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Ontario real estate market forecast: cottage-country realtors predict more inventory this spring

Photo collage by Taylor Kristan

Ontario’s real estate market has been in a dizzying state since the start of the pandemic, especially in cottage country. Prices boomed over the last two years with some recreational properties jumping into the millions as buyers scrambled after cottages, looking for an escape from the city. But then travel reopened, events restarted, and the cottage market cooled.

The Canadian Real Estate Association (CREA) reported that in February, 29 waterfront properties were sold in the province’s Lakeland region, which constitutes cottage-heavy areas such as Muskoka, Haliburton, Parry Sound, and Georgian Bay. That’s a 62.8 per cent drop from the same period last year, and 51 per cent below the five-year average.

In part, the lack of sales is due to low inventory. There aren’t many waterfront properties on the market right now. This has kept cottage prices stable, sheltering them from the price correction happening in urban centres. But the market could change this spring as local realtors anticipate a flood of new listings to hit the scene.

If you’re a buyer looking to get into the cottage market, here’s everything you need to know about what’s happening in Ontario’s cottage regions.

Muskoka

Three hours north of Toronto, Muskoka’s known for its windswept pines, rocky shores, and luxurious cottages. But as the CREA reported, Muskoka is currently short on inventory. According to real estate broker Susan Benson, waterfront property listings in the region are at their third lowest in the last 10 years. This has caused a spike in prices.

“The median list price for January and February is up 27 per cent compared to last year at the same time,” Benson says. The median list price for a waterfront property in Muskoka currently sits at $1.7 million.

This median price, however, might see a dip in the next few months. Benson says that at the end of 2022, properties were sitting on the market for about 15 days. Now it’s closer to 47. “Buyers aren’t biting,” she says. With properties sitting for longer, sellers may have to lower their prices to make themselves more appealing.

“A property that is priced properly can end up looking like a bargain in a market with competing properties that are overpriced,” Benson says.

Plus, the spring season typically brings additional inventory, giving buyers more choice and control. “You should, as a buyer, be able to negotiate conditions that ensure a proper vetting of the property and confirm your ability to pay for it,” Benson says. “This was the piece that was missing at this time last year.”

The Kawarthas

Southeast of Muskoka is the Kawarthas, a chain of lakes that feed into the Trent River. Similar to its northern neighbour, the region is suffering from lack of inventory, which is keeping prices high. “I listed one last Wednesday and had four showings on it. I got two offers, and it still sold $30,000 over the asking,” says Greg Ball, a real estate broker from the area.

The average price of a waterfront property in the Kawarthas currently ranges from $700,000 to $1 million, depending on the size and location of the property.

Ball predicts that the rise of interest rates and the financial burden of variable mortgages might spur an injection of new inventory into the market in May, balancing out prices and reducing the chances of bidding wars.

“From past experience, when a recession-type market hits, you dispose of what you can,” he says. “Something like the cottage will come before the house.”

If you’re planning on shopping around in the region, Ball advises using a local realtor. “We went through three years of people buying from their Toronto agent, and I’m not knocking them, but we are now getting calls from those people that purchased in 2021 and 2022 that can’t get their money back because they bought in a poor area,” he says. “I just can’t stress how crucial it is to use a local realtor that knows the area.”

Bay of Quinte

A little west of Kingston, not far from Frontenac, is the Bay of Quinte, a long and narrow body of water that connects to Lake Ontario. Unlike the two previous regions, the Bay of Quinte is already seeing its inventory bounce back.

“We’re probably up 20 per cent since December, which is typical,” says local real estate agent Doug Peterson. “When you look at the waterfront market, it’s pretty predictable, seasonal up and down.”

He expects more properties to come on the market in the coming months. “I think a lot of sellers have been hesitating over the last six months just because of uncertainty, and now things are starting to firm up a little bit more in the economy,” Peterson says. “It’s still a little topsy turvy, but people can’t wait forever.”

The Bay of Quinte hasn’t seen any recent fluctuations in waterfront prices, with the average hovering around $800,000.

If you’re looking to buy in the region, Peterson says you should act quickly. “The market is pretty tight, and well-priced listings are starting to move fast. There is a little bit of urgency that’s come back into the market,” he says. “We went for a few months where buyers were able to wait and see, and now we have those people saying, ‘Oh geez, I guess I should have done something.’”

Grand Bend

A little north of London on the sandy shores of Lake Huron is Grand Bend. The region is home to an iconic beach, making nearby cottages a hot commodity. But compared to 2022, inventory is down. “Last year, being a pandemic year, the situation was a little bit different, a little bit of a frenzied market. So, we’re looking now at more of a return to normal,” says local real estate broker Emily Carcamo.

