A new report from economists at Desjardins predicts that the gradual fall of home prices in Ontario will continue, with some cottage country regions seeing drops of up to 50 per cent.
The authors noted that rural areas have seen major spikes over the past few years, with places such as Bancroft, Quinte, Muskoka, and Haliburton seeing the average home more than double in price from December 2019 to the peak in March 2022. “These communities have also seen the largest price declines, and that trend is expected to hold going forward,” the report states. Projections include: Bancroft with a drop of 50 per cent, Muskoka and Haliburton at 39 per cent, and Peterborough and the Kawarthas, 37 per cent.
This comes as the housing market across Canada is cooling off in the face of rising interest rates and limited supply. While some projected drops for cottage country look alarming, it’s important to put things in context, says Anthony vanLieshout, the broker of record for Royal LePage Lakes of Haliburton.
“Within Haliburton County from 2016 until the end of 2021, we saw property values appreciate to the tune of 300 per cent,” he said (a cottage around the $300,000 mark would’ve risen to nearly $1 million). After such a dramatic increase, he says it only makes sense that prices are creeping down; but a cottage that may now be in the $700,000 range isn’t exactly a steal.
The data and projections also consider homes in an entire region, not just cottages alone. Peterborough and the Kawarthas, for example, includes homes in the city of Peterborough, a different market than waterfront properties on nearby lakes.
“I have been selling about three cottages a week for the last eight weeks,” said Jill Price, broker at RE/MAX All Stars Realty in the Bancroft and Kawarthas region. “In September, October it was hurting a little bit, and prices did go down, but now I’m seeing a steady increase in sales.”
Price said that cottages in the $600,000 range have been more difficult to sell, while those around the million dollar mark are moving fine, suggesting that wealthier buyers have been relatively insulated from rate hikes. She also described a “huge influx” of buyers—up to 50 per cent—purchasing strictly for investment, which also contributes to lower inventory.
Overall, the housing market—and to a lesser extent, the cottage market—is coming down from what vanLieshout calls “unrealistic and unsustainable highs.”
He said one thing that’s not likely to change is the heightened interest in cottage living, a lasting effect of the pandemic. “It definitely featured cottages in a positive way, and the demand is always going to be higher than it ever was for those reasons,” he said. “I think that will hold for all of rural Ontario.”
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