Canada's recreational real estate rush comes to a close: Prices expected to soften amid waning activity Français
National aggregate house price forecast to dip 4.5% in national recreational market in 2023 as sidelined buyers wait for more inventory, economic stability
Highlights:
- The aggregate price of a single-family home in Canada's recreational property market increased 11.7% year-over-year to $619,900 in 2022
- Nationally, the aggregate price of a single-family waterfront and condominium property increased 9.5% and 16.6% year-over-year, respectively, in 2022
- Condominiums in Quebec's recreational property market recorded the highest provincial year-over-year aggregate price appreciation in 2022, rising 22.3%
- Alberta is the only provincial recreational market expected to see price appreciation in 2023 (+0.5%)
- Quebec and Ontario expected to see the largest recreational property price decreases in 2023, with forecasted declines of 8% and 5%, respectively, compared to 2022
- More than half (57%) of recreational property experts across the country reported lower inventory than last year in their respective regions, and 65% reported reduced inventory compared to typical pre-pandemic levels
TORONTO, March 28, 2023 /CNW/ - According to Royal LePage, the aggregate price of a single-family home in Canada's recreational regions is forecast to decrease 4.5 per cent in 2023 to $592,005, compared to 2022, as activity in the market wanes. This is due to reduced demand as a result of economic uncertainty and a lack of available housing stock, which has helped to keep prices stable. Despite a modest decrease expected this year, the national aggregate price would remain more than 32 per cent above 2020 levels, after two years of double-digit price gains in the country's recreational real estate market.
With the exception of Alberta, which is expected to see a 0.5 per cent increase, all of Canada's provincial recreational markets are forecast to see a decrease in single-family home prices in 2023. The province of Quebec is forecasting the greatest price depreciation, at -8.0 per cent.
In 2022, the aggregate price of a single-family home in Canada's recreational property regions increased 11.7 per cent year-over-year to $619,900. This follows year-over-year price gains of 26.6 per cent in 2021. When broken out by housing type, the aggregate price of a single-family waterfront property increased 9.5 per cent year-over-year to $736,900 in 2022, and the aggregate price of a condominium rose 16.6 per cent to $432,000 during the same period.
"After two years of relentless year-round competition, Canada's recreational property markets have slowed and returned to traditional seasonal sales patterns," said Phil Soper, president and CEO, Royal LePage. "While interest rate hikes have less of an impact on the recreational market than homes in urban settings, because families typically put more money down and borrow less, general consumer inflation combined with a severe lack of inventory has dampened sales activity. Buyers who are active in today's market appear willing to wait for the right property - a sharp contrast to what we experienced during the pandemic."
While low inventory poses a challenge for buyers looking for that special cabin or lakeside cottage, the coinciding contraction in demand has resulted in a return to more normal market conditions.
According to a survey of more than 200 Royal LePage recreational real estate professionals across the country,1 57 per cent of respondents reported less inventory this year, compared to last year. At the same time, 51 per cent of respondents said they have witnessed less demand for recreational properties in their region, compared to this time last year. When compared to typical pre-pandemic levels, 65 per cent of recreational property experts nationally reported less inventory, while a majority reported similar (38%) or more (38%) demand.
"Recreational homebuyers tend to purchase for leisure and life-enriching purposes. Call it a want versus a need," added Soper. "Unlike many city buyers who may need to acquire a principal residence quickly, secondary home purchasers often have the benefit of time to find the right property for their specific needs."
Nationally, 28 per cent of recreational property experts surveyed said that the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic is somewhat common; 56 per cent of experts reported this trend was not common in their market. Atlantic Canada, a pandemic relocation hotspot, recorded the highest percentage of experts who said the return to urban or suburban areas is somewhat common in their region, at 46 per cent.
"During the pandemic, with offices closed and people working from home, Canadians discovered that a recreational property could double as a principal residence, complete with capital gains exempt status," added Soper. "With high-speed internet now readily available in many rural markets, families flocked to recreational regions to put extra space between themselves and their neighbours and to take advantage of nature; particularly when cultural and sporting venues, shops and restaurants in cities were closed. Many urban businesses now require employees to be in the office at least a few days a week, making long commutes challenging. For many, living in cottage country full-time has lost its romantic shine, meaning we are back to viewing the cottage, cabin and chalet as a weekend and summer escape from urban living."
