As evidenced by the many boomers who are happy to stay in their current homes for retirement, seniors aren’t exactly interested in downsizing. In fact, they might be interested in precisely the opposite, according to RE/MAX, which found that seniors are almost single-handedly driving vacation home prices up across the country.
A recent survey by the real estate company found that prices for vacation homes “surged” in 78% of the Canadian regions it looked at. The survey tracked median prices between July 2016 and June 2017, and compared them to prices recorded between July 2017 and June 2018.
RE/MAX looked at a range of vacation home types, including waterfront properties, non-waterfront properties, properties with water access and ski-in properties (for example, chalets).
As with the non-vacation housing market, British Columbia and Ontario are leading the way for price growth. B.C. saw an overall increase of 19%, but in vacation areas like Tofino, prices went up by as much as 112% compared to last year.
Prestige regions also brought prices up in Ontario. Prices for waterfront homes in Haliburton grew by 98% compared to last year, while prices for homes with mere water access shot up by 71%.
According to RE/MAX, seniors are to blame for these prices hikes. The company’s survey said that retirees drove demand — and thus, prices increases — for vacation homes in 91% of the regions it examined. While some of the survey’s respondents looked at such properties as investments (33%), most people wanted the recreational benefits of a vacation home, such as the ability to hike and fish (41%), get away from their day-to-day routines (46%), and relax with family and friends (58%).
“Compared to 2017, when only 55% of regions surveyed had retirees driving the market, this year's 91% are having a much bigger impact,” said Christopher Alexander, executive vice president and regional director, RE/MAX INTEGRA Ontario-Atlantic Canada Region.
“Combined with the fact that Canada's senior population is the largest it has ever been, and many of these retirees are using recreational properties as retirement properties, pricing has increased across the majority of markets.”
The only surveyed region that hasn’t seen prices increase for vacation homes? That would be the Prairies, where median prices actually fell by 4% compared to 2017.
Despite this, RE/MAX predicts that vacation home prices will continue to go up into 2019. The company also estimates that a bigger proportion of buyers will shift from retirees to younger buyers in the next two to five years.
And where will these younger buyers get the money from? That’s one question that’s outside of RE/MAX’s purview.