After two years of soaring cottage prices, the real estate market is starting to stabilize. In its Spring Recreational Property Report, Royal LePage forecasted a 4.5 per cent dip in cottage prices across the country in 2023, dropping the aggregate price from $619,900 to $592,005.
“General consumer inflation combined with a severe lack of inventory has dampened sales activity. Buyers who are active in today’s market appear willing to wait for the right property—a sharp contrast to what we experienced during the pandemic,” said Phil Soper, president and CEO of Royal LePage, in the report.
A return to in-office work has also caused the market to slow. During the pandemic, cottages offered an alluring escape from the city, especially with the introduction of high-speed internet in rural locations. But now, with many employees required to return to the office a few days per week, and shops, venues, and events back in full swing, buying a cottage has dropped in priority.
But despite the market stabilizing, buying a cottage is still expensive. Across the country, prices remain 32 per cent higher than pre-pandemic levels. To better understand the cottage market, here’s a breakdown of what’s happening in each province:
Cottages in Ontario
In 2022, the aggregate price of a waterfront property in Ontario increased by 8.9 per cent to $1,006,600, compared to 2021. Southern Georgian Bay was the most expensive region with a 7.1 per cent price increase to $1.5 million, followed by Orillia, which saw a 22.4 per cent increase to $1,377,000, and then Muskoka, which saw a 15.7 per cent decrease to $1,062,500.
Muskoka’s price drop may be indicative of a more significant trend. According to a Royal LePage survey of Ontario realtors, 52 per cent of respondents reported less demand this year than last year. The entire province is forecasted to see a five per cent decrease in recreational property prices.
“Activity in the recreational market came to a comparative standstill in the last half of 2022. Rising interest rates, buyer fatigue, and lack of inventory all played a role,” said John O’Rourke, a broker at Royal LePage Lakes of Muskoka. “Early signs this spring point to a more balanced market where inventory levels and sales are trending in line with historical norms.”
The market in Quebec
In 2022, the aggregate price of a waterfront property in Quebec increased 17.3 per cent to $480,200, compared to 2021. Memphrémagog topped the price list after a 24.6 per cent increase to $860,000, followed by Les Pays-d’en-haut with a 4.3 per cent increase to $600,000, and then Les Laurentides with a 25.3 per cent increase to $530,000.
Despite its major price jump in 2022, Quebec is forecasted to have the biggest price drop in 2023 at eight per cent. Similar to Ontario, this price drop is due, in part, to lack of demand. In a Royal LePage survey of Quebec realtors, 76 per cent of respondents reported less demand this year than last year.
“Buyers are more patient; they’re negotiating, and they’re taking time to carefully assess their needs and financial capacity before taking the plunge,” said Véronique Boucher, residential real estate broker at Royal LePage Au Sommet. “Conditional offers to purchase, which were practically unheard of during the pandemic real estate boom, made a big comeback in the latter half of 2022, a sign of a much more balanced and fair cottage market.”
Waterfront property in British Columbia
In 2022, the aggregate price of a waterfront property in B.C. increased 5.6 per cent to $1,065,000, compared to 2021. Invermere was the most expensive region with a 26.6 per cent increase to $2,025,000, followed by the Comox Valley, Denman Island, Hornby Island, and Mt. Washington areas with a 4.4 per cent increase to $1,350,000, and then the East Kootenays with a 0.2 per cent increase to $774,500.
In a Royal LePage survey of B.C. realtors, over half reported that cottage owners remained full time in the area rather than moving back to urban settings after the pandemic. This trend has caused a shortage in supply, keeping prices relatively high. But Royal LePage expects B.C. cottage prices to drop by two per cent in 2023.
“Come springtime, I anticipate that supply levels will rise as more sellers move into the market, but I don’t expect there to be a huge wave of relief,” said Frank Ingham, associate broker at Royal LePage Sussex. “Many buyers continue to wait on the sidelines for prices to fall or for borrowing costs to become more affordable, especially those purchasers who are buying for their retirement or for their adult children to enjoy. This trend is creating more pent-up demand on the sidelines and is causing properties to stay on the market twice as long as last year. However, as the spring market gains momentum, I expect more homes that have been sitting on the shelves will start to move into the hands of buyers.”
What’s happening with housing in Alberta?
In 2022, the aggregate price of a waterfront property in Alberta decreased by five per cent to $641,900, compared to 2021. Wabamun Lake was the most expensive area at $820,200, a 7.7 per cent decrease from 2021; Pigeon Lake at $674,500, a 0.7 per cent decrease; and then Lac St. Anne at $534,700, a 10.9 per cent decrease.
Alberta is experiencing a lack of turnover in its cottage markets, keeping properties in demand and prices high. That’s why, despite the decrease in 2022’s waterfront prices, Alberta is the only province in Canada forecasted to see a price increase of 0.5 per cent in 2023.
The market in the Prairies
In 2022, the aggregate price of a waterfront property in Saskatchewan and Manitoba increased by six per cent to $271,300, compared to 2021. North Central Saskatchewan topped the list with a 20.9 per cent increase to $688,000, followed by Lac du Bonnet in Manitoba with a 10 per cent increase to $550,000, and then Interlake, Man. With a 0.4 per cent decrease to $450,000.
“Business is faring as usual in our recreational markets. Demand and inventory are proportional to one another, creating balanced market conditions. Reduced supply has kept recreational property prices buoyant,” said Lou Doderai, broker and owner of Royal LePage Icon Realty in Prince Albert, Sask.
Despite a stable market, the aggregate price of a recreational property in the Prairies is forecasted to drop by three per cent in 2023.
The market in Atlantic Canada
In 2022, the aggregate price of a waterfront property in Nova Scotia, Newfoundland, New Brunswick, and Prince Edward Island increased by 17.2 per cent to $279,900, compared to 2021. Despite an 18.4 per cent decrease, Shediac, N.B., was the most expensive region in 2022 at $464,500, followed by South Shore, N.S., with a 22.4 per cent increase to $450,000, and then Cape Breton, N.S., with a 22.1 per cent increase to $427,500.
Nearly half of the respondents in a Royal LePage survey of Atlantic Canada realtors reported a decrease in demand this year compared to last year. As a result, Royal LePage forecasted that the aggregate price of a recreational property in Atlantic Canada will drop by three per cent in 2023.
“Parties on both sides of the transaction are waiting for a better deal—recreational buyers are sitting on the sidelines waiting for more inventory to become available, while sellers are holding out for higher offers and competitive bids. But the multiple-offer scenarios and homes selling over asking are not as common today as they were during the pandemic boom,” said Corey Huskilson, sales representative at Royal LePage Atlantic in South Shore, NS. “As we enter the spring market, I expect activity to pick up but prices to stay stable as supply and demand remain relatively balanced.”
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