In Ontario's cottage country, "give six feet" distancing stickers have long been scraped off the floors of general stores and main street businesses from Collingwood to Haliburton, but the hangover from the pandemic-incited cottage mania was still being felt across the region's real estate markets in the beginning of 2024.
"Things are a little different depending on which cottage country region you’re looking at, but overall, I would say the market was down slightly this year for waterfront properties, maybe by 10%," President of OnePoint Association of Realtors and former-President of the Lakelands Association of Realtors Bonnie Looby tells STOREYS. "I think that just has to do with the fact that everything has been on hold for the last three years."
But like all hangovers, cottage country's has given way to a baseline of stability and normalcy. And in Looby's view, there's a new baseline. "Prices have all but levelled out," she says. "There was a slight downturn this year, bringing things down a bit, but I think we’ve hit where we're going to settle, and I'm hoping that will get across to people who are looking to buy and have been waiting for a huge price drop, as well as sellers who have been waiting for things to pick up."
With prices "levelled out," interest rates trending down, and the busy spring cottage market nearing, how might things shape up in 2025?
Bonnie Looby, President of OnePoint Association of Realtors
Sales On The Rise...
Looby, who frequently engages with realtors from across cottage markets, has observed that some regions, including the Muskoka Lakes, Parry Sound, and Haliburton have been seeing more and more sales in recent months. "Until November, I would have said 2024 was going to be a worse year than 2023. But I'd say sales have jumped 30% since then," says Looby.
Similarly, Maryrose Coleman, a Muskoka-based realtor and Senior Vice President of Sales at Sotheby's International Realty Canada, saw things start to pick up in June after a slow spring, but says fall was when things got busy. "This fall, the buyers really started to come back," Coleman tells STOREYS. "Where before we were seeing a lot of buyer reluctance and people just waiting to see if prices or interest rates were going to come down further, we started to see people actually engaging in the market."
Coleman largely attributes this rise in activity to improved buyer sentiment as rates have come down, but also an increase in product, and better product at that. Just last week, Coleman closed a deal on a cottage that didn't even make it to MLS. The property was a desirable upper-Lake Joe cottage that quickly sold after garnering avid interest from those it was privately marketed to. "We've seen that kind of thing happening, which is making me very optimistic," says Coleman. "Unless something dramatic happens with the situation around the world politically or economically, I'm thinking we're going to have a really strong spring."
...Prices To Follow Suit
Of course, when sales increase, prices follow suit. Though Coleman says prices remain stable at the moment, she foresees increases come 2025, especially for waterfront properties.
"The thing is, there aren’t a lot of waterfront properties," she says. "It's just a really finite market, its not like the condo market in Toronto where there’s thousands to choose from, especially if someone’s really focused on a specific lake, it could take years for them to get in there." Those waterfront properties will likely see price increases first, Coleman adds.
Maryrose Coleman, Senior Vice President of Sales at Sotheby's International Realty Canada
In the GTA and Toronto, we've seen a similar occurance, where overall sales have been on the rise this fall, but particularly for desirable single-family homes in popular neighbourhoods — the city version of having somewhere to anchor your water trampoline.
As cottage country's largest customer-base, Toronto also serves as an indicator for what is to come up north. Another realtor based outside of Huntsville, Jay Richardson, tells STOREYS that positive economic indictors driving sales in the city could soon been reflected in cottage country. "What happens in Toronto is a window into what's going to happen in Muskoka in the months to come," says Richardson. "They’re our primary market, Toronto and GTA buyers, so what effects them ultimately effects the waterfront market."
Richardson also sees prices increasing come 2025. "As the market heats up, competition for cottage property returns and prices will inevitably rise," she says. "I’m expecting — and I've said this to buyers who are saying ‘well maybe we’ll wait till early summer’ — I say beware, because prices, in my opinion, are going to stabilize and head up."
Inventory Could Balance Prices
Regardless of economic conditions and demand, cottage inventory will play a large role in determining how high and how fast prices rise, especially on those more desirable listings.
Richardson feels it's too early to tell how much inventory there will be in early-2025, as we're in the midst of the winter season, where properties that didn't sell are off the market, and those that are thinking of selling are waiting to see what market conditions look like come spring.
But based on the current economic environment and improved buyer sentiment, she's hopeful. "Will there be more inventory? I sure hope so, I think so, I anticipate more inventory," says Richardson. "I have talked to some sellers that are thinking next year appears to be a good year for them to come on the market."
Jay Richardson, realtor with Royal LePage
Another factor that could influence listing numbers is that long-drawn-out COVID-19 hangover. Across markets, Looby has already noticed an uptick in listings as the summer season drew to a close. "Towards late-2024, the number of listings started to go up higher than they’ve been in three or four years now, and it's because people who bought during COVID are choking," says Looby. "They paid too much for the property to start with, monthly payments have gone up by almost 50%, and many of them are struggling to simply break even."
And when the spring market picks back up in 2025, there could be another wave of COVID buyers looking to cut their losses.
In some townships, those "choked" cottage owner's listings could be joined by their cousins, the cottage Airbnb aficionados who purchased their cottages under the impression that rental revenue would help cover ownership costs. Now, after Muskoka Lakes and Haliburton became the latest major townships to introduce short-term rental regulating by-laws, Coleman says people are selling.
For some, it's a matter of money, and others, a matter of annoyance over having to register the rental or meet a number of requirements that weren't there previously. "There will be people who decide in the springtime that they just don't want to deal with the regulation change," says Coleman. "They bought it as an investment, they’ve been doing short-term rentals, now the restrictions are going to make it more difficult for them to generate the kind of revenue they were generating before."
The regulations vary across cottage country, but now, almost all townships have restrictions of some kind in their by-laws. Looby tells us regulations can range from requiring rental owners pay for a licence to limiting the number of weeks you can legally rent to five weeks per year in some places to requiring that owners be able to arrive at to their property within 30 minutes of a complaint.
Who's Buying?
With the cottage market positioned for a robust spring market, who will be nabbing their slice of cottage country?
In Toronto and across the GTA, first-time homebuyers who have been patiently waiting to break into the market are expected to drive demand in 2025, but cottages — often being secondary recreational properties — typically aren't on the radars of young, equity-poor first-time buyers.
While the cottage market can attract a bit of a mixed-bag, buyers are typically older with more equity to leverage, or younger well-established families.
For Richardson, successful Gen Xers are one group she sees driving cottage demand in 2025. "They've weathered that high-rate environment, they’ve maintained their strong incomes, they have young families, and they view cottage ownership as both a lifestyle and an investment decision," she says.
Coleman has also seen activity from Gen Xers. In one case, a couple was looking for a family cottage for them and their adult children and expected grandchildren. "We've been looking for a while, but he's adamant that he needs a cottage next year because they've been looking for a couple of years now and haven't found the right one," Coleman says. "'This is the year, we’re ready to do it,' they said. '2025, we want to be in a cottage for the summer.'"
But Coleman says she expects a wide range of buyers to return to the market, even first-time buyers. "I have one couple that are looking to purchase a cottage as their first primary residence, and then on the other end of the spectrum are more established families," she says. "I've seen Gen Xers as well, but not just that."
Another type of buyer Richardson anticipates will drive market demand are near-retirees in search of future retirement properties while prices are more favourable. "Many in that group have substantial savings and home equity to leverage," she explains. "As their Toronto market homes have good rates, it gives them the ability to move up to recreational properties and early retirement homes."
