Now is a Great Time to Buy a Cottage

Do you remember the 2020-2021 cottage boom?

Well, if not, then it is likely because the entire Canadian real estate market was booming during the coronavirus pandemic amid a historically low interest rate environment.

However, during this period, the cottage industry was enjoying tremendous growth as many households were exploring many residential possibilities. Since families were working from home or studying remotely, there was a major urban centre exodus, allowing people to flee to rural communities and live inside a cottage or chalet on a permanent basis.

The low-rate climate was undoubtedly an exciting time for the nation’s housing market.

Cottage sales activity and prices slowed. But what about lately? A plethora of reports suggest that it could be an excellent time to buy a cottage again.

Now is a Great Time to Buy a Cottage

In recent months, industry experts have said that 2023 and heading into 2024 could be the right time to purchase a cottage. In the Ontario real estate market, for example, some reports suggest that a single-family home in a recreational part of the province could tumble by five percent. The decrease is primarily because of reduced demand due to inflation and low supply.

Research has found that the top three consumer segments that are stimulating activity in the recreational property market include retirees, families, and couples. The most sought-after features of cottages and recreational properties include access to the waterfront and recreational activities, such as skiing and water sports.

Indeed, one of the biggest motivators for living in a cottage is its quality of life.

According to an April 2023 report by RE/MAX, more than one-third (36 per cent) of Canadians are attracted to the life a cottage can provide compared to properties in larger city centres. Another reason is the opportunity to earn rental income from recreational properties. The report shows that close to one-fifth (18 per cent) of Canadians who plan to buy a cottage want to rent it out for income purposes.

Finally, the desire to own a cottage and pass it down to family is also a key persuader in buying this type of residential property.

Cottage prices reached a record high during the COVID-19 public health crisis as more people could work from home and utilize their cottages as permanent residences. However, there has been a return to in-office work over the past year, further reducing the demand for these kinds of homes.

A separate RE/MAX report revealed that average cottage prices in the Kawarthas and Peterborough have declined from $1.24 million in the first quarter of 2022 to approximately $856,000 in the first quarter of 2023. Cottage sales have also dropped by 50 per cent in the area for the same period.

Overall, demand for cottages in Ontario had peaked during the pandemic but is now back on par with levels in 2018 or 2019.

As a result, cottages have once again become more of an escape from the city instead of a long-term residence. The Muskoka area, one of Ontario’s most expensive recreational real estate markets, has reported a 16 percent decline in prices from the previous year.

“A diverging trend is beginning to emerge in our market, with sales activity continuing to fall for non-waterfront residential properties but now improving for waterfront homes,” said Matthew Lidbetter, President of the Lakelands Association of REALTORS®, in a statement.

“In both cases, new listings are surging to historical levels, and overall inventories have climbed to just above their averages. However, in the case of waterfront homes, it seems as though early signs of a recovery, or at the very least a moderation in decline, are starting to show. It will be difficult to discern meaningful trends on this segment of the market as we head into the colder months, so it’s something we’ll be keeping an eye on once we get into early spring.”

Therefore, people who are in the market for a cottage should be able to get one at a reasonable price this year.

Another major reason for reduced prices is the rising cost of living for most families. Fuel costs have increased, groceries have become more expensive, and interest rates are high.

Many families cannot afford to drive or fly to cottages the way they could when things were more affordable. Additionally, people who had bought cottages during the pandemic but have had to return to work are now looking to sell as they realize the commute to the city is not practical for them/

In addition, the high cost of living makes cottage ownership a luxury once again. This has helped inject a hefty supply of cottages into the housing market this year.

The Joys of Cottage Living

Cottages are always a good idea for people who want to retire and are looking to downsize. This is a good time for them to sell their place in the city and move to a more remote location. As it is, real estate prices in urban areas are high, and for retirees, it would make a lot of sense to sell at a high price and reinvest in something smaller and cheaper and away from the hustle and bustle of the city.

Real estate is always a solid investment, and whether you want to capitalize on low prices and purchase a cottage for your family or use it for rental purposes, the current stable prices could benefit you. Since Old Man Winter is on the horizon, buying in the winter offers an additional price advantage as waterfront properties tend to sell much faster and for higher prices during the spring and summer months.

Right now, there is less competition in the market, and buyers may be in a stronger position to negotiate. Overall, now is an excellent time to buy a cottage.