Generation X is dominating Canada’s recreational housing market, according to a new report from Re/Max Canada.
Members of gen X, aged 43 to 58, are driving activity across the country and are behind 91 per cent of transactions, said Re/Max’s latest cottage trends report. That’s a marked change from previous years when the market has been driven by retirees, made up of baby boomers, aged 59 to 79, and their gen-X children.
The hunt for more affordable housing could be one factor behind gen-X’s buying frenzy, with prices in cottage country lower than what can be found in the city. But some of the demographic shift can also be attributed to baby boomers passing their money down to family as part of the expected $1-trillion intergenerational wealth transfer, Re/Max said.
Indeed, inheritance considerations are playing into people’s decision to own cottages. The opportunity to give recreational property to family is a leading motivator for 51 per cent of Canadians, including 47 per cent of gen-Xers, who own or plan to own a cottage, said a Leger survey conducted on behalf of Re/Max. It’s also the reason why 42 per cent of current recreational property owners are holding onto their estates. Others are moving to hand over cottages while they’re still alive, with 56 per cent having already, or planning to, put property in a beneficiary’s name.
“It’s interesting to see gen X gaining more of a foothold in recreational markets across Canada. Demand, coupled with the desire to own and keep these properties in the family, may further impact already low inventory levels in this segment of the market,” Christopher Alexander, president of Re/Max Canada, said in a press release. “When it comes to succession planning, recreational properties are always a good addition to any real estate portfolio, especially given the long-term ROI that they typically yield, making them an excellent opportunity for inheritance aspirations as well.”
Another factor driving people to snap up recreational properties is that quality of life is perceived better in cottage country compared to larger city centres. It’s what attracted 36 per cent of Canadians, including 45 per cent of gen-Xers, to own or plan to own a recreational property, Re/Max said. That number jumps to 55 per cent for buyers considering taking the leap into cottage ownership.
“As the lines between recreational and residential properties become increasingly blurred in a trend that emerged during the pandemic, quality of life has become even more important,” Elton Ash, executive vice-president, Re/Max Canada, said in the release.
Still, Canadians have strong ideas about what makes the ideal recreational property. Their top five “must haves” include an affordable purchase price (43 per cent), proximity to water or waterfront (32 per cent), reasonable maintenance costs (29 per cent), proximity to needed amenities (29 per cent) and all-season access to emergency services (27 per cent).
Recent data shows the recreational market has cooled following record-setting activity in 2022, with half of the regions now experiencing more balanced conditions.
Royal LePage chief executive Phil Soper explained in an interview with the Financial Post’s Larysa Harapyn earlier this month that the downturn is just hitting cottage country because the recreational property market is skewed to the spring. As a result, there hasn’t been time for prices to adjust downwards as with urban markets.
But despite declining demand in late 2022 and early 2023, Re/Max brokers and agents are anticipating consumers will come back to the market this summer and through the remainder of the year. Overall, the average price of a home is expected to rise by 0.9 per cent.
“As the warmer weather approaches, and economic conditions begin to stabilize, buyer confidence is returning to recreational markets,” Ash said.