Price inflation and cottage country
April 12, 2022
First, I only received one letter regarding my comments last week, about pricing and the Luxury Tax on boats, and it registered strong disagreement with my suggestion.
I’m a Cottage Life magazine subscriber and I get their newsletter as well. Last Thursday they ran a story based on a report from real estate company Royal LePage, that has released its 2022 Recreational Property report. The company’s prediction: Cottage prices will continue to increase at a dizzying pace.
According to the report, the average price of a recreational property in Canada, which includes secondary properties, such as cottages, chalets, cabins, and waterfront properties, will increase by 13 per cent in 2022 to $640,710.
Phil Soper, president and CEO of Royal LePage, commented in the report, “Demand for recreational properties continues to vastly outstrip inventory in many cottage regions across the country. Waterfront and mountain-top locations near cities are limited by nature, even in a vast land like Canada, forcing buyers into multiple-offer scenarios.”
One area of Ontario had the country’s highest recreational property price appreciation with a 34.6 per cent increase from 2020. The average price for an Ontario recreational property in 2021 was $653,000.
A cottage on the water will cost even more. The Royal LePage report said that recreational waterfront properties in Ontario sold for an average of $888,000, second only to British Columbia, which saw prices soar above $2 million.
Even compared to the price inflation in residential homes, the increase in waterfront property prices seems astronomical.
The Liberals have just released their new budget and they are targeting the, (I think, unsustainable) increases in real estate prices, as well as targeting rapidly rising consumer price inflation in all sorts of goods and services. It’s too early to tell what the outcome of this budget will be in the long run, but rapidly rising prices are clearly in our future for now.
The question I’m wondering about, is where the escalating real estate prices put the price of a boat in comparison. According to the Royal LePage report, 36 per cent of Ontario’s boomers are considering purchasing a new residence within the next five years. Fifty-six per cent of that group is considering buying in a cottage region. That means that over the next five years, Ontario could see an additional 729,000 people enter the cottage real estate market.
Low inventory continues to drive up prices and I will confess that I find it hard to grasp the extent of the situation to guess where things will settle out, but one thing seems clear from the Royal LePage report; there is huge buying pressure for waterfront access. I think that will include boats.
Andy Adams – Editor