As of the end of March, Grand Bend had 39 waterfront listings available with an average price of around $1 million. “That’s actually quite good,” Carcamo says. “If we’re looking at waterfront from Port Franks up to Bayfield, we’re looking at about 11 properties for sale where the average price is over $2 million.”

Grand Bend prices aren’t expected to see any drastic changes, but property on Lake Huron is a niche market meaning there’s always interest. In fact, the average sale price for waterfront properties in 2023 is 14 per cent higher than it was at this time last year. While days on market remains similar. In March 2022, properties sat for approximately 13 days. In March 2023, it increased to 15 days. This means properties are still turning over quickly.

The area has traditionally seen a lot of attention from baby boomers moving to Grand Bend post-retirement, but COVID has pushed an increasing number of young families out of urban centres in search of rural retreats. In many cases, they’re buying older, more affordable properties and renovating them.

“We are seeing more families leaving urban centres where prices were more expensive,” Carcamo says. “They’re re-evaluating their priorities in life and their goals, wanting to live in more of a rural setting by the beach where life is a little bit slower, a little bit more enjoyable—living that vacation lifestyle.”

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What information are cottage sellers required to disclose to buyers?

Photo by Mircea Costina/Shutterstock

A small beach house in Bayfield, Ont. overlooking Lake Huron has become the focal point of a $2.2 million lawsuit, according to the CBC.

Michael Bousfield and Leah Stumpf, a couple from Guelph, Ont., were in the process of purchasing their dream vacation home when the seller told them three days before closing the deal that the property was uninhabitable due to an eroding shoreline. Having already arranged their financing, the couple was forced to proceed with the purchase and has since launched a lawsuit against the seller, as well as the Ausable Bayfield Conservation Authority (ABCA) and the municipality of Central Huron, after the two governing bodies wouldn’t issue a permit to fix the shoreline without the couple paying for a coastal engineering report.

The case will be heard in a Toronto courthouse.

Negotiating real estate deals can be tricky. As it turns out, sellers aren’t legally required to tell you everything about a property. To avoid any legal troubles, here’s everything you should be aware of when you’re looking at a cottage and whether the sellers are required to declare it.

Patent defects

Roof leaks, foundation cracks, and window breaks. According to the Real Estate Council of Ontario (RECO), a patent defect is any visible issue with a property. They’re easy to spot—this could be a stain on the ceiling from water damage or a missing safety rail. Due to their visibility, the seller is not required to disclose these defects. To ensure you don’t miss any patent defects, RECO advises that you ask the seller and their realtor specific questions about the state of the property, and hire a home inspector to have a thorough look.

Latent defects

These issues are harder to see, so hard that even a home inspector might miss them. They’re the kinds of things that only the seller would know about, such as a basement that floods each spring, a quickly eroding shoreline, or any hidden damage or mould. Sellers are required to disclose this information to buyers. “If a seller is aware of such a defect and doesn’t disclose it, they can be exposed to a lawsuit by the buyer,” RECO says. The latent defect must be disclosed before the buyer enters a contract of purchase. If the buyer discovers a latent defect after purchasing the property that wasn’t disclosed by the seller, they have two years from the day the defect was discovered to launch a lawsuit.

Stigmas

Stigmas don’t affect the property’s appearance or structure. Instead, they’re past events that could cause the buyer to rethink their purchase. For instance: a murder on the property, an illegal grow-op, a notorious individual who lived there, or even rumours about the property being haunted. Since some buyers may be more comfortable with these stigmas than others, the seller is not required to disclose this information unless it affects the price of the property. The onus to uncover any stigmas falls on the buyer and their realtor. RECO recommends asking the seller and their realtor direct questions about the history of the property, researching it online, and speaking to neighbours.

Seller Property Information Statement (SPIS)

When looking at a property, the buyer can request a SPIS from the seller. This is a form filled out by the seller that outlines all of the potential defects and damages they’re aware of on the property. It’s a good way to get an overview of any problems you should be looking for. However, an SPIS is voluntary. A seller is not required to fill one out. RECO emphasizes that real estate transactions operate on a “buyer beware” system. In most cases, it’s up to the buyer and their realtor to uncover a property’s flaws. If a seller is unwilling to provide a SPIS, the buyer should have the home inspected by a professional and ask specific questions about the state of the property before entering a contract of purchase. Sellers are legally required to tell the truth if asked about their property.

