Despite high interest rates in 2023 and the federal government’s recent proposal to increase the capital gains inclusion rate, most cottagers are holding on to their properties rather than selling, says Re/Max’s 2024 Cottage Trends Report.
“We don’t anticipate a flood of listings in response to recent changes to the capital gains tax,” said Christopher Alexander, president of Re/Max Canada, in an email. “The timeline is too condensed for people to list, get their property sold, and close by June 24. In that short timeframe, sellers simply won’t get top dollar for their property, and the lower selling price would outweigh the higher capital gains tax.”
Instead, the tax change is prompting cottagers to look at how to keep the cottage in the family without the associated inheritance costs. “Years of research has shown that Canadians consistently see value in real estate ownership—both as a necessity and an investment. Those who have already gained a foothold in the recreational property market are determined to hold on to this asset, despite mounting affordability concerns across the country,” Alexander said in the Re/Max report.
According to Re/Max’s 2024 Cottage Trends Report, the average price of a recreational property in Canada is predicted to increase by 6.8 per cent this year. The expected increase in price is due to lack of inventory. While this is a moderate increase compared to the price jumps seen during the pandemic, it will build on already dizzying cottage prices.
Short-term rental owners are also holding out on selling. The province of B.C. and townships such as Huntsville, Ont. and Kawartha Lakes, Ont. have introduced restrictions around short-term rentals to curb guests’ behaviour while also freeing up real estate stock. Yet, in a study conducted by Leger on behalf of Re/Max, 58 per cent of recreational property owners said they plan to hold onto their rental investments.
The other notable change to the market is that young families and couples now represent the primary cottage buyers in 59 per cent of cottage markets. This is a significant shift from 2018, when retirees were the most dominant demographic in 91 per cent of cottage markets. Thanks to hybrid and remote work options, younger buyers can spend more time at the cottage, prioritizing properties with reliable Wi-Fi.
All of these factors represent a high-level look at what’s happening in Canada’s cottage real estate market, but each region is experiencing different changes. To get a better sense of what each market looks like, here’s a breakdown by area.
British Columbia
Unlike much of Canada, the West Coast currently leans in favour of buyers. Between January and March 2024, Ucluelet saw an 11 per cent decrease in the average sales price of a cottage compared to the same time last year, dropping from $764,000 to $676,703. Tofino saw an average sales price of $1,001,116 in the first quarter of 2024, but Re/Max anticipates that price to drop by 10 per cent this year due to regional restrictions on short-term rentals that will motivate owners to sell. Whistler is experiencing a more balanced market. It’s seen a 7.5 per cent price increase so far, rising from $1,633,855 in 2023 to $1,756,473 in 2024.
Alberta
All Alberta markets have seen an increase in the average sales price this year compared to last year, mostly because owners are holding onto their properties. Edmonton Lakes saw an 11.8 per cent increase from $639,750 to $715,300. Sylvan Lake and Central Alberta jumped by 14.9 per cent from $580,357 to $666,949. And Canmore increased by 8.1 per cent from $962,619 to $1,040,422.
Ontario
While most Ontario cottage owners are holding onto their properties, both Muskoka and Haliburton County have experienced a flood of sales so far this year. In turn, Muskoka’s average sales price dropped by five per cent from $1,487,265 in 2023 to $1,412,237 this year. On the flip side, Haliburton County has seen prices increase, up nearly 19 per cent from $816,112 in 2023 to $968,794 in 2024. Southeast Georgian Bay, Honey Harbour, and Port Severn experienced a drop in price, 28.7 per cent, from $1,272,917 to $906,967. Peterborough, however, saw a 93.1 per cent average sales price increase from $465,000 to $898,000, and same with the Kawarthas—a 93.1 per cent hike from $465,000 to $898,000. Both areas have seen sales skyrocket from 2023 to 2024, up a whopping 800 per cent. Prices in areas such as French River and Simcoe County have risen 3.4 per cent and 10.2 per cent respectively, year over year. Re/Max anticipates that nearly three quarters of Ontario’s cottage markets will continue to see price increases throughout 2024, with some jumping by as much as 33 per cent.
Atlantic Canada
Limited inventory on the East Coast has lead Re/Max to believe most of the area’s markets will lean in favour of sellers this year. So far, northern Nova Scotia has seen its average cottage sales price jump 57.5 per cent from $223,433 to $351,958, with many buyers coming from Ontario and Western Canada. Cape Breton, N.S. saw a six per cent increase from last year to this year with prices rising from $260,686 to $276,982. And Charlottetown, P.E.I. saw its average price hold steady at $275,000. Annapolis Valley, N.S., however, saw a 48 per cent drop in its average sales price from $229,428 to $119,750. Although, Re/Max expects this price to rise by five per cent throughout the year. And St. John’s, N.L. saw a 9.1 per cent price drop from $354,000 to $321,750, but Re/Max anticipates an 18 per cent price increase by the end of 2024.
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