Tariffs, economic uncertainty chilling cottage housing market, report says

Winnipeg Free Press

19-05-2025

The May long weekend marks the unofficial start of cottage season for many Canadians, but a new report says some looking to buy a vacation home of their own are holding back until economic tensions settle.
The report by Re/Max Canada, which is based on a Leger survey it commissioned in March, said lower borrowing costs and improved affordability in the recreational market last year had prompted renewed interest among potential buyers.
However, that's now being overshadowed by economic uncertainty that has chilled the national housing market in recent months in response to the ongoing U.S.-Canada trade war.
According to the survey, 59 per cent of people whose housing options have been influenced by recent tariffs indicate they are less confident in the recreational market than they were in 2024.
'Market conditions really took a hit when they started having these trade discussions,' said Re/Max Canada president Don Kottick in an interview.
But he didn't rule out a quick turnaround, saying the market could open up rapidly if Canada reaches a new trade deal with its southern neighbour.
'I think the underlying desire is there. The general consensus is that desire is not going to go away,' he said of interest in the secondary home market.
'Recreational buyers are temporarily on the sidelines as they await for further clarity or signs of economic stability.'
While unit sales aren't expected to decline year-over-year in the majority of Canada's recreational markets, activity is forecast to range from flat to a 10 per cent increase.
Re/Max brokers and agents anticipate a national average price increase of about 1.8 per cent across the Canadian recreational market in 2025, according to the report.
Among Canadians less confident in the housing market than they were in 2024, 19 per cent said due to the tariff threats, they are holding off on buying or selling until there is further clarity.
In Ontario, the market is 'more or less paused,' said the report, as both buyers and sellers keep an eye on employment and other economic indicators.
Year-over-year prices in the Ontario cottage market have declined across half of all regions analyzed, with declines ranging from about one to 20 per cent, including Niagara-on-the-Lake, Peterborough County, Northwestern Ontario, Orillia, and Grand Bend, largely due to increases in inventory.
The remaining 50 per cent of Ontario cottage markets have seen prices increase, reflective of tight inventory levels in Simcoe County, Kawartha Lakes, Greater Sudbury, and Prince Edward County.
The average price in B.C.'s recreational market is expected to rise 1.1 per cent in 2025, according to the report, thanks to balanced market conditions.
'I think we can assume that Canadians are being a little bit more cautious,' said Carrie Lysenko, CEO of online real estate brokerage Zoocasa.
'We are seeing a lot of fluctuations.'
But Lysenko said some popular cottage destinations, such as Ontario's Muskoka region, are more 'immune' to fluctuations in overall economic and real estate trends because they benefit from a 'different profile of buyer.'
'Muskoka is known as the Hamptons of the north. Desirability is so high to have properties in those areas,' she said.
'These are not first-time home buyers. These are higher net-worth individuals that are looking for secondary or tertiary properties, investment properties that they potentially are going to either enjoy for themselves or rent out.'
She said there could be reason for optimism that other secondary markets in Canada will pick up too.
An analysis earlier this month by Zoocasa said tariffs are prompting Canadians to pull back from U.S. real estate, including secondary homes in warm resort and vacation markets.
It said Canadians made up the largest share of foreign buyers in the U.S. last year with an average purchase price of roughly US$834,000, and that domestic purchases could increase as interest down south wanes.
'When we think about how far can your dollar go in the U.S. versus buying a secondary and vacation property in Canada, that might be more affordable and more attractive,' said Lysenko.
'It would likely put more pressure on some of these vacation destinations, like Muskoka, like Whistler, maybe parts of Vancouver Island.'
The Re/Max report also said there could be hope for a rebound in Canada's cottage country as Canadians divert U.S. travel plans, comparing the situation to the increased local tourism seen during the pandemic.
But it said affordability will remain a key factor for potential buyers, with 57 per cent of survey respondents identifying it as a must-have.
'It really is largely based on disposable income,' said Kottick.
This report by The Canadian Press was first published May 19, 2025.