Tag: real estate

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Cottage Life

Airbnb to make pricy hidden fees more transparent on bookings

Photo by Shutterstock/Daniel Krason

Airbnb is making changes to its platform after the company received complaints from guests about hidden fees.

“I’ve heard you loud and clear—you feel like prices aren’t transparent and checkout tasks are a pain,” tweeted Airbnb CEO Brian Chesky in early November.

As of December, Airbnb said it will be making its prices more transparent by offering an option to view a property’s total price before taxes in the search results, map, filter, and listing pages.

Previously, the company displayed a rental’s average nightly rate, meaning add-ons, such as a cleaning fee and Airbnb’s service fee, weren’t included until you reached the payment page. Suddenly, a $400 weekend getaway might jump to $700 with add-ons. Once a guest toggles on the fees-included feature, though, it will enable the guest to see the total price before starting the booking process.

“I think it’s better to be more transparent. I think people like to know the costs that are associated with choosing an Airbnb over a hotel,” said Jennifer Schnier, an Airbnb host in Georgian Bay Township. “Because the experience in an Airbnb is very different.”

What are Airbnb’s hidden fees?

The extra fees that pop-up on a rental’s payment page have long been a point of contention for Airbnb guests, particularly the cleaning fee. This fee is meant to cover the cost of cleaning and sanitizing a rental between stays. But the host has control over how much is charged. The amount charged typically correlates with the length of stay and the size of property.

For her four-bedroom rental, Schnier said she charges a $50 cleaning fee for short stays and $150 for stays longer than a week. “There is behind-the-scenes cleaning. When you rent a hotel, you’re not cleaning a stove, an oven, a fridge. There are different amenities, so there is associated cleaning fees that go along with that,” she said.

But some hosts use the cleaning fee as an excuse to squeeze out additional revenue from guests, charging more for cleaning than their nightly rate. Guests have also taken issue with hosts charging a cleaning fee and then asking them to perform tasks, such as vacuuming, before checkout.

“You shouldn’t have to do unreasonable checkout tasks, such as stripping the beds, doing the laundry, or vacuuming. But we think it’s reasonable to turn off the lights, throw food in the trash, and lock the doors—just as you would when leaving your own home,” Chesky said in a tweet. “If Hosts have checkout requests, they should be reasonable and shown to you before you book.”

The other fee that pops up on the payment page is Airbnb’s service fee. The company charges a service fee to cover the cost of operating. For most stays, Airbnb said the service fee will be less than 15 per cent of the booking’s subtotal.

How does this affect cottage rental owners?

When it comes to renting out your cottage through Airbnb, it should be business as usual. To stay competitive, you may want to consider how much you’re charging for cleaning.

According to Airbnb, 55 per cent of listings charge a cleaning fee and, on average, the fee is less than 10 per cent of the total reservation cost. To avoid scaring away potential guests, Airbnb suggests keeping your cleaning fee reasonable or doing away with it altogether.

In early 2023, the company plans to introduce new pricing and discounting tools that will help hosts understand the total costs guests pay and how to set competitive prices.

What other changes is Airbnb making?

In addition to being more transparent about hidden fees, Airbnb said it’s tweaking its search ranking algorithm to prioritize rentals by their total price, rather than their nightly rate. This means that higher quality listings with better total prices will rank further up in the search results.

“The Airbnb experience is already different [than traditional accommodations], so if we are more transparent with the up-front fees then people might have a bit of an understanding of why there are some extra fees there,” Schnier said.

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Cottage Life

Rising interest rates spurs renewed interest in vendor take-back mortgages

Photo by fizkes/Shutterstock

Canadian cottage prices are still at record-highs despite the economy inching towards a recession. That’s why cash-strapped buyers are increasingly turning to an alternative financing options to purchase a cottage, including vendor take-back (VTB) mortgages.

With a VTB mortgage, the property seller is the lender. “No bank or mortgage broker is necessary with a VTB,” says Andrew Thake, a mortgage broker in Ottawa. “It’s essentially a private loan agreement between a seller and buyer.”

