Cottage owners stuck in paradise as market slams to a standstill

Yahoo

10-07-2025

An Ontario couple in their 60s, ready for the next phase in their lives, found their perfect next move. Unfortunately, they came up against the realities of the cottage market in the province.
David (whose surname has been withheld to protect his confidentiality) and his wife put their waterfront cottage on Catchacoma Lake in the Kawartha Highlands for sale in the spring of 2023.
The couple decided to sell their two-acre property and purchase something smaller, more accessible and easier to maintain in their retirement. They found a $600,000 flat lot with no stairs that suited their needs, close to both shopping and medical facilities, in the idyllic community of Bobcaygeon.
'We were looking at the downsizing aspect of it and transitioning into our next phase of life,' David said.
The couple purchased their old cottage in 2004 for $500,000. It benefited from steady price appreciation over the past two decades, while renovations, such as a finished walk-out basement, docks and a waterside bunk house with a hot tub, added to the property's value.
The problem was that they couldn't find any serious buyers for the place, which they first put up for sale at $1.6 million. David ended up taking the listing down in fall of 2023, tried with another real estate agency, and met with the same results.
David and his wife are not alone in finding themselves up against a tough recreational property market in Ontario.
This cottage market is at a standstill, suspended by growing economic concerns among buyers and sellers, according to a 2025 REMAX cabin and cottage trends report. Year-over-year prices have fallen across half of all regions covered in the report, with declines ranging between one and 20.3 per cent.
I had to refinance and carry two places. It was a nightmare
A cottage owner on the difficulties of selling their property
This is especially true in areas like Niagara-on-the-Lake, Peterborough County, Northwestern Ontario, Orillia and Grand Bend.
Growing inventory and declining demand from cautious would-be buyers is leading some sellers to slash their prices or hold off — while others who overpaid for cottage life during the COVID-19 pandemic and can no longer afford it are taking major losses, real estate agents say.
'The pandemic buying period had sort of died off, and so we had a few tire kickers,' David said. 'We did start at a pretty high price, and we did knock that down a bit, and still no takers.'
Toward the end of 2023, David decided to start a Facebook group called Cottages For Sale in Central Ontario to increase exposure to his cottage and put the listing up through another real estate company again.
He finally got an interested buyer who reached out through the Facebook group in March 2024, and ultimately purchased the property for $1.2 million in November. But David said the selling process was long and arduous.
'I had to refinance and carry two places,' he said, adding that he gave the buyer two extensions on the closing date. 'It was a nightmare.'
The Kawartha Lakes area has seen some cottages languishing on the market for well over a year, according to Alex Blenkarn, a real estate salesperson at eXp Realty, based in Peterborough.
'In 2025, there have been more new listings in the first six months than there were in 2021 for the entire year,' said Blenkarn.
Blenkarn said statistics from the Central Lakes Association of Realtors showed 404 new listings in the Kawartha Lakes area in 2021 and 851 new listings in 2024, with 437 new listings in the first half of 2025.
The sales data isn't any more promising. About three-quarters of sellers sold their waterfront property in 2021, but only a quarter sold in 2024.
Blenkarn said this means listings that didn't sell in previous years are crowding the market along with new listings this year. 'It's basically two different sellers feeding the pool, and it just creates a snowball effect of oversupply.'
You've got to be struggling financially to take a $300,000 loss
Alex Blenkarn, a real estate salesperson based in Peterborough
Some owners are selling their cottages due to appreciation, especially if they've owned their cottages for over a decade. But there are also sellers who snapped up cottages in the first couple years of the COVID-19 pandemic when they were able to work remotely and are now realizing they are not getting the same use out of the property, Blenkarn said.
'It's costing more than they're benefiting from the cottage.'
As a result, he's seen five listings sell significantly below their original purchase price this year. One three-bedroom cottage sold for $735,000 in April — a 33 per cent loss for the previous owner who purchased it in 2021 for $1.1 million.
Staycations are back, so why are Canadian cottage sales slumping?
As Canadians ditch U.S. real estate, some predict a flood north
'You've got to be struggling financially to take a $300,000 loss,' Blenkarn said. 'Nobody wants to sell for a loss like that.'
Blenkarn said he is also seeing cottages being leased out and up for sale at the same time, an indicator that the owner is having trouble affording the property in the interim.
David said his Facebook group, a forum for people to post their cottages for sale, has swelled to reach more than 18,000 members.
'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.'
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.
'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.
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.
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.
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.
'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.
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.
'I keep telling (sellers to) hold on to them if you can because you're just going to take a loss.'
On the other hand, overflowing inventory and declining prices means buyers now have the luxury of choice.
'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.'
Charles Layton, 44, said he has scoured hundreds of cottage listings over the past 15 years.
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.
'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.
'Having a place on the water where we can enjoy nature feels like the Canadian dream.'
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.
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.'
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.
'We were able to bide our time and make a careful decision.'
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.
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.
'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.'
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.)
Still, she said the market certainly looks different than it did five years ago.
'During COVID, people were buying anything that was waterfront,' Scott said. 'Now, quality matters.'
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.
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.
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.
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.
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.
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.
John O'Rourke, broker and owner of Royal LePage Lakes Of Muskoka Realty, said May sales trended slightly below a 10-year average and properties are staying on the market for about 45 to 60 days, which he said is fairly typical when comparing to pre-pandemic numbers.
'During COVID, it was six days,' O'Rourke said. 'But if you look at historical trends, it's really just a return to a normal market.'
O'Rourke said he is seeing financially well-off buyers of between 40 and 50 years old with families enter the market. 'We're starting to see some generational wealth transfers, where the parents are leaving money to prospective buyers, too.'
Conrad Zurini, a REMAX broker for Niagara-on-the Lake, said that area has also seen inventory accumulate. He said this is likely due to declining interest in border towns and cross-border travel amid the tariff war with the U.S., plus the costs of maintaining and preserving a heritage home.
But Zurini suspects the market could bounce back later in the year, as many buyers are waiting on the sidelines for prices to fall further.
Affordability isn't a major concern for most cottage buyers. Blenkarn noted it's a recreational market for secondary properties, so they aren't considered a 'need' compared to most single-family homes.
'The people that are purchasing these secondary homes are generally well off, in one of the top income brackets,' he said. 'A lot of them have that equity in their primary residence.'
So, while it may be a tough time to sell in many cottage regions, it could also be an ideal time to buy, for those who can afford it.
'I don't think I've ever seen a better market for buyers,' said Zurini. 'I don't think you'll see long-term rates going any lower for the foreseeable future.'
• Email: [e-mail]