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Experts predict a price drop for Canadian cottage regions in 2023

Photo by Shutterstock/Alessandro Cancian

After two years of soaring cottage prices, the real estate market is starting to stabilize. In its Spring Recreational Property Report, Royal LePage forecasted a 4.5 per cent dip in cottage prices across the country in 2023, dropping the aggregate price from $619,900 to $592,005.

“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,” said Phil Soper, president and CEO of Royal LePage, in the report.

A return to in-office work has also caused the market to slow. During the pandemic, cottages offered an alluring escape from the city, especially with the introduction of high-speed internet in rural locations. But now, with many employees required to return to the office a few days per week, and shops, venues, and events back in full swing, buying a cottage has dropped in priority.

But despite the market stabilizing, buying a cottage is still expensive. Across the country, prices remain 32 per cent higher than pre-pandemic levels. To better understand the cottage market, here’s a breakdown of what’s happening in each province:

Cottages in Ontario

In 2022, the aggregate price of a waterfront property in Ontario increased by 8.9 per cent to $1,006,600, compared to 2021. Southern Georgian Bay was the most expensive region with a 7.1 per cent price increase to $1.5 million, followed by Orillia, which saw a 22.4 per cent increase to $1,377,000, and then Muskoka, which saw a 15.7 per cent decrease to $1,062,500.

Muskoka’s price drop may be indicative of a more significant trend. According to a Royal LePage survey of Ontario realtors, 52 per cent of respondents reported less demand this year than last year. The entire province is forecasted to see a five per cent decrease in recreational property prices.

“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, a broker at 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.”

The market in Quebec

In 2022, the aggregate price of a waterfront property in Quebec increased 17.3 per cent to $480,200, compared to 2021. Memphrémagog topped the price list after a 24.6 per cent increase to $860,000, followed by Les Pays-d’en-haut with a 4.3 per cent increase to $600,000, and then Les Laurentides with a 25.3 per cent increase to $530,000.

Despite its major price jump in 2022, Quebec is forecasted to have the biggest price drop in 2023 at eight per cent. Similar to Ontario, this price drop is due, in part, to lack of demand. In a Royal LePage survey of Quebec realtors, 76 per cent of respondents reported less demand this year than last year.

“Buyers are more patient; they’re negotiating, and they’re taking time to carefully assess their needs and financial capacity before taking the plunge,” said Véronique Boucher, residential real estate broker at Royal LePage Au Sommet. “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 cottage market.”

Waterfront property in British Columbia

In 2022, the aggregate price of a waterfront property in B.C. increased 5.6 per cent to $1,065,000, compared to 2021. Invermere was the most expensive region with a 26.6 per cent increase to $2,025,000, followed by the Comox Valley, Denman Island, Hornby Island, and Mt. Washington areas with a 4.4 per cent increase to $1,350,000, and then the East Kootenays with a 0.2 per cent increase to $774,500.

In a Royal LePage survey of B.C. realtors, over half reported that cottage owners remained full time in the area rather than moving back to urban settings after the pandemic. This trend has caused a shortage in supply, keeping prices relatively high. But Royal LePage expects B.C. cottage prices to drop by two per cent in 2023.

“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 at 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.”

What’s happening with housing in Alberta?

In 2022, the aggregate price of a waterfront property in Alberta decreased by five per cent to $641,900, compared to 2021. Wabamun Lake was the most expensive area at $820,200, a 7.7 per cent decrease from 2021; Pigeon Lake at $674,500, a 0.7 per cent decrease; and then Lac St. Anne at $534,700, a 10.9 per cent decrease.

Alberta is experiencing a lack of turnover in its cottage markets, keeping properties in demand and prices high. That’s why, despite the decrease in 2022’s waterfront prices, Alberta is the only province in Canada forecasted to see a price increase of 0.5 per cent in 2023.

The market in the Prairies

In 2022, the aggregate price of a waterfront property in Saskatchewan and Manitoba increased by six per cent to $271,300, compared to 2021. North Central Saskatchewan topped the list with a 20.9 per cent increase to $688,000, followed by Lac du Bonnet in Manitoba with a 10 per cent increase to $550,000, and then Interlake, Man. With a 0.4 per cent decrease to $450,000.

“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 of Royal LePage Icon Realty in Prince Albert, Sask.

Despite a stable market, the aggregate price of a recreational property in the Prairies is forecasted to drop by three per cent in 2023.