A VTB is often utilized as a second mortgage that supplements an initial mortgage from a traditional lender such as a bank. “The VTB can bridge the gap when a bank is unwilling to finance the entire purchase price of a property, and the buyer doesn’t have enough of a down payment to cover the rest,” says Thake.

Because conventional mortgage interest rates are on the rise, Thake adds it’s actually sellers who typically instigate a VTB to help close a sale when they’re having trouble finding a buyer. For example, buyers might struggle to qualify for mortgages on unique cottage properties that don’t meet major lender requirements. “You see this especially with remote properties without much direct access, or cottages that lack potable water,” says Thake. In those cases, or in other scenarios where their cottage simply isn’t attracting buyers, sellers can entice offers in this tough economy by proposing a VTB with generous terms.

If the terms are right for both parties, a VTB is a win-win: the buyer is able to afford their cottage, while the seller successfully closes a property that would otherwise have no takers— with the bonus of earning added profit from the VTB interest.

For sellers who prefer a clean break once the sale closes, Thake cautions that a VTB can potentially lead to an unwanted ongoing relationship with the buyer. “They will be more inclined to ask questions like, ‘how do you winterize this?’ or ‘where did you put the lock to the shed?’ if their financial commitment to you extends beyond closing,” he says.

Thake also advises transparency with all other parties when a VTB is in place: a bank may adjust its financing if it discovers an undisclosed agreement between the seller and buyer. “If everyone knows the numbers, there aren’t any unwelcome surprises.”

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Cottage Life

Nova Scotia adds stricter short-term rental rules to its province-wide registry

Photo by ducu59us/Shutterstock

New amendments are coming to Nova Scotia’s provincial short-term rental registration system this spring, the province announced. 

Three major revisions to the act were approved in April 2022 including:

  1. The removal of a registration exemption for short-term rentals operated in primary residences (meaning single-room rentals and bed-and-breakfast style operations must now register annually).
  2. Short-term rental owners are now required to include their registration number in their online listings. 
  3. All rental owners will have to attest to their property’s compliance with municipal land-use bylaws when registering.

Anna Moran, director of research and policy at the department of communities, culture, tourism, and heritage, says these changes will help the province and municipalities get a better understanding of the short-term rental situation in Nova Scotia. “The intent of the amendments is to support us—the province—to gather comprehensive data that we can then give to municipalities to help them with their land-use bylaws,” she says.  

Moran says these changes were introduced in response to the demands of municipal leaders. “What we were hearing from municipalities was ‘you don’t require primary residences to register—that’s an issue for us. We’re going to set up our own registry.’ Nobody wants that kind of duplication of effort,” she says. 

Nova Scotia became one of the first provinces in Canada (after Prince Edward Island) to regulate short-term rentals at a provincial level when they introduced the Tourist Accommodation Registration Act in the spring of 2020.

Moran says the act established the provincial registry for short-term rentals to assist local governments in enforcing their own regulations. “What municipalities asked us for is support to get a clear picture of the short-term rental situation in their communities,” says Moran.

The registration act requires that every short-term rental property owner register with the Tourist Accommodations Registry annually. The cost of registration depends on the size of the accommodation—for properties with one to four bedrooms, the fee is $50; for properties with five or more bedrooms, the fee is $150. 

The act defines short-term rentals as any operation with a fixed roof being rented to the public for less than 28 days at a time. This means the act applies to a broad range of accommodations including hotels, motels, apartments, homes, vacation properties, and more, says Moran. 

The province is emphasizing an education-first approach to enforcement, working with hosting sites to ensure all listings are in compliance with the provincial regulations, says Moran. However, the province can also enforce fines starting at $1,000 per day, capped at a maximum of $7,500 annually, for rental owners who do not comply with the act. To date, just over 1500 accommodation providers have registered with Nova Scotia. Rental owners are required to register with the province through their online portal by April 1, 2023.

