canada’s strengthening economy and an expected rise in interest rates, 46 per cent of prospective recreational property buyers in Ontario want to buy before a potential increase in rates.
Sixty-one per cent of Ontarians polled are most likely to purchase a cottage on a lake in the next 24 months. This is higher than the national average of 57 per cent.
According to Albertans polled, the three most important features of a recreational property are four-season use (50 per cent), quiet (45 per cent) and proximity to amenities (41 per cent).
Nearly all (97 per cent) of respondents from Alberta either somewhat agree or strongly agree that a recreational property is a great way to bring family together.
According to respondents from BC, the most important features of a recreational property are four-season use and quiet (tied at 43 per cent) and proximity to amenities and rental potential (tied at 31 per cent).
Eighty-five per cent of respondents from BC either somewhat agree or strongly agree that a recreational property is a great way to bring family together (seven per cent below the national average of 92 per cent and lowest in the country).
From May 5th to May 11th 2011 an online survey was conducted among 1,004 Canadians who currently own a recreational property and Canadians who are considering purchasing a recreational property in the next 24 months. For the purpose of this study a recreational property is considered to be a cottage on a lake, a resort condominium, a property in the woods, a timeshare, a mobile home, a farm, vacant land, fractional ownership and a chalet near a ski hill.
The margin of error—which measures sampling variability—is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to the most current gender and region Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.
Royal LePage 2011 Recreational Property Report
Royal LePage 2011 Recreational Property Report Price Summary
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of 14,000 real estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s & children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.
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