It’s no secret that cottages have become a hot commodity over the last year and a half. The COVID-19 pandemic and the rise of remote work combined with inflated real estate prices in urban centres have caused people to reassess their lifestyles, and leave the city behind for a piece of cottage country paradise.
According to a cottage trends report released by RE/MAX, 21 per cent of Canadians are turning to recreational markets after being priced out of urban centres.
But with such a profound increase in demand, cottage inventory is becoming scarce. The result is that when a moderately priced cottage does come onto the market, the price is driven up by intense bidding wars.
The price of a recreational property in Canada is forecasted to increase by 15 per cent in 2021 to an average price of $502,730, according to Royal LePage’s spring report. While Ontario’s cottage market is predicted to see one of the biggest jumps with a 17 per cent average price increase up to $547,207.
“Life during the pandemic has made cottage country and country living more desirable than ever, in every part of Canada,” said Phil Soper, president and CEO of Royal LePage, in the report. “The flexibility provided by working remotely, excess savings from months sitting at home, and low-interest rates have left Canadians young and old alike to seek properties with more space, easy access to nature, and the ability to achieve that ever-elusive work-life balance.”
The price hikes and bidding wars, however, are making it tricky for people to stick to their budgets. To make sure you don’t overpay, here are some tips to keep in mind when placing an offer on a cottage.
Set a walk-away point
Once you find a dream cottage, it’s easy to get swept up in the emotion of bidding on it. This is particularly true for first-time cottage buyers who may not know what a reasonable offer is. Kathy Dimaline, a real estate broker in Bruce Peninsula, Ont., says that in these kinds of situations, you can’t rely on your real estate agent to tell you what you should offer.
“If I tell you a number and it’s too low, you’re going to be mad at me. If I tell you a number and you overpay for it, you’re going to be mad at me,” she says. “So, what I do is I simply tell people to remove the emotion and come up with a number that is your walk-away point.”
By sticking to that number, Dimaline says people feel more comfortable with the bidding process.
If you don’t win the bid, don’t worry
Losing out on a cottage bidding war can feel devastating, especially if you had your heart set on the property. But once again, Dimaline says you need to remove your emotions from the process. “People are getting caught up in this bidding frenzy,” she says. “Stay patient, stick to your budget, and know what your walk-away point is. If you don’t get this one, another one will come along. And if you don’t get that one, another one will come along, and, eventually, you will buy the perfect place.”
Choose the right real estate agent for you
When deciding on a real estate agent to work with, your best bet is to use someone local. If you’re looking at cottages in the Frontenac area, for instance, then you want to work with someone who has a good grasp of that market. Specifically, you want someone who knows the properties well, such as what the waterfront’s like and when the property will get sun. It also helps that they usually know which properties are going on the market before anyone else.
Dimaline adds that you have to remember that your relationship with your real estate agent is a partnership. You need to put your trust in them. She says that a lot of people have been blaming real estate agents lately for the bidding wars. In Ontario, the Real Estate Council of Ontario (RECO) stipulates that agents aren’t allowed to tell their clients how much another person is offering.
“That’s what pushes the bids up. It’s not the agents,” she says. “That’s the rule we have to abide by. We cannot disclose what’s in any other offer. That’s why we have all these crazy bidding wars. That’s why people are bidding way over because they don’t know how much to bid.”
When a modestly priced cottage comes onto the market, the offers flood in. “The high-priced stuff that’s well over a million, we’re not getting into big bidding wars on that. It’s the modest-priced stuff that is getting the bidding wars,” Dimaline says, “because everybody’s in that same price range.”
To avoid bidding wars while keeping prices affordable, you can look at alternatives, such as a cottage that’s farther away from urban centres, a cottage that’s on a river rather than a lake, or even a cottage with no waterfront property at all.
However, if you are determined to buy in a competitive location, Dimaline advises patience. “What I tell people is if you didn’t get this one, it wasn’t meant to be. We’ll find you another one. And usually, when I find them another one, it’s better.”