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Cottage Life

Buy the Way: This couple stretched their budget after a difficult medical diagnosis

Photo courtesy Jen Pogue and Warren Sonoda

The search: Toronto couple Jen Pogue and Warren Sonoda had been saving to buy property downtown. It had taken years—working in the film industry means that their income comes in on a job-to-job basis. Then, in early 2021, Jen was diagnosed with an incurable form of stage 4 metastatic triple-negative breast cancer. “With a diagnosis like that, it changes your priorities,” says Warren. It accelerated their property hunt, but the couple wasn’t impressed with what $500,000-$600,000 afforded them in the city. So, they expanded their search to cottage country. That summer, while renting on Lake Kennisis, Ont., they found a riverfront, three-season, A-frame for $499,000. “We offered $570,000 thinking, that’s competitive,” says Warren. It wasn’t—the property sold for $830,000.

The couple enlisted the help of realtor Carl Laudan, a former colleague. “Having someone who was a friend and a former filmmaker was a game-changer for us,” says Warren. “He understood what we needed and our situation, specifically as film people.” One night, Warren, who had become something of a realtor.ca savant, found a 1,100 sq. ft., three-bedroom cottage on Cordova Lake, Ont., listed at $614,000. Upon visiting the place, it felt right immediately. “We looked at each other and said, ‘okay, how do we make this work?’ ” says Jen.

The compromise: Comparable cottages in the area were going for $800,000—and competition was fierce. “On bid night, I was sweating out of places I didn’t know I could sweat out of,” says Jen. In a final push, the couple made an unconditional offer, and Jen wrote a letter to the sellers describing why they wanted the place. It worked— they got it for $777,000. Jen and Warren faced an additional hurdle to close. Because of their variable income, a traditional mortgage wasn’t an option. They secured financing through a B-Lender (an alternative lender, such as a non-traditional bank or a credit union) and by putting 35 per cent down.

the sunroom at Jen Pogue and Warren Sonoda's cottage
Photo courtesy Jen Pogue and Warren Sonoda

The silver lining: “Early on in my diagnosis, I learned to invent a safe, happy place in my mind that I could go to during anxious times,” says Jen. “Mine was immediately and vividly a cottage.” A year on, the couple still feel like the budget stretch was worth it. “When we bought the cottage, I didn’t know if I’d get to see what the summer sun looked like there,” says Jen. “The thought of dying before I had a chance to spend the money I had worked so hard for on something I loved is definitely what propelled me to go all in on our cottage.”

Broker advice: Mortgage strategies for freelancers

Having a variable income is common, and it won’t preclude you from applying for a cottage mortgage. “Anytime there’s a variance, lenders want to see an average of the last two years,” says Andrew Thake, a mortgage broker in Ottawa. If your average isn’t high enough, a broker can help you put together a financial plan. If you’re planning to buy in the next two years, “we could structure your tax filings around that purchase,” says Thake. That may mean not writing off as many expenses, but it will show the lender that you have the income. Plus, you can be saving and looking for a cottage simultaneously, even if you aren’t pre-approved yet. Mortgage brokers can also help you survey alternative lending (B-Lending) or private lending (C-Lending), in addition to exploring the best rates across traditional banks. “We know which lenders are going to be the right fit,” says Thake. And even if you start with an alternative lender, you’re not locked into that model. “We can help you even after you own the cottage to get you back to a traditional lender.”

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Buy the Way: This couple snagged a bargain by buying land through an estate sale

Photo courtesy Evan Timusk

The search: After five years of looking for a wilderness retreat, Sault Ste. Marie-based couple Evan Timusk and Jenn Vosper were beginning to lose hope. They had budgeted up to $80,000 for an isolated property surrounded by Crown land, ideally with water access. Mature forest was another objective that further pigeonholed their search. “It seems like most people clear the trees before they sell the land,” says Evan. “We were getting tired of looking at saplings and skidder trails.”

The compromise: In October 2019, they received a surprise tip on a remote, 76-acre parcel located in the headwaters of the Thessalon River, 40 km north of Bruce Mines, Ont. The former mining claim property hadn’t been visited by the family in more than 50 years and was about to be offloaded in an estate sale. Sensing a great opportunity, the couple bushwhacked there by GPS and discovered old-growth pine, rugged hills, and a clearwater river with gravel shores. “We instantly fell in love,” says Jenn.

