Prices for vacation homes in Canada’s most popular ski regions are still rising despite a significant slowdown in sales volumes, according to a new report that found a surge of interest from Americans looking to get ahead of new foreign ownership rules may be helping keep prices afloat.
Royal LePage’s 2022 Winter Recreational Property Report, which is being released on Nov. 29, shows the median price of single-family detached homes in top ski areas was up 15.1 per cent to $1,042,700 in the first 10 months of 2022
“While the rapid rise in interest rates, which began in March of this year, 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,” Pauline Aunger, the broker of record at Royal LePage Advantage Real Estate, said in the report. “Additionally, many buyers of secondary properties are able to leverage equity from their primary residence or may not require financing at all.”
Despite the price gains, all recreational regions surveyed experienced double-digit declines in sales volumes in the first 10 months of 2022.
Big White in British Columbia’s ski region posted the highest price gain in the single-family detached segment at 45.5 per cent, bringing the median price to $1,600,000. The median price of a condominium increased 11.1 per cent to $500,000. Total sales dipped 33 per cent year-over-year in the region.
Quebec’s Mont-Tremblant experienced a 38.1 per cent decrease in recreational property sales over the first 10 months of the year while the median price of single-family detached homes increased 23.5 per cent to $500,000. For condos in the region, sales tumbled 47.8 per cent even as the median price jumped by 44.4 per cent to $475,000.
According to the report, Mont-Tremblant’s real estate market is in the midst of transitioning from a seller’s market to a buyer’s market, which explains the sharp decline in volumes. With interest rates moving higher, many potential buyers have adopted a wait-and-see attitude.
Royal LePage is forecasting that the median price of a single-family detached home in the region will decline by 10 per cent over the next 12 months.
Ontario’s Georgian Bay, meanwhile, saw total sales decline 27 per cent year-over-year as the median price rose by a more modest 11.3 per cent to $890,000 over the same time period. The median price for a condominium was up just 1.5 per cent, following a jump of more than 50 per cent last year.
Royal LePage is forecasting that the median price of a single-family detached home in Southern Georgian Bay will increase five per cent over the next 12 months.
In the same report, Royal LePage disclosed their recent online survey of U.S. citizens living in border states and found that a spike in Canadian recreational property purchases occurred after the federal government announced a two-year ban on foreign buyers beginning Jan. 1, 2023.
“With that announcement, it really piqued the interest of U.S citizens, especially since the Canadian dollar to the American dollar has been very advantageous in the past two years for U.S citizens purchasing in Canada,” Aunger said in an interview. “I think that the fact that there is going to be a two-year foreign buyer ban just simply pushed people who had been thinking about it off the mark to say ‘now it’s time.’”
While Trudeau’s ban on foreign buyers is intended to curb the role that professional investors and foreign buyers play in the Canadian housing market, recreational home purchases continue to be a grey area.
“Will the ban absolutely not affect recreation? That still hasn’t been completely answered. We’re still waiting on 100 per cent of the regulations on that bill,” Aunger said.
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