Canada’s cottage boom went bust. Are buyers ready to take the plunge again?
Recreational real estate has been on a wild ride the last few years. First there was the boom brought on by the COVID-19 pandemic, when interest rates dropped to .25 per cent and urbanites, suddenly free from the confines of office work, sought bucolic refuge from the close quarters of city life. Prices rose more than 40 per cent, and it seemed that any cottage with reliable internet for remote work was snapped up — sometimes for 70 per cent over asking.
As the pandemic’s grip loosened, monetary policy tightened, along with the wallets of aspiring cottage owners. With the rapid rise in rates, from 0.25 per cent to 4.50 in two years, the forecast for discretionary spending on cottage real estate was a little less sunny. Prices and sales tumbled across most regions. According toReMax’s 2023 Cottage Trends Report, the average sale price in one area dropped from about $1.24 million in the first quarter of 2022 to about $856,000 a year later. There was another slight downward shift nationally in 2023, with prices dipping by one per cent year over year to $646,600.
Now, as spring transitions into summer and cottage season gets underway, there are signs the post-boom market is stabilizing and would-be buyers may finally be ready to jump in. According to Royal LePage’s 2024 Cottage and Cabin Trends Report, the national median single-family recreational home price is $678,930 — 59 per cent higher than in 2019. That price is projected to rise another five per cent this year, with the highest appreciation expected in Ontario, at eight per cent.
Meanwhile, cottage owners have been weighing whether to hold onto their beloved retreats or sell in advance of the federal government’s looming capital gains tax hike. The increase — from 50
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