Evan and Jenn hustled to make a bid before the property was listed. They offered $32,000, hedging that difficult access would dissuade competition. The family countered at $36,000, and the couple accepted. The deal closed after an eight-month wait while the estate was settled in court, which Evan says is normal for this type of purchase.

The silver lining: Evan and Jenn decided to build their own cabin, settling on a 16-by-20-foot structure using locally harvested (and milled by hand) rafters on stick-framed and insulated walls. They found trailer-loads of rough cut lumber on Kijiji and Facebook Marketplace, along with windows and a stove for a sauna. (Building in an unorganized township allowed the couple to bypass graded lumber.) Total material costs— enough for a cabin, sauna, and shed— tallied $24,000.

Photo courtesy Evan Timusk

After making six weeks of concerted effort and hauling endless loads of materials to the building site, the cabin took shape. By first snow, they’d framed and sheathed the cabin and added a steel roof. The couple plan to finish the interior this year, with the goal of being able to relax and enjoy the place in 2023. “There was still a bit of uncertainty while we waited for the legal proceedings, especially during the pandemic,” says Jenn. “It’s been a great experience to work together on such a lengthy project. Every new step now feels like a victory.”

Owner advice: How to navigate an estate sale

Evan and Jenn admit they got lucky in many ways. For starters, pre-pandemic prices for recreational land in northern Ontario’s Algoma district typically ran $1,000 per acre, and they’ve surged since. It also isn’t easy to find an estate sale. The couple cast a wide net by leveraging contacts in real estate offices and speaking with agents who specialized in their target area. Finally, they made an informed offer: being aware of the remoteness of the property, the difficult access, and the fact that “no one in the family had likely stepped foot there and had no attachment to the place” enabled them to score a lowball deal, Evan says.

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Appellants say Tiny Township’s STR rules insufficient for addressing ‘ghost hotels’

Photo by Franco Francisco Maria/Shutterstock

Community members in Tiny are pushing back against the township’s new short-term rentals regulations. Two separate appeals have been filed with the Ontario Land Tribunal over the new zoning bylaw changes that were approved by the township in October to assist with the new short-term rental regulations. The changes include a definition for short-term rentals, parking standards for rental units, and a ban on renting out accessory structures such as bunkies.

The appeals were filed by Good Neighbours Tiny, a group promoting “family-oriented residential neighbourhoods”, and the so-called Tiny Township Association of responsible short-term rental owners. 

“When you have both sides appealing the regulation, in this case, the zoning bylaw, it likely means that you didn’t do your job well and you failed to bring forth the regulation that actually fulfills its purpose and intention,” says Jelena Vuckovic, of the Tiny Township Association of Responsible Short-Term Rental Owners.

Jelena Vuckovic and her family during Christmas at their cottage in Tiny. Photo courtesy of Jelena Vuckovic

Vuckovic has owned a property in Tiny since 2020 and has been renting it out periodically to earn supplemental income. “We are just trying to stay afloat in this economy, put our kids through school, and make financial decisions that make sense for us now and when we retire,” she says. 

Vuckovic would like to see Tiny strengthen its current bylaw enforcement to bring problem rentals under control. “I think most of the complaints and issues can effectively be resolved by implementing and enforcing the existing regulations already at the Township’s disposal such as noise bylaws and building and fire codes,” she says.

Debbie Galbo and Jennifer Hierholzer of Good Neighbours Tiny also filed an appeal against the township’s new zoning regulation. They are neighbours in Tiny and both live next to a rental property which they say has housed many large and noisy groups over the last year. “It’s been a nightmare,” says Galbo. They’ve had to deal with garbage and parked cars filling up the street, and countless noise disturbances. 

Good Neighbours Tiny would also like to see the township strengthen bylaw enforcement. They would like to see bylaw officers accessible on evenings and weekends, to better deal with excessive disturbances. “We can tell you we don’t need bylaw on Tuesday at noon,” says Hierholzer. “Generally the bylaws are not being broken during the day, it’s in the middle of the night.”

