Recreational Property: Are Buyers Ready To Take The Plunge?

Recently, I had the privilege of being interviewed by the Financial Post to provide insights into Canada's premier recreational property markets. In particular, Western British Columbia, one of the nation's most sought-after regions for recreational real estate. During the interview, I shared my perspectives and observations on the dynamics shaping this vibrant market. Below is a snapshot from the article highlighting my insights, and you can read the full article on the Financial Post's website [here]

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Frank Ingham, an associate broker at Royal LePage Sussex in North Vancouver, covers the cottage market in the idyllic locales of the Sunshine Coast, and Pemberton, near Whistler. These areas are renowned for their breathtaking natural beauty and abundant outdoor activities. Despite a glut of new listings on the market (up 82.4 percent year over year by mid-spring), buyers are currently exercising caution.

“People are not jumping at buying like they were a year or two ago,” Ingham said. “They have their hands in their pockets and they’re saying, ‘We’ll be patient.’ ”

Although he says most clients are pleased with the interest rate drop, with some now considering moving off the sidelines, prices remain unaffordable for most people. Even international buyers aren’t biting.

“Prices are unusually high here compared to other areas in the interior of B.C,” says Ingham. “In our little town, a used house — say, 20 to 30 years old — can be in the $1.2 to $1.4 million range. A condo can be $700,000 to $900,000, which is super high, and likely twice as much as other regions in the province.”

In mid-spring, the median sale price for a single-family recreational property in North Vancouver increased by 3.3 percent year over year to $2,211,000.

He explained that the high prices are due to the limited amount of land in prime locations, which are mostly within a two-hour drive from Vancouver. Whistler, for example, with its world-class skiing and biking and five-star restaurants, once attracted international buyers. But according to Ingham, things have changed. “Our international market is quiet compared to what it used to be. I sold properties to people from around the world — from Dubai, Australia, New Zealand, Europe.”

Ingham suspects that current high prices, along with the speculation tax (which doesn’t apply to Whistler and Pemberton) are affecting international buying activity as buyers fear the tax could apply at any given moment.

He further emphasized the importance of addressing affordability issues to stabilize the market, citing the capital gains tax as more of a hindrance. “Affordability is at an all-time low. Everybody knows it and talks about it,” Ingham said. “Increasing the capital gains tax is not going to help at all. It’s going to make it worse.”

Ingham pointed to two of his recent sales off the Sunshine Coast. The properties were on a secluded sandy beach island accessible only by boat. One, a vacant waterfront lot, fetched $1.8 million, well above its assessed value of $1,344,000. The other was a one-bedroom cabin, which sold for $997,850, just shy of its assessed value of $1,045,000. Both sellers were motivated by the looming June 25 capital gains tax increase and pushed to secure their deals before the deadline.