Much like the rest of Ontario, the Ottawa Valley’s cottage real estate market experienced a surge in activity during the COVID-19 pandemic. But experts say the area is now starting to feel the comedown.
“In our market, we saw a 30 per cent increase in pricing during COVID,” says Erin Phillips, a realtor in the Ottawa area whose team specializes in waterfront properties. “Our demand was through the roof. But it’s actually starting to slow down a little bit. We’re getting a little more inventory and a little bit more of a balanced market.”
Demand in the area started to slow in July, says Phillips. This means that bidding wars, which contributed to driving prices over asking, have become rare, and cottages are staying on the market for longer. In March, cottages were snapped up within two days of going on the market. Now, the closing period for a cottage hovers around 30 days, says Phillips.
“During COVID, you had no time to sit and take it in. And cottage country is hard in our market because it’s pretty spread out around here…To get out and see them all you had to jump on it the minute it came up,” she says. “Now we’re getting a little bit more time on the market.”
Hiked interest rates have played a role in the slowed demand. The Bank of Canada raised its key interest rate to 2.5 per cent in July in an effort to combat runaway inflation. Higher mortgage rates and concerns over a coming recession have caused many to delay their dream of owning a cottage.
This ebb in demand has allowed the Ottawa cottage real estate market to start balancing out, shifting some power back to the buyers. Once again, buyers can include conditions, such as a home inspection, in their offers without worrying about it impacting the competitiveness of their bid, Phillips says.
Another factor slowing demand in Ottawa is cottage prices. Despite interest rates continuing to rise, cottage prices in the Ottawa area have remained high. Along the Rideau Canal system, one of Ottawa’s most desirable cottage markets, there are two price pockets, says Phillips. The first pocket averages around $1 million, and the second pocket is $2 million and up. The difference between the two price pockets is the amenities.
“Boathouses, outbuildings, number of bedrooms, waterfront exposure, etc.,” she says.
A number of the buyers showing interest in these high-end cottages are from Toronto, Phillips says. Specifically, individuals who’ve been priced out of markets closer to home, such as Muskoka.
Despite the inflated prices and interest from outside buyers, there are still affordable cottages in the Ottawa area. For those with a budget under $1 million, Phillips suggests looking at the Ottawa River and some of the smaller surrounding lakes in the Ottawa Valley.
But if you’re serious about buying a cottage near Ottawa, Phillips suggests doing it now. “I think come next spring, we’ll be back to a normal market with a bit of an increase [in demand] again, so I think the time to buy would be now to December.”