The market in Atlantic Canada

In 2022, the aggregate price of a waterfront property in Nova Scotia, Newfoundland, New Brunswick, and Prince Edward Island increased by 17.2 per cent to $279,900, compared to 2021. Despite an 18.4 per cent decrease, Shediac, N.B., was the most expensive region in 2022 at $464,500, followed by South Shore, N.S., with a 22.4 per cent increase to $450,000, and then Cape Breton, N.S., with a 22.1 per cent increase to $427,500.

Nearly half of the respondents in a Royal LePage survey of Atlantic Canada realtors reported a decrease in demand this year compared to last year. As a result, Royal LePage forecasted that the aggregate price of a recreational property in Atlantic Canada will drop by three per cent in 2023.

“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 at Royal LePage Atlantic in South Shore, NS. “As we enter the spring market, I expect activity to pick up but prices to stay stable as supply and demand remain relatively balanced.”

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How will climate change impact your property? New real estate tool shows you

Photo by Shutterstock/2M media

Climate change is a reality that is overwhelming to tackle. But two tech companies aren’t shying away from the issue. Instead, they’ve created a tool that allows real estate buyers to see how the climate is expected to shift around their prospective property.

Montreal-based Local Logic has partnered with San Fransico-based ClimateCheck to bring Canadian buyers a climate risk assessment.

“Climate change is transforming the real estate landscape, introducing new and costly levels of physical risk to property,” said Vincent-Charles Hodder, co-founder and CEO of Local Logic, in a statement. “Home seekers can now assess an area’s risk for climate-related disasters and, using our suite of location insights, make more informed decisions about where to buy and how to mitigate risks from climate change.”

The new tool is currently being used by Sotheby’s International Realty Canada, Royal LePage, and REW.ca for listings across Canada.

“It’s looking at 2050, and it’s saying within the next 30 years, what is the forecasted climate impact on this area for heat and for storms,” said Pierre Calzadilla, Local Logic’s EVP of growth.

The tool covers a five-kilometre radius around the property and will tell you how many hot days to expect in 2050, what the average temperature of those days will be, how many severe storms will occur, and how much precipitation to expect.

For example, a home for sale in North Vancouver currently experiences seven hot days per year at an average of 27 degrees Celsius. That number’s expected to increase to 24 days in 2050, averaging 31 degrees Celsius. As for storms, the area’s expected to see a jump from 12 significant two-day storms to 14, with the precipitation per storm rising from 885 mm to 1020 mm.

As the climate changes, Calzadilla pointed out that many insurance companies are pulling back from high-risk areas, such as floodplains, and buyers aren’t always aware. “It just helps people understand that this is a real thing. People have to take into account that there’s nowhere to hide with climate change.”

Local Logic and ClimateCheck have been providing free climate risk assessments in the U.S. for several years, presenting data on heat, storm, fire, drought, and flood. Calzadilla said that the two companies are currently working on introducing flood-risk data in Canada.

On top of climate risk assessments, Local Logic also provides information about a property’s surrounding area. For example, suppose a young family was looking to buy a new home. Local Logic could tell them the average noise levels in the neighbourhood, how close schools are, accessibility to transit, and the ease of getting groceries.

The company’s ability to provide location intelligence makes it the perfect partner for ClimateCheck, which was founded to bring climate change information to real estate owners and buyers.

“Combining ClimateCheck’s granular climate risk data with Local Logic’s location intelligence insights helps real estate brokers, investors, and consumers alike understand how intensifying hazards like flood and fire might affect their properties in the future,” said Cal Inman, CEO of ClimateCheck, in a statement. “This knowledge empowers them to make smarter decisions about where they buy property and how they maintain or improve property to guard against mounting risks.”

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Property prices in popular ski areas are expected to drop in 2023, says Royal LePage

Photo by Shutterstock/Eric Kolly

Royal LePage released its Winter Recreational Property Report, and they’re predicting a decrease in the median price of Canada’s ski properties in 2023.

According to the real estate company, the median price of a single-family detached home in Canada’s recreational ski regions will decrease by 3 per cent over the next 12 months to $1,011,451. Rising interest rates are expected to reign in prices, although, they did little to affect things in 2022.

Royal LePage said the median price of a single-family detached home in Canada’s ski regions in 2022 increased by 15.1 per cent to $1,042,700.

