Pretty predictably, interest rate hikes put a damper on Canadian real estate this summer. But in Ontario’s cottage country, there were unmistakable signs of life.

According to new figures from the Canadian Real Estate Association (CREA), 417 non-waterfront properties changed hands across the Lakelands region in August, marking an increase of 16.5% from the year prior.

Other metrics provided by CREA, however, make it clear that cottage country real estate has indeed lost some steam in the face of higher interest rates. Non-waterfront sales ended the summer 26.7% below the five-year average and 26.1% below the 10-year average for the month of August. Year-to-date sales — 3,100 units — were also down 8.6% when compared to the same period in 2022.

In the Lakelands region’s waterfront segment, sales edged up but to a lesser degree, with only 142 transactions recorded last month. That figure is up only 2.2% compared to the same time in 2022, and is 35.9% below the five-year average and 39.1% below the 10-year average for the month of August. Year-to-date, 798 sales were recorded, and that figure marks a decrease of 9.2% from the same period in 2022.

Speaking specifically to the Lakelands North region — which includes the sought-after district of Muskoka — Ross Halloran, Broker and Senior VP of Sales for Halloran & Associates, Sotheby’s International Realty Canada, says it’s a bit of a mixed bag.

“Despite the correction trend continuing in the month of August 2023, a few key statistical metrics are encouraging,” notes Halloran.

He highlights that 199 sales were recorded in August, representing a year-over-year rise of 7.6%.

At the same time, buyers had options. Active listings edged up to 1,135 (up 43.5% from August 2022) and months of inventory climbed to 5.7 (up from 4.3 in August 2022). Though the sale-to-list price ratio, at 96.9%, saw little year-over-year change, Halloran notes it has come down from the “dizzying heights” recorded in August 2021.

While the average selling price edged down 2.5% year-over-year to $975,076, the median price increased 8% to $777,500, and dollar volume grew 4.9% to $194,040,038. Median days on market also saw a rise, coming in at 29 days last month (up from 21 days in August 2022).

These are all signs that Lakelands North is “moving toward a more balanced market,” says Halloran.

As for those aforementioned signs of ‘continued correction’ — Halloran points to year-to-date sales. In the first eight months of the year, there were 1,199 sales recorded, but that figure has slipped 16.9% compared to the same period in 2022. As well, both the median price and dollar volume were down 3.3% and 16.5%, respectively.

Other year-to-date metrics were more encouraging, continues Halloran. New listings increased by 12.1%, active listings were up 61.8%, and the average selling price grew slightly to $1,012,383.

Zeroing in on the waterfront and non-waterfront segments of the Lakelands North region, there were certainly segment-specific nuances, but the takeaways were similar. Waterfront sales observed a 6.8% year-over-year rise, while non-waterfront sales rose 8.5%.

Overall, says Halloran, there’s still plenty of action in Ontario’s cottage country, Muskoka’s market included.

“Despite the current economic challenges of rising inflation, interest rates, and the geopolitical and climate crisis, sales are still occurring on a significant and regular basis, driven by hard-fought negotiations pitting savvy, all-cash buyers against even more desperate sellers who are trying to mitigate further losses in their property values while they brace themselves for further potential future market declines heading into 2024 — and beyond.”