Real Estate

‘You’re not buying a $4 million property unless you have a lot of dough.’ B.C. recreational property prices skyrocket

British Columbia Cottage Photo by Shutterstock/Protasov AN

It’s no secret—similar to the rest of the country, Western Canada’s cottage prices are on the rise. According to Royal LePage’s Recreational Property report.  B.C. is expected to see the average price of a cottage jump in 2022—a 12 per cent increase to a $1,029,280 average. This trend has continued from 2020, as the average price of a recreational property in B.C. increased by 22.4 per cent to $919,000 in 2021.

The closure of international borders during the pandemic drove cottage prices up as many Canadians sought domestic retreats. But even with international borders reopening, the prices continue to rise.

Unlike Ontario and Quebec, B.C. and Alberta don’t have well-defined “cottage countries.” Any waterfront properties that the provinces have are on the ocean or on a few specific lakes.

Since the areas where you can buy a recreational property in B.C. and Alberta are limited compared to central Canada, the surge in demand during the pandemic has kept inventory low and prices high.

Year-over-year increase of recreational property price in B.C. in 2021

All of British Columbia’s landlocked recreational properties saw an average price increase in 2021. Invermere, near the Alberta border, saw the largest change with an 88.1 per cent increase from $354,000 to $666,000. This was followed by the Comox Valley area, which saw a 28.7 per cent increase from $610,000 to $785,000. And then Pemberton, 25 minutes north of Whistler, increased 24.7 per cent from $1,000,000 to $1,247,000.

In terms of waterfront properties, Central Okanagan saw the biggest jump, with a 20.2 per cent increase from $1,955,000 to $2,350,000.

Who are the buyers?

The people buying waterfront recreational properties in B.C. right now are wealthy families, says Francis Braam, a Royal LePage broker in Kelowna. “Nobody else can afford it. You’re not buying a $4 million property to use on the weekend unless you have a lot of dough.” The same holds true for ski chalets, Braam says.

Interestingly, what Braam isn’t seeing lately is foreign buyers. He points to Big White Ski Resort in Kelowna as an example. “At Big White, we used to have a lot of foreigners who bought property—Europeans, Australians, Americans, they’re gone. It’s 100 per cent a Canadian market now,” he says. “They couldn’t get in for the last two years. Will they ever return? I don’t know. It’ll take time.”

What’s selling and what isn’t?

The average price of a recreational property in B.C. tends to balloon thanks to a couple exclusive areas, namely Whistler and Okanagan Lake. In 2021, the average price of a recreational property in Whistler increased by 14 per cent to $2,738,000. Whistler’s considered one of the best ski resorts in Canada, making chalets close to the hill extremely desirable.

The same applies to Okanagan Lake, which stretches 135 kilometres in length and is home to around 400,000 people. Although, many of the properties on Okanagan Lake are permanent homes, not just cottages, Braam notes. Since Royal Lepage isn’t able to discern what the property’s being used for, these waterfront homes are included in the company’s report, driving up the aggregate price of recreational properties in the area.

Another peculiarity with the report is that it recorded a drop in price for North Okanagan waterfront properties. Out of every cottage market in Canada, this is the only one to see a decrease in price, dropping 3.8 per cent from $1,403,000 in 2020 to $1,350,000 in 2021.

“That would be an anomaly,” Braam says. “If you took a house that sold 18 months ago on the water and then put it on the market today, it’d be worth more money.” What likely happened is that the more affordable properties on the lake sold in the last 18 months or in the last quarter, skewing the aggregate price, he says. “There’s no way the price of that product has gone down.”

Future predictions for B.C. real estate

In the real estate market around Kelowna, Braam says he’s already seeing prices settle. “I don’t think prices are going to drop, but we’re not going to maintain the same pace of two to three per cent per month the way it’s been going up for the last 18 months.”

Thanks to the province’s limited supply of available cottages, Braam doesn’t expect the market to crash. Even now, he only has a month’s worth of available listings. Supply in B.C. is likely to stay low. When you look at the province’s geography, Braam says development is restricted by lakes and mountains. Plus, B.C. has an agricultural land reserve, where large swaths of land are devoted to agriculture.

This means that the province is often restricted to tearing down old homes and building new ones, which is more expensive than developing on available land, Braam says.

“Thirty years ago, we could build a house in 90 days. That same house takes nine months to build now or a year,” he says. “It’s more complicated to build, the consumer has demanded more, they’re not as simple houses to build, and the building code has also made it much more difficult.”

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