'It's firmly a buyer's market'
The Canadian cottage market, once a frenzy of bidding wars and skyrocketing prices, has cooled down, creating a prime opportunity for potential buyers.
High demand during the pandemic has subsided, according to real estate experts, leading to an increase in available properties.
"It's firmly, firmly a buyer's market," Muskoka RE/MAX broker John Fincham said in an interview with CTV News. "Buyers are firmly in the driver's seat."
In Ontario, waterfront property sales have hit a two-decade low, with only 3,400 sold by April 2024, down more than 40% from 6,199 the previous year, according to Fincham.
Several factors are contributing to this shift. The federal government's extension of its foreign homebuyers ban until 2027 has reduced the pool of potential buyers. Additionally, inflation and high interest rates have led to more properties remaining on the market, giving buyers more options and leverage.
Ray Ferris, a realtor from the north shore of Lake Erie and former president of the Ontario Real Estate Association (OREA), noted that the time it takes to sell a cottage has also increased. Pre-pandemic, cottages in his region typically sat on the market for about three months. Now, the average time has doubled to six months.
"What I'm hearing and observing is there's a lot of economic uncertainty amongst prospective buyers," Ferris said. He added that when the Bank of Canada cut its benchmark interest rate to 4.5% in July, there was a noticeable increase in cottage sales in his area.
Ferris also pointed out that some sellers are clinging to the inflated values their cottages held during the pandemic.
In Nova Scotia, the market has shifted towards functional and utility-focused homes, such as entry-level detached houses in the suburbs. This has led to a surplus of cottages and recreational properties, creating a favourable buying environment.
"Now is a great time to buy a cottage in Nova Scotia, especially if you're willing to be a bit further out from the city or you have a bit of a higher price range," Chris Melnyk, a realtor with Royal LePage Atlantic, told CTV News. "There are a ton of cottages and recreational properties on the market… and you will get a deal."
While the recent changes to the capital gains tax caused some initial anxiety among cottage owners, it had minimal impact on the market. The emotional attachment that people have to their cottages often outweighs financial considerations.
Read next: Has the capital gains tax increase sparked a wave of Canada home sales?
"Cottages are really emotional sales. And by that, I mean cottages are where families and friends go to create memories," Ferris said.
Looking ahead, Fincham expects cottage prices in Ontario to continue dropping, especially as winter approaches. However, Ferris anticipates an increase in sales by year-end.
"People don't make buying decisions while they're here in cottage country on vacation. They end up making those buying decisions into the fall," Ferris added. "Sales increase in the fall because most people who had a great vacation want to buy a cottage to call it their own.
"In the long term, prices always go up. [Buyers] now have the luxury of taking their time, doing their due diligence, doing home inspections that they weren't able to do during the craziness of the COVID real estate market."
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