Shawn Persaud, the director of planning and development at Tiny, says the new zoning bylaw doesn’t permit tourist establishments in residential areas, but it does codify where short-term rentals are permitted. “Basically, they’re permitted in all residential areas,” he says. This is something Galbo and Hierholzer would like to see changed. As they see it, there should be a separate classification and ban on short-term rentals being operated as so-called “ghost hotels” which they define as properties owned and operated for the sole purpose of short-term renting. “They should have had clear definitions of the ‘ghost hotels’ so they can shut them down immediately,” says Hierholzer.

Persaud says short-term rentals were legal before the bylaw, but the changes introduced by the Township are a move to regulate the industry. “Our interpretation is short-term rentals have always been permitted in Tiny Township,” says Persaud. “However, we needed to regulate it because it was getting out of hand as far as the number, as well as the duration of use and that, was really creating a negative impact.” 

Vuckovic also says that “ghost hotels” are an issue in Tiny, but she says the vast majority of rental owners she’s talked to are part-time renters like herself. She acknowledges the new short-term rental regulations don’t account for the differences between the two groups. While the bylaw prohibits corporations from owning short-term rentals in Tiny, Vuckovic says nothing prevents individuals from operating ‘ghost hotels’.

Vuckovic says she supports the idea of a short-term licensing system but says costs related to the new licensing regime, including a $1,500 fee as well as costs for electrical, HVAC, and wood-burning appliance inspections, will push small-time rental operators like herself out of the market. “Instead of driving out illegal ‘ghost hotels’, it will drive out families like mine,” she says.

Current deputy mayor and councillor-elect Steffen Walma says the township believes in its current short-term rental regulations, but the appeals will be weighed through the judicial system. “People have the ability to challenge laws/bylaws at any level of government,” he said. “The township believes what we have done is fair, in the best interest of the community, and procedurally correct.” 

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Cottage Life

Listing of the week: The legendary Dodge Estate has one of the nicest shorelines on Manitoulin Island

Overhead shot of a large single-story cottage, which has a large covered front porch and an expansive lawn.

Exterior of 462 Maple Point Rd

Big front porch of a large front cabin, with yellow adirondack chairs on the porch.

Main porch

The corner of a covered wrap-around porch, with a rustic wooden porch swing.

Veranda swing

A long covered walkway connects two buildings of a spacious one-story cottage.

Covered walkway

Long covered veranda against a log cottage.

Veranda

A bright screened-in porch with wicker chairs and a sign that says

Screened-in porch

A large room with couches, a fireplace, and wooden floors.

Living area

A large room with a fireplace, a pool table, and lots of windows.

Recreational area

Interior bedroom with wood floors, a large bed and a sink in the room.

Bedroom

Interior of a wood-panelled room with a double bed and a stone fireplace.

Bedroom with fireplace

Overhead shot of a large one-story cottage surrounded by trees.

Aerial view of property

A stretch of sandy shore along a lakefront area.

Sandy waterfront access

Overhead shot of a sandy stretch of shoreline on the water. A large cottage can be seen through the trees just beyond.

Shoreline

Overhead shot of a long one-story cottage.

Exterior

462 Maple Point Rd, Kagawong, Ont.

Lake: North Channel, Lake Huron

Bedrooms: 8

Bathrooms: 5

Lot size: 4.2 acres

Frontage: 269 feet

Asking price: $1,490,000

Taxes: $3,144

Listing date: Aug. 25, 2022

Listing agent: Jordan Chandler, Broker of Record, Re/Max The Island Real Estate Brokerage (Manitoulin)

About the property:

To many, the Dodge Estate needs no introduction; it is a part of Manitoulin folklore and mystery. Originally built in the 1920s, the lodge has been preserved by various owners and is in great condition nearly 100 years after its construction. The main lodge features a large double-sided fireplace with a sunroom on one side and the great room on the other. Several of the lodge’s keepsakes can be viewed in the great room, which looks out over the North Channel of Lake Huron. Two large wings flank the main lodge with several bedrooms that all have views of the channel. A covered veranda wraps around the entire facility, providing cover from the elements and shade on hot summer days. The covered veranda extends toward the former caretakers’ quarters, which is now a three-bedroom winterized home with a screened-in porch. The lodge has an elevated view with one of the nicest sand shorelines on Manitoulin. The waters are typically calm and perfect for watersports.

