The Baby Boomer era may be coming to an end—at least in cottage country. According to a new report from Re/Max, Gen Xers (defined as people aged 43–58) are driving demand in Canada’s cottage real estate markets.
“Baby Boomers have long established themselves as the perennial cottage buyers, and now we’re seeing a changing of the guard,” says Christopher Alexander, the president of Re/Max Canada. “Gen Xers are getting into their 50s and now have the means to buy a second property.”
Gen Xers are also being empowered by inheritances. Between 2016 and 2026, it’s projected that $1 trillion in assets will be transferred from older generations to younger generations in Canada.
According to the report, 91 per cent of Re/Max Canada brokers surveyed said that Gen Xers are their most common client. Continued demand for waterfront properties combined with limited inventory, especially in Ontario, is expected to raise recreational property prices across the country by 0.9 per cent this summer, Re/Max says. However, this prediction contradicts Royal LePage’s spring recreational property report, which forecasted a 4.5 per cent drop in cottage sales prices across the country.
The Re/Max report mentioned two key factors motivating Gen X demand. The first is being attracted to the cottage lifestyle and looking for an escape from city centres. The second is succession. Forty-seven per cent of Gen Xers want to buy a cottage so that they can pass it down to the next generation.
“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,” Alexander says.
During the pandemic, many cottages were snapped up as investment properties and rented out as short-term rentals. That notion is shifting with Gen Xers looking more long-term. But Alexander says it’s likely you’ll see a combination of both ownership styles with owners renting out the cottage when they’re not using it, while also planning to pass the property down to their kids.
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With more owners planning to keep the cottage in the family, Re/Max is predicting that available inventory will become tighter, in turn driving up prices. As a result, buyers may have to be willing to make concessions.
“One thing I’ve got my eye on is how far people are willing to drive now because of prices,” Alexander says. “Despite the big push to return to the office, there still seems to be a lot of flexibility, especially on Fridays and even Mondays, from a lot of businesses to be remote. So, a four-and-a-half-hour drive is doable. As long as you’ve got internet and cell service, you can probably make it work.”
Considering the buying frenzy that happened in cottage country throughout the pandemic, Alexander says he’s surprised rising interest rates haven’t forced more owners to sell.
“I personally thought that when everybody was buying like crazy in the early part of the pandemic, they would get the harsh reality of all the expenses and work that goes along with owning a cottage. But that hasn’t seemed like it’s materialized,” he says. “Most of the people that bought in those years probably locked in at a very low interest rate. So, it’s quite possible that we won’t see a significant increase in inventory until 2025 or 2026.”
If you’re purchasing a cottage that you plan to pass down to the next generation, Alexander recommends getting a family constitution. This is an agreement entered into by family members that dictates how the next generation will share, maintain, and enjoy the cottage.
“You hear a lot of stories about that,” he says. “Second generation inherits a cottage and they have difficulty splitting up time and all that. So, I would recommend being very diligent on a potential agreement.”
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