1 A national online survey of 202 brokers and sales representatives serving buyers and sellers in Canada's recreational property regions. The survey was conducted between March 1, 2023 and March 18, 2023. |
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in the East Coast's recreational property market increased 17.2 per cent year-over-year to $279,900, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 9.1 per cent to $388,500, while the aggregate price of a condominium increased 18.6 per cent to $345,000.
According to a Royal LePage survey of recreational property experts, 62 per cent of respondents in Atlantic Canada reported less inventory this year compared to last year, and 69 per cent reported less inventory compared to typical pre-pandemic levels. Demand for recreational properties in the region has also decreased significantly. Forty-six per cent reported less demand this year than last year.
"Parties on both sides of the transaction are waiting for a better deal - recreational buyers are sitting on the sidelines waiting for more inventory to become available, while sellers are holding out for higher offers and competitive bids. But, the multiple-offer scenarios and homes selling over-asking are not as common today as they were during the pandemic boom," said Corey Huskilson, sales representative, Royal LePage Atlantic in South Shore, Nova Scotia. "As we enter the spring market, I expect activity to pick up but prices to stay stable, as supply and demand remain relatively balanced."
During the pandemic, Canadians from all across the country who were forced to work remotely flocked to Atlantic Canada for the opportunity to enjoy the Maritime lifestyle and own a home at a much more affordable price point than in major cities. According to the survey, 46 per cent of recreational property experts in Atlantic Canada said that the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic was somewhat common; an additional 8 per cent said it was very common. Meanwhile, an equal number of respondents (46%) said that this trend was not common in their area.
"The majority of recreational property buyers in Avalon Peninsula are either looking for a retirement property, or are locals moving back from other parts of the country who want a secondary property to enjoy in their downtime," said Tim Crosbie, broker and owner, Royal LePage Property Consultants in St. John's, Newfoundland. "Home prices have risen here over the past year, as have interest rates, which has given some buyers reason to halt their purchase plans. While most secondary homebuyers looking in the region are motivated to find a property that fits their specific needs, they are prepared to wait for the right home to fall within their financial reach."
Crosbie noted that the reduced buyer demand is a result of higher interest rates, and that a reduction in borrowing costs would likely encourage more purchasers back into the buying pool.
The aggregate price of a single-family home in Atlantic Canada's recreational regions is forecast to decrease a modest 3.0 per cent in 2023 to $271,503.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in Quebec's recreational property market increased 16.1 per cent year-over-year to $373,400, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 17.3 per cent to $480,200, and the aggregate price of a condominium increased 22.3 per cent to $341,900.
According to a Royal LePage survey of recreational property experts, 53 per cent of respondents in the province of Quebec reported less inventory this year compared to last year, and 79 per cent reported less inventory compared to typical pre-pandemic levels. Demand for recreational properties in the region has also decreased significantly. Seventy-six per cent reported less demand this year compared to last year, and 35 per cent reported less demand than a typical pre-pandemic year.
"We are in a two-speed market with sharply contrasting scenarios," said Éric Léger, chartered real estate broker, Royal LePage Humania. "On one hand, the inventory of properties for sale is steadily increasing and so is the number of motivated sellers willing to lower their asking price. But on the other hand, we're seeing multiple-offer scenarios with properties that are ideally located, well-maintained and listed at a fair price," he continued. "It can be challenging for consumers to stay on top of the market trends because we're still in a transition. Over the next few months, owners of secondary homes in the region may need to rethink their priorities as their mortgages come up for renewal at substantially higher interest rates."
Léger noted that the spring market in the area may be less buoyant this year because of current economic uncertainty. However, demand in the lower price ranges will remain strong.
According to the survey, 26 per cent of recreational property experts in Quebec said that they have witnessed a slight increase in buyers who intend to use their recreational property for rental purposes in their region compared to last year, while 18 per cent of respondents reported a significant increase in this trend.
"The real estate market in the Eastern Townships today is vastly different from what we saw during the past three years," said Véronique Boucher, residential real estate broker, Royal LePage Au Sommet. "Buyers are more patient; they're negotiating and they're taking time to carefully assess their needs and their financial capacity before taking the plunge. Conditional offers to purchase, which were practically unheard of during the pandemic real estate boom, made a big comeback in the latter half of 2022, a sign of a much more balanced and fair market.
