Get ready for pricier summer cottages
Ontario is poised to lead the pack in cottage price appreciation across Canada in 2024, according to a forecast by real estate franchiser Royal Lepage.
Single-family recreational homes in the province are positioned for an eight per cent surge in their average price this year, outpacing the national average of five per cent, putting the average price in Ontario at $662,148, compared to the expected national average of $678,930, according to a Royal Lepage report released Wednesday.
British Columbia follows closely behind with a projected five per cent increase in prices to more than $1.1 million, while the Prairies can expect a modest growth rate of just 0.5 per cent to $286,928. The most expensive place to buy a single-family recreational home is still in Alberta, where prices are expected to rise four per cent to almost $1.3 million.
In recent years, an influx of properties has hit cottage country markets. This surge was attributed to pandemic buyers who either found themselves unable to sustain their mortgage payments amid elevated interest rates or were compelled to return to full-time office work. Inflation and the cost of living has also played its part in forcing buyers to the sidelines.
Such circumstances contributed to a five per cent decline in Ontario prices during 2023 from 2022, which was the highest decline in Canada over that period.
“Inflation reared its ugly head, interest rates soared and the economic downturn that followed pushed cottage, cabin and chalet prices off those pandemic peaks, yet the fundamental demand for recreational living has not abated,” Royal Lepage chief executive Phil Soper said in the report. “We believe that this market segment will see a resurgence of activity in 2024.”
During a six-year span ending January 2024, Ontario cottage country areas had remarkable price increases, with nine of 11 areas experiencing growth exceeding 40 per cent, according to a Zoocasa.com report. Prices in Bracebridge, Parry Sound, and Kawartha Lakes surged by 64.1 per cent, 60.1 per cent and 56.8 per cent, respectively. Tiny, Ont., had the smallest increase at 29.9 per cent.
Local Exp Realty LLC real estate agent Karen Hanes said cottage buyers are making a comeback.
“Even though home sales have been lower during the winter months, there’s still a high demand and continued desire for people to own a second property in one of the most beautiful areas in Ontario,” she said in the Zoocasa report. “Early spring activity is hinting at increased demand from buyers.”
Royal Lepage’s data indicate that prices for waterfront properties experienced a year-over-year decline in 2023 of 8.2 per cent, the most substantial decline among recreational home categories, but Hanes expects these types of properties will be the most sought-after this year.
“Waterfront properties have a high demand from city dwellers and that demand continuously pushes prices up over time, regardless of market fluctuations,” Hanes said. “Waterfront cottage values are bound to rise due to them being quite limited in a sense. With few being built, what’s available is all there is, making them a solid investment for a family.”
Muskoka was one of the two areas where waterfront property prices increased in Ontario year over year in 2023. Hanes said the luxury real estate market, particularly in areas such as Muskoka, has been less affected by changes in interest rates and the economy compared to the broader real estate market.
“Interest rates shape affordability for many waterfront and non-waterfront properties, but for luxury real estate, the landscape is quite different and more resilient,” she said. “The foreign homebuyer ban doesn’t apply to Muskoka, so our global marketing services allow us to expose luxury properties to international buyers, which also helps keep the market strong.”