Waterfront cottage prices took a hit last year

Interest rate hikes blamed for 8.3% drop

The price of waterfront cottages — coveted properties — fell by nearly 8.3 per cent in 2023 following interest rate hikes, according to a Royal Lepage report released Wednesday.

The median price of a single-family home located on the waterfront stood at $424,900 in Quebec vacation spots, according to a review by the brokerage firm.

Properties on the waterfront still have a strong appeal among buyers who aspire to purchase a second home, said Éric Léger, real estate broker in the Laurentians region at Royal Lepage.

“I simply think that it was consumers' budgets that made them go for something that was more affordable,” he said in an interview.

The location of transactions carried out in 2023 could also explain this drop, added Annick Fleury, broker in the Outaouais region for Royal Lepage.

She said more clients favour lakes farther from major centres to have more privacy. The price of these properties is generally lower.

“It allows a slightly lower `waterfront' budget, but that doesn't necessarily mean that the value of homes decreases along the lakes,” she said.

STABLE PRICES

Overall, the median price saw slight gains for single-family properties in major resort markets, despite rising interest rates.

The median price increased by 2.6 per cent in 2023 to $396,900.

Prices had experienced significant increases during the pandemic and they stabilized in 2023, said Véronique Boucher, broker in the Estrie region at Royal Lepage.

“The recreational market is still doing well despite the economic context, which is a little different from other years.”

However, activity slowed despite prices remaining stable, with 6,956 single-family homes sold in resort markets in 2023, a decrease of 11 per cent compared with 2022.

The three brokers said transaction times are longer than during the frenzy of the pandemic, but that situation of overbidding and haste was unusual.

In its report, Royal Lepage predicts the median price of a single-family property in recreational areas will increase by two per cent in 2024.

The firm anticipates that hopes of lower interest rates should provide a boost to resort markets.

“If interest rates fall further, demand will be even greater. Then at that point, the rivalry between buyers will again manifest itself as we have already experienced,” Fleury said.

Some owners will also think about mortgage renewal in 2025. For those who made their purchase during the pandemic for a five-year term, the renewal will be at a significantly higher rate.

Some homeowners may choose to sell their second home rather than see their budget eat into an increase in their mortgage payments.

It would not be “the majority of people, perhaps not so much in the recreational sector either, but some people will have to plan for the future,” Boucher said.

“So we will probably be lucky to have a better inventory of houses to offer to clients."