The aggregate price of a single-family home in Quebec's recreational regions is forecast to decrease 8.0 per cent in 2023 to $343,528.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in Ontario's recreational property market increased 7.3 per cent year-over-year to $634,800, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 8.9 per cent to $1,006,600, while the aggregate price of a condominium increased 15.1 per cent to $510,900.
According to a Royal LePage survey of recreational property experts, 61 per cent of respondents in Ontario reported less inventory this year compared to last year, and 59 per cent reported less inventory compared to typical pre-pandemic levels. Demand for recreational properties in the region has also decreased significantly. Fifty-two per cent reported less demand this year compared to last year, however 39 per cent said demand was higher than a typical pre-pandemic year.
"After two years of historically high pandemic-driven sales, activity in the recreational market came to a comparative standstill in the last half of 2022. Rising interest rates, buyer fatigue, and lack of inventory all played a role," said John O'Rourke, broker, Royal LePage Lakes of Muskoka. "Early signs this spring point to a more balanced market where inventory levels and sales are trending in line with historical norms. Traditional cottage buyers - end users that plan on enjoying their property - are still engaged and seem eager to jump back into a market in which they are not competing with the investment-focused buyer; a prominent player during the pandemic boom."
According to the survey, 35 per cent of recreational property experts in Ontario said that the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic was somewhat common. Forty-nine per cent of respondents said this trend was not common in their area.
"Buying a recreational property is like a marathon, not a sprint. Secondary homebuyers in Rideau Lakes have the luxury of time and are looking for a very specific lifestyle property. A shortage of recreational homes makes this process even more difficult," said Pauline Aunger, broker of record, Royal LePage Advantage Real Estate. "Due to the high demand for renovation services, recreational buyers today are looking for a move-in ready property that requires less work. This includes high-speed internet and good cell service for those who want peace of mind or the option to work remotely. As we head into the spring months, we are expecting market activity to pick up, although not at the levels experienced over the last two years."
While home prices in a select few recreational markets in Ontario, including the ever-popular Southern Georgian Bay area, may increase marginally over the next year, a decline in activity overall is expected to dampen price growth.
The aggregate price of a single-family home in Ontario's recreational regions is forecast to decrease 5.0 per cent in 2023 to $603,060.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in the Prairie provinces' recreational property market increased 6.0 per cent year-over-year to $271,300, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 5.6 per cent to $507,000.
According to a Royal LePage survey of recreational property experts, 56 per cent of respondents in the Prairies reported less inventory this year compared to last year, and more than three quarters (78%) of respondents said that demand levels are comparable to last year.
"Business is faring as usual in our recreational markets. Demand and inventory are proportional to one another, creating balanced market conditions. Reduced supply has kept recreational property prices buoyant," said Lou Doderai, broker and owner, Royal LePage Icon Realty, in Prince Albert, Saskatchewan. "The North Central recreation areas are only a couple hours drive from two of the province's major urban areas, meaning many of our buyers are locals looking for secondary residences that provide an escape for the weekend. Although higher interest rates have halted some purchasers' decisions to buy a property - at least temporarily - I expect we'll see a modest pick up in market activity once the warmer weather arrives."
According to the survey, 44 per cent of recreational property experts in the Prairies said that they have witnessed a significant increase in buyers who intend to use their recreational properties for rental purposes in their region, compared to last year. An additional 33 per cent of respondents reported a slight increase in this trend.
"The recreational market in Lac du Bonnet is the healthiest it's been in 15 years. The pandemic caused more Manitoba buyers to purchase recreational properties in-province as opposed to south of the border; a level of demand that has caused the average days on market to shrink considerably," said Rolf Hitzer, broker and owner, Royal LePage Top Producers Real Estate, in Winnipeg, Manitoba. "More than ever, buyers crave a getaway to the countryside, a desire that was intensified by the pandemic and increased demand for all-season properties. As market conditions continue to normalize, I expect to see an active, but not overheated, spring and summer recreational buying season."
