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Calgary Herald

Cottage owners stuck in paradise as market slams to a standstill

Article content 'You can see the prices being knocked down daily on people's cottage properties,' he said. 'Unless it's a perfect property at a reasonable price, nobody's buying.' Article content Just south of Algonquin Park, Haliburton County is seeing a flood of cottage listings enter the market. They're not selling for what their previous owners hoped for. Article content 'So far this year, we are down in all the places that are good for buyers,' said Barb Williams, a real estate agent at Baumgartner Realty Group, based in Haliburton. Article content Williams said Haliburton cottage prices are down 11 to 13 per cent in the three months between March and May this year, compared with the same period last year. Sales have also plunged by about a third compared to last year. Article content She noted that those who secured five-year mortgage terms in 2020 are now facing higher mortgage rates as they go up for renewal. Others paying off mortgages on their primary residence may be anxious about the economic outlook and affording two home loans at the same time, Williams said. Article content Article content Haliburton's short-term rental bylaws also mean that some cottage owners have to make expensive updates to bring their properties up to code, such as new septic tanks, for example, which can set them back tens of thousands of dollars. Article content 'When you're already struggling with higher interest rates, and you suddenly have to find $20,000 and then you go to take equity out in your house (to pay for the update), it's not there,' said Williams. Article content Williams has seen sellers lose as much as 20 per cent on their cottage homes — but noted this isn't just in comparison to how much they originally purchased the property for, but also how much they invested in it, such as renovations to turn it into a short-term rental. Article content 'I keep telling (sellers to) hold on to them if you can because you're just going to take a loss.' Article content On the other hand, overflowing inventory and declining prices means buyers now have the luxury of choice. Article content Article content 'We're fully rooted in a buyer's market now,' Williams said. 'We're sitting at about 10 months of inventory, almost 11, (and) generally anything above six months is a buyer's market.' Article content Charles Layton, 44, said he has scoured hundreds of cottage listings over the past 15 years. Article content Layton, an in-house lawyer for a tech firm, and his spouse are based in downtown Toronto. He said they started seriously looking at purchasing a cottage last year as the city can get hectic and they wanted a family cottage to take their young kids to on the weekends. Article content 'We only recently amassed enough savings to make a purchase realistic and with the COVID-fuelled cottage boom subsiding and interest rates on the decline, it felt like the right time,' Layton said. Article content 'Having a place on the water where we can enjoy nature feels like the Canadian dream.' Article content In April, Layton and his spouse closed on a cottage in the Kawarthas with cedar walls and waterfront views. It was also winterized, which meant they could enjoy the property year-round, justifying the costs, he added. Article content The cottage was listed for $1.975 million, but Layton and his spouse were able to negotiate a lower price after an inspection found a few issues with the septic system and oil furnace. 'We likely would have been able to get it for even less if another buyer hadn't been vying for it.' Article content Layton said the market has definitely softened and now is a good time to buy. 'Listings are plentiful and many of the cottages are taking a long time to sell,' he said, noting that during the pandemic, many buyers were purchasing properties unseen or were forced to make hasty decisions. Article content 'We were able to bide our time and make a careful decision.' Article content Article content However not all Ontario cottage markets are performing the same way. Muskoka, a long-time haven for city dwellers characterized by many higher-end recreational properties, is still seeing demand. Article content According to the REMAX report, the average Muskoka cottage price in the first quarter of 2025 inched up by one per cent year-over-year to hit $990,000. Sales surged by 29 per cent compared with 2024. Article content Article content 'I keep hearing a lot of doom and gloom out there, but that's not what we're seeing,' said Heather Scott, a real estate agent with Forest Hill Real Estate Inc. based in Muskoka. 'There is a lot of confidence in the Muskoka market.' Article content Scott said between May to June there were 33 waterfront sales in the Muskoka Lakes area, with 15 sales under $2 million and the rest over $2 million (with two more than $15 million each.) Article content Still, she said the market certainly looks different than it did five years ago. Article content 'During COVID, people were buying anything that was waterfront,' Scott said. 'Now, quality matters.' Article content Scott said cottages with ideal locations, good road access and higher-quality waterfronts that aren't weedy and marshy are more popular among buyers. Cottages that are in poorer condition but priced too high are taking longer to sell. Article content She has also noticed fewer buyers are purchasing properties with the intent to convert them to short-term rentals — a major trend during the COVID-19 pandemic. Article content Article content Royal LePage's 2025 recreational market report found 36 per cent of Ontario recreational property brokers reported a decrease in the number of buyers who intend to use these properties for rental purposes. Article content And about 19 per cent of Canadians who are selling a cabin/cottage in the next one to two years say that they no longer see the investment potential of a recreational property, which is influencing them to sell, according to the 2025 REMAX cabin and cottage trends report. Article content The same report revealed there is significant demand for waterfront properties, followed by access to recreational activities such as skiing and water sports, larger lots with green spaces and good Wi-Fi. Article content In the Kawartha Lakes and Haliburton, real estate agents said more buyers are gravitating toward smaller cottages for about $500,000 to take their families on the weekends, as opposed to million-dollar mansions on the water.