“While the rapid rise in interest rates, which began in March of this year, has caused many would-be buyers in the residential market to move to the sidelines, some recreational property purchasers—most notably in higher-end markets—have demonstrated a greater tolerance to increasing monthly mortgage costs,” said Pauline Aunger, broker of record at Royal LePage Advantage Real Estate, in a statement.

Ski chalets were particularly popular among Americans who attempted to purchase recreational properties before the Canadian government implemented its two-year ban on foreign buyers, which started January 1, 2023 (despite vacation homes being exempt from the ban). According to a Royal LePage survey, 75 per cent of Americans who currently own a recreational property in Canada said that they made their purchase after the two-year foreign buyer ban was announced. Of those Americans who don’t own a recreational property in Canada, 67 per cent said the current strength of the U.S. dollar has made them more inclined to buy a home north of the border.

Despite attention from American buyers, and the increase in prices, all ski regions surveyed by Royal LePage saw a double-digit drop in sales volume.“For most Canadians, owning a recreational property is a nice-to-have lifestyle option,” Aunger said. “In the current economic environment, it is not surprising that sales have declined.”

But Aunger added that demand for recreational properties remains healthy; it’s just moderated itself compared to the sales volume seen during the pandemic boom.

B.C.’s Big White ski area, near Kelowna, saw the biggest jump in median price for a single-family detached home in 2022 with a 45.5 per cent increase to $1,600,000. Although, sales in the area dropped by 33 per cent.

“Transactions at the upper end of the market are largely responsible for the dramatic price increases in the single-family segment, as Big White continues to attract luxury recreational property buyers. However, demand has slowed over the last year as buyers adjust to the rising interest rate environment and sellers feel less urgency to list their properties,” said Andrew Braff, a sales representative at Royal LePage Kelowna, in a statement. “As activity moderates, we are seeing fewer multiple-offer scenarios compared to last year.”

In Whistler, the median price rose by 14.8 per cent to $3,648,200, with a 35 per cent drop in total sales.

In Canmore, Alta., the median price jumped 23.6 per cent to $1,588,900, but the area saw a 41 per cent drop in sales volume, trending back towards historic norms, said Brad Hawker, an associate broker at Royal LePage Solutions, in a statement.

In Ontario’s southern Georgian Bay area, which includes Collingwood, the median price increased by 11.3 per cent to $890,000, but saw a 27 per cent drop in total sales. Southern Georgian Bay is one of the few areas Royal LePage expects prices to go up in 2023, they’re predicting a five per cent increase in the median price.

Finally, in Quebec’s Mont Tremblant, the median price increased by 23.5 per cent to $500,000, with a 38.1 per cent decrease in sales. While the median price of a condo in the area increased by 44.4 per cent to $475,000, but the area saw a 47.8 per cent decrease in sales.

“The current slowdown should help shift the Tremblant housing market back to a more normal sales cycle,” said Paul Dalbec, a chartered real estate broker with Mont-Tremblant Real Estate, in a statement. “I expect that in the coming months, slope-side luxury condos worth between $700,000 and $1 million, and single-family residences valued from $400,000 to $600,000 will be most affected by the price correction, as those properties appreciated much more during the pandemic.”

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East Coast expected to see biggest cottage price hike in Canada in 2022

Photo by Shutterstock/Dolores M. Harvey

Atlantic Canada’s cottage market is expected to remain hot in 2022. Tied with Quebec’s 15 per cent increase, the East Coast is predicted to have the highest recreational property price gain in Canada this year. That includes waterfront cottages, chalets, cabins, and even recreational land used for camper trailers. According to Royal LePage’s Recreational Property report, the average price in Atlantic Canada will rise from $237,000 to $272,550 in 2022.

Following the rest of the country’s cottage markets, the price of an East Coast cottage has been on the rise since the start of the pandemic. Closed borders compelled Canadians to look for domestic retreats, and since many cottage owners have held onto their properties throughout COVID, it has kept inventory low, driving up prices with multiple offers.

Nova Scotia’s market, in particular, has piqued the interest of buyers. Thanks to the province’s affordable prices, Nova Scotia has become a compelling location for Ontario and Quebec prospective owners who have been priced out of their local markets.

“It’s about 50/50,” says Corey Huskilson, a real estate agent in South Shore, N.S. “Maybe even more Nova Scotians, actually. But with regular residential homes, we’re seeing a lot more out-of-province buyers.”