The aggregate price of a single-family home in the Prairies' recreational regions is forecast to decrease a modest 3.0 per cent in 2023 to $263,161, as sidelined buyers remain cautious amid evolving economic conditions.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in Alberta's recreational property market increased 13.3 per cent year-over-year to $1,165,500, compared to 2021. During the same period, the aggregate price of a single-family waterfront property decreased 5.0 per cent to $641,900, while the aggregate price of a condominium increased 17.7 per cent to $646,000. As a large and popular recreational destination, Canmore's real estate market has a significant impact on prices in Alberta, with its proximity to Banff National Park and luxury properties.
According to a Royal LePage survey of recreational property experts, 59 per cent of respondents in Alberta reported less inventory this year compared to last year, and 71 per cent reported less inventory compared to typical pre-pandemic levels. Meanwhile, demand for recreational properties in the region has remained stable. Thirty-five per cent of respondents reported similar demand this year compared to last year, and an additional 35 per cent reported more demand.
"Buyer demand for recreational properties in Canmore continues to be driven by retirees and Albertans living in the surrounding cities, as well as residents from Ontario and Quebec. As Canmore attracts many cash buyers, higher interest rates have had little impact on this market, a factor that has kept prices stable," said Brad Hawker, associate broker, Royal LePage Solutions. "Low supply continues to be a challenge, an issue that has been underscored by the lack of new construction projects. This has caused many buyer hopefuls to sit on the sidelines, waiting for their ideal property to become available."
According to the survey, 65 per cent of recreational property experts in Alberta said that the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic was not common, another factor contributing to the supply shortage.
"We are experiencing a lack of turnover in the Wabamun Lake and Lac Ste. Anne markets. Coveted recreational homes, especially those on the water, are more likely to be passed down through the generations, a trend that is exacerbating the region's low level of supply," said Tom Shearer, broker, Royal LePage Noralta Real Estate. "Those shopping for a recreational home are often locals from nearby cities who already have a personal connection to the area and are looking for a retreat to enjoy with family on the weekends and in the summer months. Unlike a primary residence, most buyers shopping for a vacation home can afford to wait for the perfect property to present itself."
The aggregate price of a single-family home in Alberta's recreational regions is forecast to increase modestly by 0.5 per cent in 2023 to $1,171,328. This is the only region in Canada forecasting price growth over the next year.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
In 2022, the aggregate price of a single-family home in British Columbia's recreational property market increased 12.9 per cent year-over-year to $1,071,300, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 5.6 per cent to $1,065,000, while the aggregate price of a condominium increased 14.3 per cent to $441,400.
According to a Royal LePage survey of recreational property experts, 49 per cent of respondents in British Columbia reported less inventory this year compared to last year, and 71 per cent reported less inventory compared to typical pre-pandemic levels. Demand for recreational properties in the region has also decreased significantly. Forty-nine per cent reported less demand this year compared to last year.
"Like many recreational markets across the country, Pemberton and Whistler continue to experience low inventory. Come springtime, I anticipate that supply levels will rise as more sellers move into the market, but I don't expect there to be a huge wave of relief," said Frank Ingham, associate broker, Royal LePage Sussex. "Many buyers continue to wait on the sidelines for prices to fall or for borrowing costs to become more affordable, especially those purchasers who are buying for their retirement or for their adult children to enjoy. This trend is creating more pent-up demand on the sidelines, and is causing properties to stay on the market twice as long as last year. However, as the spring market gains momentum, I expect more homes that have been sitting on the shelves will start to move into the hands of buyers."
According to the survey, 54 per cent of recreational property experts in British Columbia said that the trend of homeowners moving back to urban or suburban communities after relocating to their region full-time during the pandemic was not common, a factor contributing to the supply shortage.
The aggregate price of a single-family home in British Columbia's recreational regions is forecast to decrease a modest 2.0 per cent in 2023 to $1,049,874, as moderate activity is expected while buyers wait for more product to come onto the market.
Royal LePage 2023 Spring Recreational Property Price Forecast and 2022 Price Data Chart (national and regional): rlp.ca/table_2023springrecreationalpropertyreport
The Royal LePage Recreational Property Report compiles insights, data and forecasts from 50 markets. Median price data was compiled and analyzed by Royal LePage for the period between January 1, 2022 and December 31, 2022, and January 1, 2021 and December 31, 2021. Data was sourced through local brokerages and boards in each of the surveyed regions. Royal LePage's aggregate home price is based on a weighted model using median prices. Data availability is based on a transactional threshold and whether regional data is available using the report's standard housing types. Aggregate prices may change from previous reports due to a change in the number of participating regions.
