Ontario cottage prices are way down and experts are unsure of what's next for the market

The real estate market in parts of the GTA is just starting to slowly heat back up after home sales fell off a cliff in recent months, but the downswing has impacted some housing types far harder than others.

Along with condos, it seems cottage values are plunging in response to dwindling buyer enthusiasm, tumbling double-digit percentages from last summer.

Per new numbers shared by the Canadian Real Estate Association (CREA), though realtors in the Lakelands region reported a slight uptick in activity for waterfront homes in July (+5.1 per cent, representing an increase of just six sales), prices have crashed.

The median selling price for non-waterfront properties in the area was down 5.3 per cent year-over-year to $650,000, but homes with lake frontage — more likely to be cottages or vacation homes — saw a steep 23 per cent price drop from July 2023, to an average of $809,000.

The report also notes that all waterfront sales in the region last month amounted to a total of $122.2 million, which is "a substantial decline" of 22.9 per cent compared to the previous July.

The number of cottages changing hands has also fallen far below historical averages for the region, which includes Haliburton, Muskoka, Wasaga Beach, Huntsville, Lake of Bays, and others.

"Residential non-waterfront sales were 26.3 per cent below the five-year average and 30.7 per cent below the 10-year average for the month of July, [and] waterfront sales were 36.7 per cent below the five-year average and 42.9 per cent below the 10-year average," the update states.

"Sellers of waterfront properties have pulled back their listings to some extent [and] the median price took an unexpected dip in July compared to the near record in the previous month. With more interest rate cuts expected through the end of the year it will take more data to establish a firmer sightline on where the market is headed next."

RE/MAX is among those hopeful for a bounceback by the end of the year, anticipating cottage properties in 72 per cent of Ontario's recreational markets to get about 33 per cent more expensive.