“Boom in cottage country is coming1.”

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Buyers on the sidelines are feeling the threat of a decline in interest rates
are slowly returning to the market

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It's time to dust off your fishing rods. Buoyed by consumer confidence, marginalized holiday home and cabin buyers are returning to the market, albeit with demanding must-have lists.

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And while nothing has rivaled the “gold rush fever” that drove recreational property prices to “unprecedented heights” amid the pandemic, Royal LePage predicts the average price of a single-family home will rise five percent year-over-year in recreational markets across the country year to $678,930.

“Inflation has reared its ugly head, interest rates have skyrocketed and the ensuing economic downturn has driven holiday home, cottage and chalet prices from their pandemic highs, but the fundamental demand for leisure living has not abated,” says Phil Soper, president and CEO of Royal LePage.

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In 2023, the weighted average price of a single-family home in Canadian recreational markets fell a modest percent to $646,600 compared to the previous year. This followed an 11.7 percent year-on-year decline in 2022.

Broken down by housing type, the weighted average price of a single-family waterfront property fell 7.9 percent year-over-year to $1,075,500 in 2023, while the price of a standard condominium fell 1.5 percent to $420,300 over the same period . Despite a slight decline last year, the national weighted median price for single-family homes is still 59 percent above 2019 levels.

Single-family home prices are expected to rise in all Canadian provincial recreational markets this year, but the highest price increase is expected in Ontario at 8 percent to $662,148, according to the 2024 Royal LePage Spring Recreational Property Report.

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Like other recreational markets, Ontario is struggling with low inventory levels. However, sellers are expected to submit offers as soon as they see demand has returned, which will help keep prices under control. “A cottage country boom is coming,” says Pauline Aunger, registered broker with Royal LePage Advantage Real Estate in Smiths Falls.

“Buyers who have left are feeling the threat of a drop in interest rates and are slowly returning to the market. However, many of them are looking for a specific type of leisure property and are not settling for just any property, a sentiment that is currently holding back sales. “Sellers have adjusted their expectations away from the high prices seen during the pandemic and are becoming increasingly motivated to sell,” she says.

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Royal LePage Lakes of Muskoka agent John O'Rourke agrees that buyers are waiting for the right vacation home to show up when inventory is lower, and while sales are down on a year-over-year basis, he is seeing an increase in the high-end segment Market, especially in the $8 million and above market.

“Strict short-term rental legislation has made it more difficult for investors to penetrate the Muskoka market, making traditional vacation home end-users the dominant buyer type in the area,” he says. “Typically our average buyer is someone from the Greater Toronto and Hamilton area with a connection to the region.”

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