Following years of increased prices and wild competition, a new real estate report is suggesting a price drop of approximately 4.5 percent in the national cottage and recreational market with the largest drop in Ontario and Quebec at 5 percent and 8 percent.
According to Royal LePage, the aggregate price of a single-family home in Canada’s recreational regions is forecast to decrease 4.5 per cent in 2023 to $592,005, compared to 2022.
“After two years of relentless year-round competition, Canada’s recreational property markets have slowed and returned to traditional seasonal sales patterns,” said Phil Soper, president and CEO, Royal LePage. “While interest rate hikes have less of an impact on the recreational market than homes in urban settings, because families typically put more money down and borrow less, general consumer inflation combined with a severe lack of inventory has dampened sales activity.”
Don’t pack up those canoes and cottage bags anytime soon though, the report also suggests that despite a sizeable drop in price, the national price would still be pegged at about 32 per cent above 2020 levels.
Royal LePage also did a survey of real estate pros in vacation property areas, with the majority reporting less inventory heading into this season with about the same drop seen in demand compared this time last year.
“Recreational homebuyers tend to purchase for leisure and life-enriching purposes. Call it a want versus a need,” adds Soper. “Unlike many city buyers who may need to acquire a principal residence quickly, secondary home purchasers often have the benefit of time to find the right property for their specific needs.”
Royal LePage states that the low inventory might be a challenge for buyers “looking for that special cabin or lakeside cottage,” but the coinciding contraction in demand has resulted in a return to more normal market conditions.
With a possible end to interest rate hikes, and inflation still tracking at above 5 percent, it is unclear what will happen in the spring market, but many suggest pent-up demand could send prices higher again at least locally. Whether or not that translates to cottage country remains to be seen.
Other reports have suggested in Ontario cottage country, prices could rise once again this year, depending on more specific locations. For instance, Muskoka is always the most desirable, other areas around, for example, Bancroft and Parry Sound, which saw significant run-up since the pandemic, could see more substantial price corrections, especially if the whole work-from-home thing fizzles out.