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Listing of the week: This custom-built Lake Muskoka cottage is in an unbeatable location

Four red Muskoka chairs sit on a dock. Landscaped stone steps lead up to a large cottage with huge windows and trees all around.

1176 Parkers Point Road, exterior

A landscaped property has a patio with a fire pit and stone steps leading down to a large lake. Trees line the property.

Overhead view of Lake Muskoka

A fire pit surrounded by red Muskoka chairs sits on a patio overlooking a large lake.

Fire pit and view of Lake Muskoka

Overhead view of a large living area with a couch, chairs, and hardwood floors. Floor-to-ceiling windows provide a view of a large lake.

Overhead view of Great Room

A large living area with a couch, chairs, and a television mounted on a stone accent wall. Floor-to-ceiling windows provide a view of a large lake.

Great Room facing south

A large living area with high ceilings, a couch, and a coffee table.

Great Room

A modern kitchen with an island, white cabinets, and updated appliances.

Kitchen

A dining table set with plates, with three chairs on either side.

Dining area

A spacious bedroom with a large bed and an en-suite bathroom.

Primary bedroom

A bright bathroom with a toilet, a sink, and a soaker tub.

En-suite bathroom

A bright, simple bedroom with a bed, a ceiling fan, and a big window.

Guest bedroom

A medium-sized bedroom with a bed, a dresser, and a ceiling fan.

Guest bedroom

A bright, simple bedroom with a bed, a ceiling fan, and a big window.

Guest bedroom

A small bathroom with a toilet, a sink, and a shower-bathtub combo.

Guest bathroom

A bright, finished basement space that has walkout access to a backyard. Hardwood floors, a piano and chairs complete the space.

Walk-out basement

A bright basement living area with a couch, a chair, a coffee table, and a television.

Walk-out basement

A finished basement area with hardwood floors and gym equipment.

Walk-out basement

A bright bedroom with spacious bunk beds and walkout access to the outdoors.

Basement bedroom

1176 Parkers Point Road, Gravenhurst, Ont.

Lake: Lake Muskoka, Ont.

Bedrooms: 5

Bathrooms: 4

Lot size: 0.4 acres

Frontage: 104 feet

Asking price: $3,999,999

Previous asking price: $3,495,000

Taxes: $11,456.05

Date listed: March 1, 2023

Listing agent: Curry Clifford, RE/MAX Professionals North Brokerage

About the property

Enjoy modern lakeside living in the grand Muskoka tradition in this three-year-old, custom-built five bedroom, four bathroom home that easily accommodates 12 people over three full floors with space for everyone to spread out. All in an unbeatable location on Lake Muskoka less than two hours from the 401/400 interchange and just five minutes by car—or boat—to the Gravenhurst Wharf. Many are awe-struck walking into the south-facing great room featuring cathedral ceilings, a wall of windows overlooking the water, and a Muskoka granite gas fireplace. The main floor primary bedroom is an absolute sanctuary with a walk-out to a wrap-around deck, an ensuite with a soaker tub, and a large stand-up shower. Spacious bedrooms on each level with the most scenic of office spaces overlook the great room and the mesmerizing trees and water. Other features include a beautifully appointed chef’s kitchen, a bright and large inviting lower level walk-out living space, and an outdoor space fit for entertaining. Gather on the docks, by the fire pit, on the patio, or on the wrap-around deck, each with captivating wide open views of Lake Muskoka, and enjoy the sweeping granite staircase, terraced gardens, and oversized new Jacuzzi hot tub. An incredible package for a family (or families) to enjoy as their primary home or easily rent out when not in use at a very attractive income. This is a rare gem. Furnishings package available.

What are the main selling features?

  • Gorgeous, spacious home in the grand Muskoka tradition
  • Three levels with five bedrooms, four bathrooms, and a full entertainment space
  • Unbeatable location on Lake Muskoka less than two hours from the 401/400 interchange, on a municipal road
  • Five minutes by car—or boat—to the Gravenhurst Wharf
  • Fully rented last summer and fall at $15,000 per week

What makes this property unique?

  • Great outdoor entertaining space with a fire pit and a hot tub
  • Finished walk-out basement
  • Fully winterized for year-round living

Have there been any recent upgrades on the property?

A custom-built property that’s only three years old, everything in the home is up to date.

Take a tour


Would you like to list your cottage on our website? Email listingoftheweek@cottagelife.com.

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Demand for Ottawa-area cottages slows, prices remain high

Photo by Shutterstock/f11photo

Much like the rest of Ontario, the Ottawa Valley’s cottage real estate market experienced a surge in activity during the COVID-19 pandemic. But experts say the area is now starting to feel the comedown.