Further out on the Atlantic coast, Newfoundland’s waterfront cottage market has also experienced a jump. Combined with Nova Scotia’s market, the two provinces saw a 39.3 per cent increase in the price of a waterfront cottage between 2020 and 2021, rising from $239,000 to $333,000.

Year-over-year increase of recreational property price in Nova Scotia in 2021

Nova Scotia’s waterfront properties were in demand in 2021. The Annapolis Valley, which is located between two mountain ranges on the western side of the province, near the Bay of Fundy, led the way with a 70 per cent increase. The average price of a cottage rose from $210,000 to $357,000.

Cape Breton, on Nova Scotia’s eastern coast, followed with a 31.6 per cent increase from $266,000 to $333,000. Finally, the South Shore, near Halifax, saw a 16.8 per cent price increase, jumping from $315,000 to $368,000.

Who are the buyers?

As Huskilson said, Nova Scotia’s cottage market has seen interest from both Ontario and Quebec, but that segment will likely taper off in 2022 due to the government introducing a new property tax and a deed transfer tax aimed at out-of-province buyers.

“People who have not just purchased but inherited properties are now going to be paying more than double their yearly expenses for taxes. It’s a big hit. You can’t just sit on it like you normally would. It’s a full-on liability for people,” Huskilson says.

Aside from out-of-province buyers, there’s a lot of interest from young Nova Scotian families, Huskilson says. This segment could continue to grow as remote work becomes more established and out-of-province buyers are dissuaded by the new taxes.

What’s selling and what isn’t?

Waterfront properties are a key commodity right now, both oceanfront and lakefront. Oceanfront properties are more popular as four-season homes or cottages, while lakefront properties are in demand among those looking to take advantage of recreational boating.

“They’re all moving,” Huskilson says. “Everything from three-season, non-insulated, small little camps to high-end cottages.”

Future predictions for Nova Scotia real estate

Even with the new taxes and the reopening of international borders, Huskilson expects 2022 to be a strong year for cottages.

“I think it will hit pretty similar till at least the fall,” he says. “I don’t see a whole lot of change. I see a lot more [cottages] coming on the market, but more buyers are coming out of the woodwork. So, I don’t think it’s going to switch to a buyers’ market by any means.”

Year-over-year increase of recreational property price in Newfoundland in 2021

According to the Royal LePage report, most of Newfoundland’s cottage market is around the island in the province’s Central Region. Between 2020 and 2021, the area’s waterfront cottages saw a 22.1 per cent price increase, raising the average cost from $131,000 to $160,000.

Who are the buyers?

Unlike Nova Scotia, Newfoundland hasn’t had the same attention from out-of-province buyers. Instead, cottages are being snapped up by locals in their 30s or older with secure incomes, says Glenn Larkin, a realtor in Newfoundland’s Avalon Peninsula. Since some sections of the island lack cell service, remote work hasn’t factored into driving sales, but the inability to travel has played a major role.

“People who have a good bit of equity in their house, now they’re saying, ‘Listen, we can’t travel to Florida, let’s let’s buy a summer cottage,’” Larkin says. During the pandemic, he even encountered some buyers who’d sold their Florida properties in favour of a local cottage.

Larkin isn’t convinced that the reopening of international borders in recent months has swayed too many Newfoundland buyers back to sunnier waters as the cottage market remains strong.

What’s selling and what isn’t

It’s not oceanfront that’s attracting cottagers in Newfoundland, it’s pond frontage. Rather than the large chains of lakes found in central Canada, the province features small ponds. Anything within a two-hour drive from St. John’s on a pond is popular, Larkin says.

“Those have sold very well, and have multiple offers, and are not on the market very long.”

Future predictions for Newfoundland real estate

Same as the rest of Canada, Newfoundland is experiencing a lack of inventory, especially in cottages, Larkin says. Compared to 2021, he feels there’s even less inventory on the market, but sales volume remains just as high.

Despite these trends, Larkin says he believes 2022 is going to be a changing of the seasons in terms of Newfoundland’s cottage real estate.

“Interest rates are getting hit. Gas is high. So, the problem you’re gonna run into is: I’m not going to buy a summer cottage that’s two hours away because the gas is too expensive to go to it,” he says. “It will have an effect. The farther [the cottage is] from St. John’s, the harder it’ll be to sell.”