A national online survey of 202 brokers and sales representatives serving buyers and sellers in Canada's recreational property regions. The survey was conducted between March 1, 2023 and March 18, 2023.
Serving Canadians since 1913, Royal LePage is the country's leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, which has been dedicated to supporting women's shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbolTSX:BRE. For more information, please visit www.royallepage.ca.
Atlantic Canada
Annapolis Valley, NS
Logan Morse, Sales Representative
Royal LePage Atlantic
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Cape Breton, NS
Ian Hamilton, Owner
Royal LePage Anchor Realty
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South Shore, NS
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Royal LePage Atlantic
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Avalon Peninsula, NL
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Quebec
Antoine-Labelle
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Royal LePage Humania
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Les Appalaches
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Royal LePage Pro
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Laurentides and Pays d'en Haut
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Royal LePage Humania
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Matawinie and Montcalm
Éric Fugère, Residential and Commercial Real Estate Broker
Royal LePage Habitations
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Memphrémagog and Bromont
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Royal LePage Au Sommet
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Papineau
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Ontario
Bruce Peninsula
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Royal LePage RCR Realty
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Haliburton County
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Royal LePage Lakes of Haliburton
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705-935-1000
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Royal LePage In Touch Realty
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Kawartha Lakes
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Mid Lake Huron/Huron & Perth County
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Muskoka
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705-645-5257
The North Channel (Echo Bay, Desbarats, Bruce Mines, Thessalon, Iron Bridge, North Shore, Huron Shore, Blind River, Algoma Mills, Elliot Lake, Splanish)
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705-206-3110
Orillia
Anastasia Langiano, Broker of Record/Owner
Royal LePage Real Quest Realty
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Ottawa Valley
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Royal LePage Team Realty
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Peterborough County (Peterborough and The Kawarthas)
Gail Burton, Sales Representative
Royal LePage Frank Real Estate
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Rideau Lakes
Pauline Aunger, Broker of Record
Royal LePage Advantage Real Estate
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Southern Georgian Bay (Meaford, Thornbury, Wasaga Beach, Collingwood)
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Royal LePage Locations North
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St. Joseph Island
Jonathan Stewart, Broker of Record
Royal LePage Northern Advantage Stewart Team
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705-253-7105
Prairies
Interlake, MB
Tyler Bucklaschuk, Sales Representative/Broker
Royal LePage JMB & Associates
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204-642-8576
Lac du Bonnet, MB
Rolf Hitzer, Broker/Owner
Royal LePage Top Producers Real Estate
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204-960-2159
North Central Saskatchewan (Christopher Lake, Emma Lake, Candle Lake, Waskesiu Lake & Elk Ridge), SK
Lou Doderai, Broker/Owner
Royal LePage Icon Realty
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306-960-7925
Alberta
Canmore
Brad Hawker, Associate Broker
Royal LePage Solutions
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403-678-7557
Pigeon Lake
Barbara Howey, Broker/Owner
Royal LePage Parkland Agencies
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780-361-7882
Wabamun Lake and Lac Ste. Anne
Tom Shearer, Broker/Owner
Royal LePage Noralta Real Estate
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780-993-1515
British Columbia
Central Okanagan
Francis Braam, Broker/Owner
Royal LePage Kelowna
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250-860-1100
Comox Valley, Denman Island, Hornby Island, Mt. Washington
Gregg Hart, Broker/Owner
Royal LePage In The Comox Valley
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250-334-7864
Invermere
Barry Benson, Broker/Owner
Royal LePage Rockies West Realty
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250-342-5809
East Kootenays (Cranbrook, Kimberley, Fernie, Sparwood, Creston, Elkford)
Gavin Thomas, Managing Broker
Royal LePage East Kootenay Realty
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250-919-5533
Pemberton and Whistler
Frank Ingham, Associate Broker
Royal LePage Sussex
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604-230-8167
SOURCE Royal LePage Real Estate Services
Stephanie Matthias, North Strategic on behalf of Royal LePage, [email protected], (416) 802-1612
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