Uncertainty may exist throughout the investment world as stock markets fluctuate and the Bank of Canada raises interest rates, but the demand for recreational properties remains high and supply is still low.
As well, higher gas prices and the war in Ukraine are causing hesitancy for many potential buyers and investors.
However, the gap between buyers and sellers is too large to complete many negotiations, as interest rate hikes (many are expecting a couple more by the spring) are impacting the market. Buyers expect big reductions and sellers are still thinking of last year’s prices. It’s really a balanced market and many are sitting and waiting for someone to blink.
“We’re already seeing declines in the housing market across Canada,” explains Bob Clarke, owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty. “Prices are under pressure. Some cottages that were purchased during Covid could be back on the market… people thought they could work from home permanently, but we’re now seeing that there is an expectation that people get back to the office for work.”
This may create opportunities for buyers to get into the cottage market. Especially in Muskoka and Severn Bridge where Royal LePage Lakes of Muskoka Clarke Muskoka Realty continues to see movement in the $2 million and under price range.
“We’ve actually seen a pretty robust market under the $2M mark,” says Bob. “Over $2.5 to $3M hasn’t had a lot of transactions.”
For people with money, there will be plenty of opportunities to invest. Though the market is seeing what looks like price reductions, a lot of them are more about corrections in the market because of the huge jumps in property values that occurred in 2020, 2021 and through the spring of 2022.
“In a lot of cases, we were pricing things 10 and 15 per cent above last fall (2021), so when people started seeing 10 and 15 per cent reductions, they were concerned,” explains Bob. “Well, we weren’t seeing reductions, we were seeing prices normalize to last year’s numbers.”
The Big Three lakes (Muskoka, Joseph and Rosseau) are considered the gold standard of the cottage world. They are impacted less during market downturns due to a lack of inventory, a dearth of building lots, and the continued desire for families to own cottages on those lakes.
“Prime properties that are on points and are on those three lakes in the right locations really don’t get impacted a lot,” says Bob. “It doesn’t mean you’re not going to see some pricing adjustments, but it doesn’t matter if you’re in a good or a bad market, there will be people who want those properties with stellar attributes such as facing the right direction, shallow and deep water, wispy pines … those types of characteristics are always in demand.”
Bob notes that people will still be trying to get a good deal, even on these highly sought-after properties.
Meanwhile, properties that have fewer of those highly desirable attributes will be impacted more in terms of pricing, and present opportunities for new families to get into the market to start their cottaging life.
“The Severn office has been busier, and though it tends to be lower price points than Muskoka, I’ve been surprised at the volume and prices we’re seeing there,” says Bob. “It’s still active. But buyers are being a little pickier and looking for those specific attributes.”
So while some wait for the stock markets, interest rates, and inflation to stabilize, it’s creating opportunities for others to realize their cottage dreams by investing in something they can actually enjoy with their families.
TEXT CHRIS OCCHIUZZI