What makes this property unique?

The property was purchased by Daniel Dodge, of Dodge automotive fame, in the 1920s. The grounds contain a log lodge with 4,000-plus feet of indoor living space and one of the nicest sand beaches on Manitoulin Island. A tragic accident at the property resulted in a flee via boat to the closest hospital. Mr. Dodge went overboard in a storm and his body was discovered by fishermen weeks later. The events have been shrouded in mystery for decades.

What are the key selling features?

Dodge Estate has been well maintained and preserved in its original state. The beachfront is pristine, and the lot has direct access to the North Channel, one of the best sailing/yachting destinations on the Great Lakes. The property has been used as a private family compound for two decades. However, it also carries commercial zoning which would make it and excellent location for a rental lodge.

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

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Bank of Canada raises interest rates for sixth consecutive time. Here’s what it means for cottage mortgages

Photo via Bank of Canada/YouTube

The Bank of Canada is once again raising interest rates. On Wednesday, the bank bumped its policy interest rate up 50 basis points to 3.75 per cent. This is the sixth consecutive hike since March, and the highest the rate has been since 2008. Canada’s major banks, including TD, RBC, and CIBC, are expected to follow suit, raising their prime lending rates by the same amount.

The increase will make it more expensive for Canadians to borrow money and pay off loans, including lines of credit, student loans, credit card payments, and mortgages.

Why are interest rates going up?

Inflation remains well above the bank’s target goal of two per cent. By raising interest rates, the bank is attempting to discourage Canadians from overspending, in turn lowering the inflation rate.

In June, inflation hit a 39-year high of 8.1 per cent. Since then, the rate has eased to 6.9 per cent, largely due to a fall in gas prices. But the bank’s governor, Tiff Macklem, says this isn’t enough.

“We have yet to see a generalized decline in price pressures,” he said, during a press conference. “The economy is still in excess demand. It’s overheated. Households and businesses want to buy more goods and services than the economy can produce, and this is driving prices up.”

Countries around the world are seeing similar inflation rates as they emerge from the COVID-19 pandemic. The global supply chain continues to be disrupted by COVID lockdowns in China and energy shortages caused by Russia’s attack on Ukraine. As a result, supply is diminished, which causes prices to rice.

“As economies slow and supply disruptions ease, global inflation is expected to come down,” the bank said in a statement.

How long will the rate hikes last?

The bank predicts that inflation will return to its target of two per cent by the end of 2024. But to make that happen, Macklem said that interest rates will need to increase further. “How much further will depend on how monetary policy is working to slow demand, how supply chains are resolving, and how inflation and inflation expectations are responding to this tightening cycle,” he said.

Macklem pointed out that the higher interest rates are already working. Demand has slowed in interest rate-sensitive parts of the economy, including housing and other big-ticket items, such as vehicles. He added that if current trends continue, future interest rate hikes may be smaller.

“We are getting closer, but we’re not there yet,” Macklem said.

What does this mean for mortgages?

Higher interest rates will put an added strain on mortgage holders, especially those paying off both a home and cottage mortgage.

“If you purchased [a fixed-rate mortgage] during the first part of COVID, or even just before COVID, you would have seen record-low interest rates,” said Robin Dillane, a mortgage broker with Haliburton Mortgage Services. “That’s fine until the mortgage comes due. Then it’s going to be really hard.”

Current fixed-rate mortgage holders could see their interest rates jump by two to three per cent when it’s time to renew, adding several hundred dollars to their monthly payments.

“During COVID, we were down to about 1.9 per cent on some fixed rates. Now you’re seeing percentages in the fives. And if they continue to raise, you’d probably see closer to the sixes,” Dillane said. “It’s going to make it hard for the average person.”

As for variable-rate mortgages holders, their monthly payments are already on the rise. Variable-rate payments fluctuate based on the bank’s interest rates. As rates continue to go up, there’s concern that variable-rate mortgage holders will pass their trigger rates. This is when interest rates have gone up so much that an individual’s monthly payments are only covering the interest and aren’t paying down any of the principal loan.