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A new demographic could be driving up recreational property prices in Alberta

Photo by Pixx Imaging/Shutterstock

Same as the rest of the country, Alberta isn’t exempt from Canada’s rising recreational property prices, says Royal LePage’s Recreational Property report. Alberta’s average price will continue to go up in 2022 at a nine per cent clip to an average of $1,170,660. Average prices in Alberta had already soared in 2021 by 31.5 per cent to $1,074,000.

Waterfront property isn’t as widely available in the western provinces. Instead, its ski chalets and mountain retreats that are driving up the price. “All properties have been selling extremely well,” says Brad Hawker, the associate broker with Royal LePage Solutions in Canmore, Alta. “It’s not limited to one segment or another.”

Year-over-year increase of recreational property price in Alberta in 2021

When it comes to Alberta, most of the province’s recreational property market is clustered around Edmonton, at least in terms of waterfront properties. Lac Ste. Anne saw the largest recreational property price increase, rising 44.2 per cent from $416,000 to $600,000; Pigeon Lake rose 20.4 per cent from $565,000 to $680,000; and Wabamun Lake rose 16.7 per cent from $762,000 to $889,000. In terms of non-waterfront properties, Canmore had the biggest jump, rising 32.7 per cent from $1,025,000 to $1,360,000.

Who are the buyers?

Canmore broker Brad Hawker has been selling properties in the Canmore area for 30 years. Twenty-eight of those years he’s sold to the same demographic: young people looking for a welcoming community where they can raise a family. Most often, they’re from Western Canada and are also looking for a recreational location. But in the last two years, he’s started to get a lot more interest from Ontario and Quebec retirees.

“A lot of their kids have relocated to Alberta. So, when they look to retire, where do they want to be? Close to their kids and grandkids. Edmonton and Calgary would be nice, but they also want to be active.” he says. “They want to come out to the mountains and ski and hike and mountain bike. That’s been a big part of our market.”

Similar to the rest of the country, Hawker adds that Canmore has also seen its share of millennial families who now work remotely and are looking to get away from the city.

Whereas Alberta’s lake district tends to be popular with Edmonton residents due to its proximity. “Since pandemic restrictions have limited Canadians’ ability to travel abroad, that demand has skyrocketed. Line-ups at boat launches and campgrounds are longer than ever,” says Tom Shearer, a Royal LePage broker with Noralta Real Estate, in the company’s report.

What’s selling and what isn’t?

The short answer is that everything’s selling. This includes waterfront cottages around Alberta’s lakes, as well as mountain retreats in Canmore. However, Canmore tends to be a unique situation. Similar to the rest of Canada, the area is seeing low inventory rates, but this is exacerbated by Canmore’s geography.

“We have very limited inventory, very limited construction, and very limited approval for new projects,” Hawker says, “so, we’re not even getting any relief on the supply side.”

Canmore is located in a valley between two mountain ranges. Both slopes of the mountain ranges have strict no-building policies, the area being used as a wildlife corridor to let animals pass unhindered. To the west, the town has Banff National Park, and to the east is Bow Valley Provincial Park.

“Getting a new land area approved for development takes an extremely long time because of the environmental side of things,” Hawker says. He predicts that within the next 15 years, all of Canmore’s available land will be developed.

Future predictions for Alberta real estate

Both waterfront property and chalet prices are expected to remain high in 2022. “Strong demand for waterfront properties continues to put upward pressure on prices in the region, and I don’t expect there will be any relief this spring,” Shearer said.

The same can be said for Canmore. In 2021, the town saw a record year in real estate sales, but despite the soaring prices, Hawker says he doesn’t expect them to keep rising at the same rate. In fact, he’s already seeing some levelling off. “You can’t keep having record year after record year of sales volume.” Already the first quarter of 2022 has been slower than 2021. Keep in mind, that 2022 sales volume is still 64 per cent higher than the first quarters of the four years preceding the pandemic.

As for what could be causing the levelling off, Hawker points to rising interest rates on mortgages. He expects the rates to start easing back to pre-pandemic levels. And if the pandemic causes a recession, people might not be able to afford their mortgages, making more properties available.

Regardless, Hawker expects that the lack of available land in Canmore will keep supply low, meaning that for the time being, demand will stay high, keeping prices competitive.

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‘You’re not buying a $4 million property unless you have a lot of dough.’ B.C. recreational property prices skyrocket

Photo by Shutterstock/Protasov AN

It’s no secret—similar to the rest of the country, Western Canada’s cottage prices are on the rise. According to Royal LePage’s Recreational Property report.  B.C. is expected to see the average price of a cottage jump in 2022—a 12 per cent increase to a $1,029,280 average. This trend has continued from 2020, as the average price of a recreational property in B.C. increased by 22.4 per cent to $919,000 in 2021.

