Cottage real estate: How Toronto’s boom affects cottage prices

Published: February 11, 2020

Muskoka Photo by Shutterstock/Alessandro Cancian

If your city has a booming market, nearby cottage real estate prices could also be rising.

According to the annual global real estate bubble index, Toronto is the second most overvalued market in the world. And as Toronto’s real estate prices increase, so do Ontario’s cottage real estate prices. Muskoka, in particular, has seen a serious upswing since 2016. According to a report released by Re/Max, this correlation is no coincidence. Muskoka’s real estate market is closely tied to Toronto’s. As Toronto experiences a real estate shortage, demand skyrockets in Muskoka.

“[People] are cashing out of the city and moving up here,” says Peter de Graaf, a real estate agent who has been working in the Muskoka area for 24 years. He says that many Torontonians—baby boomers in particular—are realizing that if they sell their home in the Greater Toronto Area, they can buy a similarly sized property in Muskoka and still have money left over.

Ontario’s northern appeal is having its effect on younger generations as well, with millennials and Gen Xers looking to buy cottages. “There are some that are young who can’t and probably won’t be able to ever afford something in the downtown area of Toronto, where they work. So they rent down there, and they buy something up here, which becomes their principal residence,” de Graaf says.

As a result of the real estate boom, Muskoka, typically seen as a summer locale, is rapidly developing into an all-year-round destination. “A lot of the lake properties are being improved. A lot of cottage roads used to be three season, now they’re becoming four season,” says de Graaf. “Because of the amount of money people have invested in their cottage and the amount of taxes they pay, they want to use them year round.” De Graaf adds that a lot of the old three-season cottages built in the ’50s, ’60s, and ’70s, are being torn down and replaced with four-season cottages.

In turn, the area is attracting more services, dining options, and cultural events. “We have more things here, in a town of 16,000 people, than some towns that are isolated but three times our size have,” de Graaf says.

While this development is great for the area, it doesn’t explain why Muskoka is seeing a bigger real estate boom than other cottage areas close to Toronto. De Graaf says that it’s not just Muskoka’s picturesque and desirable location, but also the area’s long history and proximity to the GTA that is making Torontonians consider buying. At around a two-and-a-half-hour drive, Muskoka is an easy commute, barring traffic, along the Hwy. 400/11 corridor with no stops—the holy grail for cottage real estate.

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Toronto’s effect on Muskoka is one of the more pronounced real estate booms in Canada, de Graaf says, but there’s a good chance this kind of urban-cottage real estate relationship exists around other major hubs, such as Vancouver and Montreal. De Graaf points to other Ontario cottage markets as examples of the sprawling influence an urban real estate market can have. “People who can’t afford to buy in Muskoka, they’ve gone to areas such as Haliburton. Now, they’re going to areas east of Haliburton because the price point is there. Georgian Bay and Parry Sound would be just less than Muskoka. So, people are going a little farther north or east or west to get the better price point.”

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