Now more than ever, seasonal getaways, relaxation and family and friend good times at recreational properties like Lake Wabamun, Pigeon Lake, Alberta Beach, Wizard Lake, Buck Lake, Jackfish Lake and Lake Isle are being planned and scheduled. However, they are also being evaluated as viable investments, considering the important realities and factors about investment risks and strategies.
In the past five years or so, a subtle and unique factor about the value and demand for close-to-Edmonton recreational properties has been the pandemic scramble, and the post-pandemic trend of working-from-home.
Of course, it’s impossible to put a practical value on the quality of life and the enjoyment factor of an away-from-the-city recreational property. Understandably, details like fluctuating property values, taxes and expenses are usually overshadowed by nature walks, barbecues, campfires and lake fun! However, Edmonton area real estate professionals and investment advisors have positive and cautious facts to consider.
Thinking about the practical aspects of recreational property ownership vs. conventional, residential real estate is much like the analogy between apples and oranges. Yes, they are both real estate, but…
There are the traditional home ownership factors to consider, and also the pros and cons of rec properties as “investment.” The logic is that a recreational property is an investment, with the added benefit of physical space to enjoy and create memories with family and friends over many years.
Experts point out that, in addition to the usual risks about real estate investing (like future desirability and the resale market) there are added risks specific to a recreational property as a second home.
There is no guarantee that recreational property will continue to increase at the rates that it has over the post-pandemic years. In fact, stats show that there was a significant increase in property values in desirable close-to-Edmonton, work-from-home areas, which are not likely to grow at the same rate in the future.
There are money strategy factors, like factoring in maintenance and other carrying costs, property taxes, utilities, insurance and more.
With much to consider, the demand (and popularity) of Edmonton area recreational properties continues to be strong, according to experts Charlene Anderson and Kelvin VanDasselaar at ReMax Edmonton Lake Property.
“The market is stable and growing. Unit sales year over year were fairly consistent, with 195 units in 2024, compared with 172 the year before. So, it’s safe to say we are back to pre-pandemic market numbers.”
Anderson cites Edmonton-region specifics. In 2024, Wabamun lakefronts’ average prices were $909,692 and backlots were $295,489. Lac Ste Anne lakefronts were $686,753 and backlots $262,655. Lake Isle lakefronts were $371,542 and backlots $227,563.
“We saw a slow down in park model resort properties resales last year,” Anderson notes. “They are a hard property to finance based on mortgage guidelines about minimum square footage. Park models are an affordable way to downsize, but don’t usually meet minimum square footage standards. They also fall into recreational mortgage guidelines, which means approximately 20 to 40 per cent downpayment is required.
“Four-season lakefronts, within close proximity to Edmonton, remain in higher demand but buyer expectations have changed, and buyers are taking their time to find the right property for their wants and needs,” she points out.
In some ways, like the impact of technology, Edmonton’s recreational property trends are changing.
“During the pandemic, the ability to work from home was certainly a requirement,” VanDasselaar says. “Post pandemic technology is still a requirement, given how reliant we have become on electronic media consumption along with the popularity of streaming services like Netflix and Amazon.
“The affordability of streaming services like Starlink makes Lake Country not much different from urban centers. Another important factor is delivery services like Amazon and UPS now rolling right into Lake Country.”
While the jury is split about considering a recreational property as an investment, personal priorities must be balanced with practical money details.
According to Fraser Betkowski, portfolio manager and senior investment advisor at Richardson Wealth, “Real estate investment requires expert knowledge of the location, the property itself and understanding all costs. The pros are obvious and include the potential for a large return, an opportunity for income and owning a physical asset.
Like with primary residences, the cardinal rule is location, location, location.
“Real estate investment offers a real asset that is usually inflation resistant and generally uncorrelated to traditional financial markets. With debt, real estate investment offers leverage, and the gains can be high due to the initial investment being higher than typical investment positions.
“And taxes! When the property is sold for a gain, it is usually taxed as a capital gain at a 50 per cent inclusion rate. Selling a second property escaped the recent legislative changes on capital gains taxation, meaning if the gains on the sold property are over $250,000, it would still be taxed at a 50 per cent inclusion rate and not the higher two-thirds,” he explains.
Investment advisors agree. It is possible to declare the cabin as a primary residence during certain years and claim the “primary residence exemption” (PRE) to reduce or avoid capital gains taxes when it sells, but there is caution about claiming the cabin as a primary residence. It requires documentation that the property was ordinarily inhabited during the years of the tax return.
Capital gains must also be paid on the increase in the property value from when it was purchased to the year the cabin was claimed as the primary residence.
“The problem is that people are rarely objective when they buy real estate. They adhere to biases that confirm their decision and when they want to sell, are driven by an anchor price of what they bought the property for because they believe that real estate always goes up.”
Betkowski cautions that real estate investment, especially the purchase of a vacation property, should be regarded as a lifestyle decision rather than a financial one. If a second property is purchased with cash, then that makes the decision easier. If a second mortgage is required, added costs must be understood.
Acknowledging the many popular ‘pros’ about recreational properties, he explains the main ‘cons’ of real estate investing; especially various (and often overlooked) carrying costs like property taxes, maintenance, insurance and others. If the property is also an income property, there are additional costs of being the landlord or the cost of hiring a property manager.
It’s April and, in the spring, an Edmonton getaway relaxer’s thoughts turn to enjoying Lac Ste Anne, Wabamun and the other close-to-Edmonton hot spots.
“While 2025 is just beginning, we anticipate a busy season,” Anderson says with enthusiasm, “based on the number of listings we already have in our pipeline for the traditional spring/summer selling season. Interest rates are not the deterrent they were 12 months ago, and rec properties are still a good, stable investment, financially and for quality of life.”