In August, RBC revealed that 80,000 of its customers were about to pass their trigger rates, adding an extra $200 to customers’ monthly payments.“Everybody’s is different, and you should be checking in your contracts for those trigger rates,” Dillane said.

Higher interest rates will also make it more difficult for people to pass the stress test to secure a mortgage. The stress test determines whether an individual will be able to pay their mortgage if interest rates increase. To qualify, they must show that they can pay the benchmark rate of 5.25 per cent or their lender’s rate plus two per cent, whichever’s higher. Since interest rates are up, it’s likely the lender’s rate will be higher. If the individual can’t afford mortgage payments at this rate, the bank won’t loan the money.

Dillane pointed out that there is a way around this. If the individual opts for a variable-rate mortgage, some banks will offer the loan at below their prime lending rate, making it easier to qualify. The only problem is that a variable-rate mortgage is much riskier as you can’t predict the monthly payments.

How do you prepare for interest rate hikes?

Fixed-rate mortgage holders worried about rising interest rates should calculate how much their monthly payments will go up at the time of renewal, based on current interest rates, Dillane said, then increase their monthly payments to that amount.

“The extra money that you’re putting on your mortgage, because you’re contracted at a low rate, goes directly off the principal, so when that mortgage is renewed, you actually have a lower principal amount,” she said. “If the rates are higher, you’re kind of buffering to still be able to afford that mortgage.”

By choosing to increase payments, it not only helps pay down the principal faster, but also gives the mortgage holder a sense of control over their budget, rather than having the increase forced on them, Dillane said.

While variable-rate mortgage holders can’t operate on the same predictability, they can adjust their payments. Work in round numbers, Dillane suggested. For instance, if the monthly payment is $1,125, round it up to $1,200. “You just built in an extra $75,” she said, “and you won’t even notice it over the course of the mortgage.”

Paying more up front may sound daunting, but according to Dillane: “It’ll reduce the amount of stress that you’re going to have when you have no option but to increase your payments.”

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Cottage Life

Market outlook: What fall brings for Ontario’s cottage country real estate market

While the cottage real estate market was hot over the summer, literally and figuratively, it’s expected to cool down in the coming fall months, according to Re/Max’s 2022 Fall Real Estate Market Outlook. But you can still expect a strong market, says Rick Laferriere, a Re/Max sales representative based in Barrie, Ont.  

What buyers and sellers can expect for the fall 2022 cottage real estate market

Based on his observations, Laferriere notes that there are many buyers, but not enough properties. He estimates there’s been a 30 per cent drop in the number of available properties compared to the summer. 

This means that for those looking to sell their cottages, Laferriere says you’re in a strong position to do so. Besides, spring and fall are prime months for selling; while owners typically devote other months to preparing their cottages for sale or rent. He recommends sellers work with a local real estate company familiar with the area’s values and prices. “If you overprice something in today’s market, it won’t sell.” Even if you’re not ready to sell this year, Laferriere recommends owners take photos of their cottages now against the fall foliage, rather than waiting until the winter months when their lawns are covered in ice or snow. 

In May, Re/Max forecasted average cabin and cottage prices in recreational markets would rise by 20 per cent for the remainder of the year. The report found around 40 per cent of Canadians living in recreational markets, such as the Kawarthas and Southern Georgian Bay, are drawn to its affordable pricing. But the recreational market in other parts of Ontario could look different depending on how high interest rates go. (The Bank of Canada has two more policy rate announcements left in 2022, one on October 26 and the last on December 7.) 

Ontario cottage regions with the biggest and lowest price jumps in 2021

The Muskoka cottage market is still hot, Peterborough cools off

There were two cottage-country areas of note in the fall Re/Max report: Muskoka remains an outlier and affordability has taken a hit in Peterborough. Muskoka region is still expected to experience a five per cent increase in average prices this fall. Over in Peterborough, interest rate hikes and mortgage stress tests may have finally put a damper on the market. The area is expected to see a seven per cent decrease in average sale price for residential and waterfront properties in the next few months.

Will cottage prices go down in Ontario?

