Ontario cottage prices crashed this spring — but real estate experts say you should move fast if you’re looking to buy. Average sale prices plummeted from five to 60 per cent in the first quarter of this year compared with last, according to the annual cottage trends report from Re/Max Canada. Kenora and Lake-of-the-Woods, Peterborough and the Kawarthas, and Haliburton saw the largest year-over-year drops. Christopher Alexander, president of Re/Max Canada, said the cottage market is seeing a return to seasonal activity that begins in March and dies down by November. “The two years of pandemic busyness has tapered off,” he said. “We’ve been in a normal cycle for a good year now.” Phil Soper, president of Royal LePage, said he believes the big drop in prices is due to a delayed correction in the cottage market. “The market correction ended in the city around the end of March,” Soper said. “It took awhile longer in cottage country because there doesn’t tend to be a lot of activity after the spring market.” The worst of the decline is over, he said, and going forward, he believes prices in cottage country will start to creep back up. Properties on popular lakes, in the horseshoe around Toronto, are already attracting multiple offers.“The demand, although it’s half of what it was during the pandemic craze, is still there,” Soper said. “It is outpacing the very limited amount of properties we have for sale, which is again pushing prices up.” While reduced inventory will mean reduced sales, he anticipates single-digit price increases, mainly in the category of “medium-priced” cottages on sale for around a million dollars. Hesitation spurred by the high interest-rate environment is likely behind the tight inventory, said Alexander. “People have been reluctant to list,” he said, adding that many locked in on record-low rates in 2020 and 2021. Alexander cited generational wealth transfer as another limiting factor. “Long-term cottagers are putting their properties in trusts or they’re passing it to the next generation.” Kenora broker Greg Kirby said he’s finding the summer a little busier than he was anticipating. “I was predicting (last) November that 2023 would be soft, and it hasn’t been,” he said. He suspects the number of properties he sells this year will be similar to pre-pandemic times — around 40. “We’re in what I describe as a pretty balanced market,” he said. The Re/Max study from April found that Kenora and Lake-of-the-Woods experienced a 59 per cent year-over-year decrease in first quarter sale prices — the highest in not only the province, but across the country. Peterborough and the Kawarthas and Haliburton trailed behind with 31 per cent and 26 per cent price decreases, respectively.Alexander said these places also experienced some of the greatest spikes during the pandemic, and are returning to normal as wider travel rebounds. “The markets that bounced up the most seem to have fallen the most,” he said. “People can get on an airplane again and go overseas to a variety of places they couldn’t during the (early) pandemic.”Any further drop in cottage prices will depend on how people react to potential interest rate hikes, said Philip Cross, economist and senior fellow at the Macdonald-Laurier Institute. “We saw the increase in mortgage rates helped depress prices in the first half of the year,” Cross said. “When it appeared the Bank of Canada was going to pause those hikes, almost immediately, housing demand started to pick up again.” “One of the things that has been quite surprising over the last year … is just how resilient people have been,” he added. “When they’ll say uncle and stop spending is very much a guess because we’ve never experienced something like this before.” Cross noted that this year, there will be less lift in the cottage market from people working from home. And because cottages are usually discretionary secondary purchases, the market will be limited to a small group of wealthy people. Regardless of future interest rate hikes and pauses, Alexander said that the worst of the price drops are over in the recreational property market. “Consumer are cautious right now … but the cottage buyer is pretty savvy,” he said. “Going forward, people now understand what the rate environment is going to be, and what they’re going to need to afford the places they want to be in.”Dhriti Gupta is a Toronto-based general assignment reporter for the Star. Reach her via email: dgupta@thestar.ca
Ontario cottage prices crashed this spring — but real estate experts say you should move fast if you’re looking to buy.
Average sale prices plummeted from five to 60 per cent in the first quarter of this year compared with last, according to the annual cottage trends report from Re/Max Canada. Kenora and Lake-of-the-Woods, Peterborough and the Kawarthas, and Haliburton saw the largest year-over-year drops.
Christopher Alexander, president of Re/Max Canada, said the cottage market is seeing a return to seasonal activity that begins in March and dies down by November. “The two years of pandemic busyness has tapered off,” he said. “We’ve been in a normal cycle for a good year now.”
Phil Soper, president of Royal LePage, said he believes the big drop in prices is due to a delayed correction in the cottage market. “The market correction ended in the city around the end of March,” Soper said. “It took awhile longer in cottage country because there doesn’t tend to be a lot of activity after the spring market.”
The worst of the decline is over, he said, and going forward, he believes prices in cottage country will start to creep back up. Properties on popular lakes, in the horseshoe around Toronto, are already attracting multiple offers.
“The demand, although it’s half of what it was during the pandemic craze, is still there,” Soper said. “It is outpacing the very limited amount of properties we have for sale, which is again pushing prices up.”
While reduced inventory will mean reduced sales, he anticipates single-digit price increases, mainly in the category of “medium-priced” cottages on sale for around a million dollars.
Hesitation spurred by the high interest-rate environment is likely behind the tight inventory, said Alexander. “People have been reluctant to list,” he said, adding that many locked in on record-low rates in 2020 and 2021.
Alexander cited generational wealth transfer as another limiting factor. “Long-term cottagers are putting their properties in trusts or they’re passing it to the next generation.”
Kenora broker Greg Kirby said he’s finding the summer a little busier than he was anticipating. “I was predicting (last) November that 2023 would be soft, and it hasn’t been,” he said. He suspects the number of properties he sells this year will be similar to pre-pandemic times — around 40. “We’re in what I describe as a pretty balanced market,” he said.
The Re/Max study from April found that Kenora and Lake-of-the-Woods experienced a 59 per cent year-over-year decrease in first quarter sale prices — the highest in not only the province, but across the country. Peterborough and the Kawarthas and Haliburton trailed behind with 31 per cent and 26 per cent price decreases, respectively.
Alexander said these places also experienced some of the greatest spikes during the pandemic, and are returning to normal as wider travel rebounds. “The markets that bounced up the most seem to have fallen the most,” he said. “People can get on an airplane again and go overseas to a variety of places they couldn’t during the (early) pandemic.”
Any further drop in cottage prices will depend on how people react to potential interest rate hikes, said Philip Cross, economist and senior fellow at the Macdonald-Laurier Institute. “We saw the increase in mortgage rates helped depress prices in the first half of the year,” Cross said. “When it appeared the Bank of Canada was going to pause those hikes, almost immediately, housing demand started to pick up again.”
“One of the things that has been quite surprising over the last year … is just how resilient people have been,” he added. “When they’ll say uncle and stop spending is very much a guess because we’ve never experienced something like this before.”
Cross noted that this year, there will be less lift in the cottage market from people working from home. And because cottages are usually discretionary secondary purchases, the market will be limited to a small group of wealthy people.
Regardless of future interest rate hikes and pauses, Alexander said that the worst of the price drops are over in the recreational property market. “Consumer are cautious right now … but the cottage buyer is pretty savvy,” he said. “Going forward, people now understand what the rate environment is going to be, and what they’re going to need to afford the places they want to be in.”
Dhriti Gupta is a Toronto-based general assignment reporter for the Star. Reach her via email: dgupta@thestar.ca
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