American buyers slowly trickling north of border
Fears offshore investors are squeezing Canadians out of housing market unfounded
The low dollar has Americans returning to Ontario cottage country, but the vacation property market remains “quintessentially Canadian,” according to the president and CEO of Royal Lepage.
Foreign buyers accounted for10 per cent or less of vacation property sales in Canada in the last year, said the real estate company’s 2016 Canadian Recreational Housing Report.
Of those transactions, about 64 per cent were made by Americans.
“Yes, Americans are a factor. The Chinese, South Asians, are not a factor at all. Overall activity in our recreational property market from coast to coast, and certainly in our Ontario market, is being driven by Canadians,” said Royal LePage’s Phil Soper.
The “hot topic” question about foreign transactions was included in this year’s broker survey because of concerns over offshore investments in urban markets such as Toronto and Vancouver, he said. “We’ve got some xenophobia, frankly, circulating in Canada,” said Soper.
The numbers, he said, don’t support fears that offshore investors are squeezing Canadians out of housing.
The other concern that cottage country will be overtaken by shortterm renters using sites such as Airbnb, is also exaggerated, said Soper.
“Yes, people will look at various strategies to get into recreational property ownership. They’ll rent their property out. They’ll buy it with family members. They’ll go farther afield. They’ll buy off water. Lots of strategies. But . . . less than 20 per cent of the purchases are being made by people looking to have a property they can rent,” he said.
The quest for retirement properties is, however, a big reason people are buying again. But retirees aren’t the ones making that long-term investment. The Royal Lepage report shows it’s actually Gen Xers, who are on the hunt for rural real estate.
Nearly twice as many cottage buyers were 36 to 51years old, compared to baby boomers 52 to 70, according to the 49 Royal Lepage brokers, surveyed.
Gen Xers often have children and a home in the city. But they aren’t caught up in the stock market because it hasn’t paid off for them like it did for the previous generation, said Soper.
“They’re saying, ‘I’m buying for lifestyle reasons. I want my kids to have the cottage experience. I want to get out of the city with my children and this is the best thing I can do for my family, but I’m justifying it based on retirement,’ ” he said.
The cottage market has taken longer to recover from the global economic crisis than the urban housing market, but for the second year prices and demand have grown.
“I would say we’re at the beginning of an expansionary phase,” said Soper, who expects the tighter buying conditions to continue.
“For the last few years, you could kick around and look at things. Now, people have to be a little sharper and make decisions quicker or they’ll just find disappointment,” he said.
The recreational property report is based on Environics research, Census and National Household Survey indicators, as well as other statistics and the Royal Lepage broker survey.