“In our market, we saw a 30 per cent increase in pricing during COVID,” says Erin Phillips, a realtor in the Ottawa area whose team specializes in waterfront properties. “Our demand was through the roof. But it’s actually starting to slow down a little bit. We’re getting a little more inventory and a little bit more of a balanced market.”

Demand in the area started to slow in July, says Phillips. This means that bidding wars, which contributed to driving prices over asking, have become rare, and cottages are staying on the market for longer. In March, cottages were snapped up within two days of going on the market. Now, the closing period for a cottage hovers around 30 days, says Phillips.

“During COVID, you had no time to sit and take it in. And cottage country is hard in our market because it’s pretty spread out around here…To get out and see them all you had to jump on it the minute it came up,” she says. “Now we’re getting a little bit more time on the market.”

Hiked interest rates have played a role in the slowed demand. The Bank of Canada raised its key interest rate to 2.5 per cent in July in an effort to combat runaway inflation. Higher mortgage rates and concerns over a coming recession have caused many to delay their dream of owning a cottage.

This ebb in demand has allowed the Ottawa cottage real estate market to start balancing out, shifting some power back to the buyers. Once again, buyers can include conditions, such as a home inspection, in their offers without worrying about it impacting the competitiveness of their bid, Phillips says.

Another factor slowing demand in Ottawa is cottage prices. Despite interest rates continuing to rise, cottage prices in the Ottawa area have remained high. Along the Rideau Canal system, one of Ottawa’s most desirable cottage markets, there are two price pockets, says Phillips. The first pocket averages around $1 million, and the second pocket is $2 million and up. The difference between the two price pockets is the amenities.

“Boathouses, outbuildings, number of bedrooms, waterfront exposure, etc.,” she says.

A number of the buyers showing interest in these high-end cottages are from Toronto, Phillips says. Specifically, individuals who’ve been priced out of markets closer to home, such as Muskoka.

Despite the inflated prices and interest from outside buyers, there are still affordable cottages in the Ottawa area. For those with a budget under $1 million, Phillips suggests looking at the Ottawa River and some of the smaller surrounding lakes in the Ottawa Valley.

But if you’re serious about buying a cottage near Ottawa, Phillips suggests doing it now. “I think come next spring, we’ll be back to a normal market with a bit of an increase [in demand] again, so I think the time to buy would be now to December.”

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Cottage Life

Cottage prices remain high despite rising interest rates: RE/MAX

Photo by Shutterstock/Elena Elisseeva

There’s been a lot of talk about recessions lately. With Canada’s inflation rate hitting 8.1 per cent in June, the largest yearly increase since January 1983, the Bank of Canada is driving up interest rates in an attempt to curb consumer spending and get supply and demand back into the same ballpark.

Real estate—cottages in particular—was expected to be one of the first industries hit by the bank’s tightened purse strings. Yet, a report from real estate company RE/MAX shows that cottage prices are remaining strong throughout Canada, with many regions still seeing price increases.

In 2021, the aggregate price of a cottage in Canada jumped 21.5 per cent to $567,000, according to Royal LePage. This was mostly due to the pandemic. Domestic, rural properties skyrocketed in popularity as people looked to escape urban centres and businesses transitioned to remote work. But even in 2022, when COVID-19 has become a part of our everyday lives, and many businesses are reintroducing in-office work, cottage prices remain high.

Here are the year-over-year recreational prices as of May 2022:

  • Kawartha Lakes, Ont.’s median residential property price rose by 30.4 per cent to $806,000.
  • Georgian Bay, Ont.’s benchmark single-family home price rose by 17 per cent to $804,800.
  • Powell River Sunshine Coast, B.C.’s average price of homes sold rose by 43.3 per cent to $677,950.
  • Prince Edward Island’s average price of homes sold rose by 20.9 per cent to $405,686.

Despite these increases, cottage prices aren’t skyrocketing the way they were during the pandemic. This is largely due to a decrease in overall sales volume. “You can really see the cut-off at about the end of May in my market,” says Bryan Coxworth, a real estate broker with Sotheby’s International Realty who operates out of Muskoka and Georgian Bay. “April and May I was still getting competing offers on pretty much everything I was selling. And then it kind of abruptly ended right at the end of May, and the market really slowed down through June and much of July.”

As of August, Coxworth has noticed people start to re-enter the cottage real estate market. This week, he sold a waterfront property within 95 per cent of its listed price. “That’s average. That’s where things typically sell if you look at 20 years of history,” he says. “COVID skewed those numbers. But I think where we are now is we’re back to a more normal market.”

