Demand sends prices of recreational properties soaring
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Last year, Rolf Hitzer, a broker at Royal LePage Top Producers Real Estate in Lac Du Bonnet, saw offers on recreational properties higher than he’s ever seen in his 35-year career.
And while he used to tell his listing clients that they should expect it to take one-to-four years for a cottage to sell, they were gone, on average, in just more than one month last year.
“I think the mark is universal, whether it’s on the shores of Lac du Bonnet or in the Interlake or wherever, the market, because of COVID, has changed dramatically.”
According to Royal Lepage’s annual spring recreation property price forecast and review, data shows prices across the country were up 26.6 per cent last year. And the real estate firm is forecasting a 13.0 per cent increase in prices nationally in 2022 to $640,710.
Its data for this year and forecast for the Prairies are much more modest — about 13 per cent price increase last year and a forecast of three per cent increase this year — brokers on the ground in Manitoba’s cottage country are quite a bit more bullish.
While it’s still a little too early to have a good sense of the level of demand this year because of the lingering winter weather, there is a general expectation among brokers that demand will continue to outpace supply.
“It still seems like the situation could be characterized as ‘desperately seeking recreation property’,” Hitzer said. “If the imbalance continues in 2022, which is what I suspect it will, I think we’ll be looking at price increases this year in the five-to-10 per cent range.”
Despite the overwhelming demand and lack of inventory to sell last year Manitoba still has the most affordable cottage country in Canada, not counting Atlantic Canada.
Royal LePage’s data shows that cottages in Gimli and the Interlake went for an average of $218,000 last year, up 12.8 per cent.
But Tyler Bucklaschuk, a broker with Royal LePage JMB & Associates in Gimli who works on the west side of Lake Winnipeg from Matlock to Hecla, said even back country properties that previously spent a lot of time on the market, were selling last year.
“Inventory is still way down but I don’t think we will see that big of a jump again this year,” he said.
Phil Soper, president and CEO of Royal LePage, said the same factors challenging the residential housing market in Canada — chronic low supply and growing demand — are also present in the recreational market. And even with restrictions being lifted across the country, he believes the market is likely changed forever.
“The desire for homes with more space, both indoors and out, is a trend that I believe will long outlive the pandemic,” he said.
While a 13 per cent increase in prices in the Interlake was a substantial spike, in Falcon Lake and the Whiteshell, prices were up 25 to 30 per cent last year.
Dave Ellie, of Falcon Realty Ltd., said. “Collectively there will be about 100 properties for sale in the region every year and last February alone I was contacted by maybe 150 people in just that one month alone.”
And while traditionally cottages in the area would have been sold first come first served, that has all changed.
“Now the vast majority of properties post an offer date, show it for one or two weeks, then accept sealed offers,” Ellie said. “That is a tough market to buy in.”
Shanna Karle, a broker with Ateah Realty that specializes in real estate services for the beach communities on the east side of Lake Winnipeg, concurred with brokers from other regions.
“Our largest problem is that there just isn’t a lot inventory,” she said.
While the pandemic has dramatically turned the real estate market on its head, substantially favouring the sellers, it has really lit a flame under the cottage market in Manitoba.
Hitzer remembers that after the real estate crisis rocked the U.S. in 2008, Manitobans flocked to Arizona, Nevada, Florida and Texas for cheap properties.
“That flattened our cottage market to the point where if you wanted to sell your cottage you had to be very patient,” he said. “Then COVID hit and Manitobans realized it was not safe to go south of the border for many reasons.”
Although interest rates are starting to creep up and there are uncertainties about the economy, rates are still very low and the economy is definitely growing, so there is a general consensus that the recreation market will remain unbalanced this year.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.