Ontario cottage regions where waterfront property prices spiked and declined

Ontario’s cottage real estate market has been decidedly hot and cold over the past four years thanks to high-interest rates, companies mandating workers back to the office, and the return of international travel. The fervour that hit cottage real estate during the pandemic has since slowed, as multiple levels of government have cracked down on short-term rentals (an option many cottagers turned to as a way to offset their mortgage) and owners are starting to feel financially pressed as mortgages come up for renewal at much higher rates. According to Royal LePage’s 2024 Spring Recreational Property Report, prices in Ontario for single-family waterfront properties softened by 8.2 per cent from $1,017,000 to $934,000 between 2022 and 2023. These prices are based on a weighted median using sales in each region.

Royal LePage experts are predicting a shift in the market that could favour buyers. “Sidelined buyers sense an impending drop in interest rates and are slowly moving back into the market,” says Pauline Auger, the broker of record for Royal LePage Advantage Real Estate in Smith Falls, Ont. Her overall sentiment: buyers are pickier and sellers are coming to terms with the fact that they can’t expect to get high pandemic prices.

That being said, buyers should expect the competition to be fierce on the more desirable lakes, as 44 per cent of recreational property experts reported less inventory this year compared to 2023 in a Royal LePage survey of 150 brokers and sales representatives conducted between February 24, 2024, and March 12, 2024. It’s too soon to say how the cottage market will behave at this point in the year says John O’Rourke, the broker of Royal LePage Lakes in Muskoka Realty. “Historically, this period [March] accounts for five to ten per cent of our sales.” However, early sales data for the Muskoka region suggests a return to a more balanced market.

If you’re a buyer or seller, here’s where prices have jumped or dropped in Ontario cottage regions.

Ontario cottage regions where prices went up ⬆️

Muskoka

Roughly three hours north of Toronto, the Muskoka region includes popular cottage country destinations such as Bracebridge, Lake of Bays, and Huntsville. The district is home to 1,600 freshwater lakes including “The Big 3”: Lake Joseph, Lake Rosseau, and Lake Muskoka. In the summer, the population swells to more than 151,000 residents, 55 per cent of which are seasonal, according to figures from 2021.

It was one of two regions in the report that saw an increase in the weighted median price of a single-family waterfront property between 2022 and 2023, up 6.8 per cent from $1,250,000 to $1,335,000.

Who are the buyers and sellers?

O’Rourke primarily deals with buyers from the Golden Horseshoe area looking to get into the Muskoka region. In 2023 and into early 2024, he says buyers are being pickier about the type of cottage property they’re looking for.

“They want a nice entrance to the lake; fairly close to town, and a year-round, fully winterized cottage. As you get closer to town and you start ticking off all of those boxes, the price goes up quite a bit,” he says. “One trend that we are seeing is more people looking for a four-season cottage or something that has the potential to be turned into one.”

During the pandemic, a lot of first-time buyers were using home equity lines of credit to fund their cottage purchases with the intent of operating them as short-term rentals.

“Compared to Covid, there was a lot of rental availability last year. If people are using home equity lines of credit, they’re getting into seven or eight per cent interest rates they probably didn’t bargain for that when they purchased the cottage.”

The North Channel

Set along the north shore of Lake Huron, the demand for waterfront properties in this area has boomed in recent years. If you’re heading out from the Toronto area, the drive is at minimum five hours. However, it’s the only cottage region in the report where prices, despite increasing by nearly 25 per cent, hovered just under $500,000 for a single-family waterfront property in 2023. Ontarians or Americans along the border might find The North Channel a quieter and less-traversed area than some of the cottage regions further south.

In 2022, we wrote about a couple who purchased a cottage in Sault Ste. Marie. during the pandemic. A realtor reported bare-bones places with no septic, no toilets, and more off-grid situations that used to sell for $119,000 or $129,000, were going for $250,000 during the bubble.

Ontario cottage regions where prices went down ⬇️

Kawartha Lakes

Due northeast from Toronto, the Kawartha Lakes region is within a three-hour drive of the city centre. It includes the towns of Fenelon Falls and Burnt River and is home to Balsam Lake and Sturgeon Lake. Thanks to the extension of the 407 to Hwy. 35 and the 115, you can avoid the busy Hwy. 401 when commuting to a cottage in the Kawartha Lakes.

Buyers will want to pay attention to this region. It experienced the highest price drop out of all the Ontario regions for single-family waterfront properties, declining by 25 per cent to $733,300 in 2023.

Peterborough County

Within Peterborough County are a series of interconnected lakes, including some that are part of the Trent-Severn Waterway, which winds through the county where it eventually empties into Lake Ontario. Cottage buyers, if recreational boating is on your must-have list, then Peterborough County is an ideal cottage region for boating enthusiasts due to the lock system that starts on Buckhorn Lake and feeds into Stony Lake. Notably, Parks Canada hosts a Lock & Paddle event where paddlers pile into the world’s tallest hydraulic lift lock.

Prices have fluctuated in the county, from a high of $1,023,800 in 2022 to $875,000 in 2023 for single-family waterfront properties. While the prices have come down, they’re nearly double the average sold price for single-family homes in Ontario in 2023. If you’re considering renting the property to offset the mortgage, then you’ll want to investigate which township the cottage resides in as they have different short-term rental rules and bylaws. Eight townships reside within Peterborough County including Havelock-Belmont-Methuen and Douro-Dummer.

Lake Erie shoreline

Lake Erie is one of the smallest Great Lakes by surface area. Its shores are split between the Canadian and American borders, where sport fishing and agriculture feature prominently. In recent years, algal blooms have plagued different parts of the lake due to agricultural runoff. The region includes popular cottage country locales such as Long Point, a 40-kilometre-long sand pit. Waterfront properties declined by 16.5 per cent in the area in 2023, with the weighted median price hovering around $865,000.

Royal LePage 2024 Spring Recreational Property Report

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