A decrease in sales volume means that offers are no longer being driven above the asking price by bidding wars—an occurrence unique to COVID in cottage country, Coxworth says. But prices aren’t going down either. Stable internet and the ability to work from cottage country have ensured that there is still a demand for cottages according to RE/MAX.

But demand has waned compared to 2020 and 2021, especially when you look at the number of available cottages on the market. “During COVID, I was running two to three listings and they’d all sell within two weeks, so you never built up any inventory,” Coxworth says. Pre-pandemic, Coxworth managed 20 to 30 listings at one time. Now, he’s juggling around 14.

“In my mind, we’re not back to the number of listings that we’d seen through 2017, 2018, and 2019. We’re not up to that level of listings. Although, I can see it increasing, and I think it will continue to increase.”

With fewer competing offers and more supply, transactional power has started to shift back to the buyer. Previously, with bidding wars, buyers were often forced to pay over the asking price and didn’t have the luxury of including conditions with the sale. But that’s changing.

“Now, a buyer has an opportunity to come out, negotiate a little bit on the price, and protect themselves with the appropriate conditions on financing and a home inspection,” Coxworth says.

Without as many competing offers, buyers also have time to step away and think about the purchase. Whereas during COVID, if you didn’t act immediately, the cottage was gone, Coxworth says.

“If I were a buyer, this would be the time I’d be wanting to buy because I have more control over the situation now than I did a year ago. Far more control.”

Experts at RE/MAX say it’s unlikely cottage prices will ever return to pre-pandemic levels, but they may start to stabilize.

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RBC forecasts historic real estate market correction, including cottages

Photo by Shutterstock/Mitch Hutchinson

The Royal Bank of Canada is forecasting a “historic correction” to Canada’s real estate market after two frenzied years of buying, and cottage country will feel the impact.

In its latest housing report, RBC assistant chief economist Robert Hogue says that the bank expects home sales to fall 23 per cent this year and 15 per cent next year, eventually culminating in a 42 per cent drop from the start of 2021. That’s a larger decline than any of the past four national downturns (-33 per cent in 1981–1982, -33 per cent in 1989–1990, -38 per cent in 2008–2009, and -20 per cent in 2016–2018). Along with the drop in sales, the national benchmark price will fall 12 per cent by the second quarter of 2023.

The drop in sales and prices is a result of rising inflation caused by COVID-19 and Russia’s invasion of Ukraine. In May, Canada’s inflation rate reached 7.7 per cent, the largest yearly increase in almost four decades.

To combat rising inflation, the Bank of Canada is raising interest rates, making it more expensive to take out loans, such as mortgages. In July, the Bank of Canada raised its interest rate an entire percentage point to 2.5 per cent. In the RBC report, Hogue says he expects the interest rate to continue rising, reaching 3.25 per cent by October.

Ontario and B.C.’s real estate markets are expected to be hit the hardest, specifically high-priced areas sensitive to interest rates, such as Toronto, Vancouver, and Victoria. Over the next year, RBC predicts that property sales in Ontario and B.C. will fall 38 per cent and 45 per cent respectively, with prices dropping 14 per cent.

The average property price in Ontario has already fallen 7.6 per cent this year, and 4.9 per cent in B.C.

Within these markets, some of the first properties impacted will be cottages. “With consumer spend, what we expect is the consumers to stop purchasing things that are discretionary and keep buying the necessities. That same logic applies to the housing market. If [people] don’t need a cottage, this is probably not really the best time to go out and look for one,” says Claire Fan, an RBC economist.

Out of Canada’s cottage country areas, it’s the markets around Toronto and Vancouver that will experience the greatest changes, Fan says.

“Those markets saw the most uprising in both prices and retail volumes over the course of the pandemic because people were looking for more space,” she says. “But a lot of these markets that saw the biggest price appreciation over the course of the pandemic are the ones that are getting hit the hardest at the moment because larger prices come with pricier mortgages, and those are the most interest-rate sensitive.”

Areas farther away from high-priced urban centres should remain more stable. And Canada’s other provinces won’t be hit as hard as Ontario and B.C. “We project prices to slip less than 3 per cent in Alberta and Saskatchewan, and between 5 per cent and 8 per cent in the majority of other provinces by the first half of 2023,” Hogue says in the report.

While none of this is great news for home or cottage buyers, RBC does expect the real estate market correction to end sometime in the first half of 2023. “We’d argue the unfolding downturn should be seen as a welcome cool-down following a two year-long frenzy that put a huge financial burden on many new homeowners and made ownership dreams harder to achieve,” Hogue says.