If you’re in the market for a cottage, Laferriere says patience is key. With inventory low and prices high, it’ll take time to find a property that is in your price range and one that you actually like. According to Laferriere, a cottage on Lake Simcoe, Ont., costs an average of $1.9 million. “There hasn’t been much change in that price.” Even a waterfront condo in the Lake Simcoe area can cost an average of $790,000. 

On the other hand, prices for cottages in areas with weeds or the water nearby is silty have dropped by about 20 per cent from the summer. “Don’t settle for something just because that’s what’s available on the market,” he adds. 

Ultimately, the availability of properties can lead to major swings in the recreational market. Laferriere says availability can shift a buyer’s market to a seller’s market or a seller’s market to a buyer’s market.

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Cottage Life

Editor Michelle Kelly talks (first-hand) about renting at the lake

Photo by Erin Leydon

My mom sold our family cottage 11 years ago. Since then, I’ve rented with my own brood, first a little cabin south of Algonquin Provincial Park and then, for five years, a cottage on the shores of Lake Huron. The owners of the Huron place named it “Slice of Heaven,” and was it ever. We loved it there. I’d first visited that beach as a teen, as a guest of a friend’s family who rented there (“Rest Awhile”). The whole sandy strip is imbued with deep, fond memories for me. That history and my memories there helped make Slice of Heaven feel like mine. It was there I kept time by the sun, ate (too many) ice cream cones with my kids on the deck, and did jigsaw puzzles in my pajamas until the middle of the night.

But, of course, it wasn’t really mine, a truth made plain when the owner declined to rent it to us last summer, with no explanation given.

I always thought we were exemplary renters— it’s my job to train people on such things. Your voice carries at night! Remember the septic! Bears love garbage! Giving this advice is something we’ve taken particularly seriously these past few years as the rental market has exploded. It’s not hard to be a good neighbour, and, for the most part, that’s all you need to be when you are renting. Don’t assume, ask. Be kind. Remember you’re not the only ones on the lake. Share. In my experience, most renters adhere to these principles and respect their borrowed vacation homes. Most cottage owners are responsible too—they let their tenants know the dos and don’ts, and they are available if things go awry.

Sadly, it doesn’t always work. Each time I get a letter from a cottager who is frustrated by the noise and disruption caused by the party cottage down the bay, I feel terribly for them. I feel even worse when those party renters cause trouble for the environment—the baby loon chicks they threaten when they drive too fast in their boats, too close to shore, or the water issues caused by using shampoo in the lake. Our advice to these irate cottagers is always the same—speak to the cottage owners. Because while it’s easy to be upset with the renters, ultimately, it’s the owners who are to blame. If you’re the one profiting from renting out your cottage, it shouldn’t be your lake-mates’ work to manage the fallout from that profit.

There are numerous, easily accessible resources available for renters and cottage owners, including the excellent Guide to Responsible Renting on the Federation of Ontario Cottagers’ Associations’ website. FOCA is doing great work to ensure that renting happens in a safe and reasonable way. As with many things, education is everything. I certainly prefer it to more restrictions, something we’ve seen an uptick in recently. I think some owners are skeptical about renters because cottagers are so passionate about their environment, and thank goodness—cottagers are some of the most committed environmental stewards we have. However, while cottagers make up an important part of our lakeside communities, they don’t own the lakes. Those belong to everyone. For the majority of Canadians, renting a cottage is one of the only ways to meaningfully access cottage country. As such, we need to ensure that access and that we all take care of our most precious resource.

I was sad that we couldn’t visit the beach this summer. We loved our rental there as we would have loved our own cottage—and treated it that way. Who knows where we’ll end up next summer? I’m trying to think of the end of our tenure as nothing more than an opportunity to find a new place to love and care for. Just as any responsible renter would.

@MKonthedock

This story originally appeared in our Sept/Oct ’22 issue.

Want to learn more about short-term rentals? See Michelle Kelly in conversation with FOCA executive director, Terry Rees, at the 2022 Fall Cottage Life Show (November 11-13 at the International Centre in Mississauga, Ont.). Michelle and Terry will be on the Main Stage Saturday and Sunday at 1:30 pm. Buy your tickets now.