The slowing Canadian real estate market is creating an opportunity for those interested in buying a weekend getaway.

"The Canadian recreational property market has been notoriously short of supply for several years," says Phil Soper, president and CEO of Royal LePage Real Estate Services. But with recreational properties mirroring the stabilizing real estate trend in Canada, price increases are slowing and giving hope to would-be purchasers.

Recent reports by Royal LePage and Re/Max, the country's largest residential real estate companies, show that while prices are still rising, there are more listings available on the market and sales are slowing down compared to last year. The Re/Max report shows that of 45 recreational property markets surveyed, 91 per cent are in the transition stage, shifting from strong sellers markets to more balanced conditions.

"But don't expect to see bargain basement prices or fire sales," says Michael Polzler, executive vice-president and regional director of Re/Max Ontario-Atlantic Canada. "The recreational market continues to experience solid demand -- a trend that is expected to continue throughout 2008. The influx of new listings has yet to translate into downward pressure on recreational property prices. Prime waterfront properties, while more plentiful than in years past, will still command top dollar."

The Re/Max report shows that some areas of the country have recreational properties listed for less than $200,000, including Central South Cariboo in B.C.; Parry Sound, the East Kawarthas and Kingston in Ontario; Summerside in PEI; South Shore in Nova Scotia; Shediac in New Brunswick, and the East Coast of Newfoundland.

Royal LePage says "hidden gems" can be found for less than $100,000 in Kingston and the Haliburtan Highlands in Ontario, and in Atlantic Canada. "However, at this price point, it will be rare for these properties to have water access," it says.

The slowdown in Canada's real estate market has been predicted by economists for years. A combination of the tightening economy in Ontario, high energy costs, and a slowing of pent-up demand is being blamed. In the recreational property market, Re/Max also points to housing market opportunities in the U.S. that may have hurt Canadian markets. "The housing meltdown in the U.S. combined with a Canadian dollar at par, created serious investment opportunities for properties in Florida, Arizona, Texas and California," says the report.

Royal LePage commissioned a survey to ask about Canadians' attitudes toward the recreational property market. It found that Canadians still love the idea of going to the cottage and using recreational property as an investment, with 61 per cent of existing and prospective cottage owners saying that buying a cottage is a better investment than buying stocks, bonds or mutual funds.

However, 19 per cent of cottage owners said they would consider selling their properties if gas prices continue to rise, and 33 per cent of owners said high gas prices would impact the number of trips they take to the cottage this summer.

Asked about the most important features in a recreational property, survey respondents placed proximity to their primary residence at #4, after "pristine waterfront," "four-seasons capability," and "low maintenance."

While some people worry that Canada is heading for a major real estate crash like that in the U.S., economic fundamentals in Canada are much different and most experts believe that the market will stay healthy, with moderate price increases continuing during the next few years.

Although the number of listings in all types of property is significantly higher than last year, it doesn't mean that a number of homeowners are "desperate to sell," says a recent report by TD Economics.

"This is the dominant difference between the Canadian and U.S. experience," says the report, which was co-authored by Craig Alexander and Pascal Gauthier. "Indeed, the U.S. has been characterized by an abnormal rise in delinquencies and foreclosures or large negative equity positions. In Canada, speculators may be quickly dumping properties on the market to get out while the times are good, but individuals that have a principal dwelling are not under financial duress. This distinction is crucial to evaluating the impact of weaker home price performance on personal wealth and consumption. Canadian consumers are nowhere nearly as leveraged through their home equity as American consumers are."

In the recreational property market, "We're coming off the longest period of economic expansion since World War II," says Elton Ash, regional executive vice-president of Re/Max of Western Canada. "Recreational property values have appreciated beyond our wildest dreams across the country. More balanced conditions are a welcome change for purchasers."

Published: July 8, 2008

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He is also consulting editor of Homes & Cottages, Canada's largest building and renovation magazine. Email jimhc@pathcom.com.