'Buyers are firmly in the driver's seat': It's a good time to buy a cottage in Canada, experts say

CTV National News: Cottages sitting unsold Annie Bergeron-Oliver has more on why the once hot cottage market in Canada has suddenly cooled, turning into a buyers paradise.

As the weather cools down across Canada, so too is the cottage market, with real estate experts saying now is the time to purchase that cottage you've had your eyes on.

Gone are the days of COVID real estate craziness, which saw sale prices rise through the roof, constant bidding wars and properties being wiped clean off the market. Now, there are an above average number of cottages for sale across Canada, even compared to pre-COVID levels.

For example, Ontario is experiencing some of its lowest cottage sales in recent memory, according to broker John Fincham who publishes analytics for the province. By April 2024, only 3,400 waterfront properties were sold in Ontario compared to 6,199 the previous year — a decline of more than 40 per cent and the lowest in more than two decades, he reports.

In other words? "It's firmly, firmly a buyer's market," the Muskoka Re/Max broker tells CTV News. "Buyers are firmly in the driver's seat."

An abundance of unsold cottages can be attributed to several factors, Fincham says. Early this year, the federal government announced it would extend its year-old foreign homebuyers ban until 2027, preventing non-Canadians from buying residential property. Fincham says this, along with inflation and high interest rates, have resulted in more availability on the market.

For Ray Ferris, a realtor from the north shore of Lake Erie, he is not so much focused on the number of cottages currently for sale in his province, but the time it takes to sell. Pre-COVID, cottages in his region would sit on the market for about three months. Now, the average is six months.

"What I'm hearing and observing is there's a lot of economic uncertainty amongst prospective buyers," Ferris, who is also the former president of the Ontario Real Estate Association, says. He notes that when the Bank of Canada cut its key interest rate to 4.5 per cent in July, there was an uptick in the number of cottage sales in his area.

In addition, the current market can be attributed to stubborn sellers who believe the value of their cottage is the same as it was in the midst of the COVID-19 pandemic, Ferris says. He adds that buyers are now waiting longer on the sidelines to see how far prices will go down, giving them more time to make purchasing decisions.

It's not just in Ontario where the cottage market has cooled. In Nova Scotia, fewer people have been looking to purchase "recreational and extraneous" properties, says Chris Melnyk, a realtor with Royal LePage Atlantic. Instead, the real estate market is being driven by homes for function and utility: think entry-level detached homes in the suburbs.

As a result, "now is a great time to buy a cottage in Nova Scotia, especially if you're willing to be a bit further out from the city or you have a bit of a higher price range," he says. "There are a ton of cottages and recreational properties on the market … and you will get a deal."

This spring, changes to the capital gains tax spurred anxiety in Canada's cottage country. Owners debated whether they should rush to sell their properties before the proposals from the 2024 federal budget came into effect in late June. However, this ended up having little impact on the cottage market, Ferris notes.

"Cottages are really emotional sales. And by that I mean cottages are where families and friends go to create memories," he says, explaining that the number one question he received from clients is how to minimize capital gain as they will one day pass down the cottage to their children or grandchildren.

As the summer selling season starts to wind down, Fincham says he expects concern will mount amongst sellers. Cottages in Ontario are dropping in price daily, and he believes we will see that accelerate into the fourth quarter as fewer waterfront properties are sold in the winter.

However, while most sellers assume the best time to sell their cottage is in the heat of summer, Ferris says he believes there will actually be an uptick in the number of cottage sales by the end of the year.

"People don't make buying decisions while they're here in cottage country on vacation. They end up making those buying decisions into the fall," he says, adding that surprises a lot of prospective sellers. "Sales increase in the fall because most people who had a great vacation want to buy a cottage to call it their own."

His message to buyers?

"In the long term, prices always go up," he says. "[Buyers] now have the luxury of taking their time, doing their due diligence, doing home inspections that they weren't able to do during the craziness of the COVID real estate market."