The closure of international borders during the pandemic drove cottage prices up as many Canadians sought domestic retreats. But even with international borders reopening, the prices continue to rise.

Unlike Ontario and Quebec, B.C. and Alberta don’t have well-defined “cottage countries.” Any waterfront properties that the provinces have are on the ocean or on a few specific lakes.

Since the areas where you can buy a recreational property in B.C. and Alberta are limited compared to central Canada, the surge in demand during the pandemic has kept inventory low and prices high.

Year-over-year increase of recreational property price in B.C. in 2021

All of British Columbia’s landlocked recreational properties saw an average price increase in 2021. Invermere, near the Alberta border, saw the largest change with an 88.1 per cent increase from $354,000 to $666,000. This was followed by the Comox Valley area, which saw a 28.7 per cent increase from $610,000 to $785,000. And then Pemberton, 25 minutes north of Whistler, increased 24.7 per cent from $1,000,000 to $1,247,000.

In terms of waterfront properties, Central Okanagan saw the biggest jump, with a 20.2 per cent increase from $1,955,000 to $2,350,000.

Who are the buyers?

The people buying waterfront recreational properties in B.C. right now are wealthy families, says Francis Braam, a Royal LePage broker in Kelowna. “Nobody else can afford it. You’re not buying a $4 million property to use on the weekend unless you have a lot of dough.” The same holds true for ski chalets, Braam says.

Interestingly, what Braam isn’t seeing lately is foreign buyers. He points to Big White Ski Resort in Kelowna as an example. “At Big White, we used to have a lot of foreigners who bought property—Europeans, Australians, Americans, they’re gone. It’s 100 per cent a Canadian market now,” he says. “They couldn’t get in for the last two years. Will they ever return? I don’t know. It’ll take time.”

What’s selling and what isn’t?

The average price of a recreational property in B.C. tends to balloon thanks to a couple exclusive areas, namely Whistler and Okanagan Lake. In 2021, the average price of a recreational property in Whistler increased by 14 per cent to $2,738,000. Whistler’s considered one of the best ski resorts in Canada, making chalets close to the hill extremely desirable.

The same applies to Okanagan Lake, which stretches 135 kilometres in length and is home to around 400,000 people. Although, many of the properties on Okanagan Lake are permanent homes, not just cottages, Braam notes. Since Royal Lepage isn’t able to discern what the property’s being used for, these waterfront homes are included in the company’s report, driving up the aggregate price of recreational properties in the area.

Another peculiarity with the report is that it recorded a drop in price for North Okanagan waterfront properties. Out of every cottage market in Canada, this is the only one to see a decrease in price, dropping 3.8 per cent from $1,403,000 in 2020 to $1,350,000 in 2021.

“That would be an anomaly,” Braam says. “If you took a house that sold 18 months ago on the water and then put it on the market today, it’d be worth more money.” What likely happened is that the more affordable properties on the lake sold in the last 18 months or in the last quarter, skewing the aggregate price, he says. “There’s no way the price of that product has gone down.”

Future predictions for B.C. real estate

In the real estate market around Kelowna, Braam says he’s already seeing prices settle. “I don’t think prices are going to drop, but we’re not going to maintain the same pace of two to three per cent per month the way it’s been going up for the last 18 months.”

Thanks to the province’s limited supply of available cottages, Braam doesn’t expect the market to crash. Even now, he only has a month’s worth of available listings. Supply in B.C. is likely to stay low. When you look at the province’s geography, Braam says development is restricted by lakes and mountains. Plus, B.C. has an agricultural land reserve, where large swaths of land are devoted to agriculture.

This means that the province is often restricted to tearing down old homes and building new ones, which is more expensive than developing on available land, Braam says.

“Thirty years ago, we could build a house in 90 days. That same house takes nine months to build now or a year,” he says. “It’s more complicated to build, the consumer has demanded more, they’re not as simple houses to build, and the building code has also made it much more difficult.”

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

Illustrations by Taylor Kristan

Real estate company Royal LePage has released its 2022 Recreational Property report. The company’s prediction: Cottage prices will continue to increase at a dizzying pace.

According to the report, the average price of a recreational property in Canada, which includes secondary properties, such as cottages, chalets, cabins, and waterfront properties, will increase by 13 per cent in 2022 to $640,710.

“The factors challenging Canada’s residential real estate market—chronic low supply and growing demand—are amplified in the recreational property segment,” said Phil Soper, president and CEO of Royal LePage, in the report. “Demand for recreational properties continues to vastly outstrip inventory in many cottage regions across the country. Waterfront and mountain-top locations near cities are limited by nature, even in a vast land like Canada, forcing buyers into multiple-offer scenarios.”

Ontario led the charge in 2021, recording the country’s highest recreational property price appreciation with a 34.6 per cent increase from 2020. The average price for an Ontario recreational property in 2021 was $653,000. Royal LePage predicts that number will jump to $737,890—a 13 per cent increase—in 2022.

A cottage on the water will cost you even more. In 2021, recreational waterfront properties in Ontario sold for an average of $888,000, second only to British Columbia, which saw prices soar above $2 million.

YOY increase of waterfront property price in Ontario

All of Ontario’s cottage regions saw a price hike in 2021, but some more than others. When it came to waterfront properties, the Land O’ Lakes, an hour north of Kingston, saw the biggest jump with a 60.7 per cent increase, the average price rising from $450,000 in 2020 to $723,000 in 2021. This was followed by Orillia, with a 51 per cent increase from $788,000 in 2020 to $1,190,000 in 2021–making it the most expensive cottage market in Ontario.

Even with international travel expected to pick up this summer, cottage demand continues to be strong as buyers look for a vacation property to escape the city. “It’s early days, but we are seeing absolutely zero impact, given the ability to travel, on the market so far,” says Susan Benson, a real estate broker in Muskoka.

Who are the buyers?

Millennials are out in full force, she says, in both the residential and cottage markets. With the ability to work remotely, many are looking for options outside of the city. Baby boomers are also having a significant impact on cottage real estate.

“The thought people had was that baby boomers were going to quietly downsize and head off into the sunset. Well, that’s not happening,” Benson says. “They are typically approaching, or into retirement and…they are cashing out of wherever they are, coming to this market, and buying their dream home, which may very well be on the water.”

According to the Royal LePage report, 36 per cent of Ontario’s boomers are considering purchasing a new residence within the next five years. Fifty-six per cent of that group is considering buying in a cottage region. That means that over the next five years, Ontario could see an additional 729,000 people enter the cottage real estate market.

Low inventory continues to drive up prices

A second factor driving up cottage prices is the low inventory rates. Out of the 151 real estate professionals surveyed in the Royal LePage report, 84 per cent said that their region has fewer recreational properties for sale this year than last year.

According to Benson, as of the end of March, there were 95 waterfront properties available in the Lakelands Real Estate Board North area, which includes Algonquin Highlands, Bracebridge, Dysart et al, Georgian Bay Township, Gravenhurst, Highlands East, Huntsville, Lake of Bays, Minden Hills, Muskoka Lakes, Parry Sound, Severn, and The Archipelago. That inventory is down 39.9 per cent compared to the same time last year, and down 73.9 per cent compared to March 2020.

Cottage owners have held onto their properties during the pandemic rather than selling. This has caused multi-offer scenarios, with the selling price often eclipsing the asking price. According to the majority of real estate agents surveyed in the Royal LePage report, 75 per cent of recreational properties in Ontario are selling above asking price.

What isn’t selling and why

As long as you implement the right strategy, there are few cottages that won’t sell right now, Benson says. “We are seeing some properties not sell, but it’s where the price they’ve selected is misaligned with what they’re offering.”

Not all Ontario cottage regions saw major price jumps in 2021. Haliburton County recorded the smallest change with the average waterfront price rising 14 per cent from $700,000 in 2020 to $801,000 in 2021. Anthony vanLieshout, the broker of record for Royal LePage Lakes of Haliburton, says you should take this number with a grain of salt.

“If you have one or two high-end, big sales, all of a sudden those numbers become a portion,” he says. “I’m not of the mindset that Haliburton wouldn’t have seen similar appreciation to any other cottage area. It’s exceedingly robust.”

vanLieshout has, however, started to notice some hesitation on high-end properties, particularly the ones listed for over $1.5 million.

“Low inventory, that’ll probably keep the prices where they are, but interest rates may be going up and gas prices…Now it’s $100 to go to the cottage back and forth,” he says. “I think we’re going to see a stabilization. It’s maybe already started.”