Cottage sellers get the news - the market has shifted downward

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The fall market in Ontario’s cottage country often brings a flurry of deals.

Sellers who didn’t land a deal over the summer often trim their prices before winter. Buyers become more serious about seeking out a bargain.

In the Haliburton region, Jeff Strano, a real estate agent with Re/Max Professionals North, says September was a surprisingly brisk month for sales after a sluggish spring and summer.

“There really wasn’t a spring market,” says Mr. Strano. “We did most of our business in August and September. It has been really odd.”

The sales in September – which were likely bolstered by exceptionally warm weather – made up for some of the lost time in the first eight months of the year, Mr. Strano says.

The uptick in Haliburton in September was the reverse of the market in Ontario cities, where a spring rally faded through the summer and into the fall.

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Nationally, homes sales dipped 1.9 per cent on a seasonally adjusted basis in September from August, according to the Canadian Real Estate Association (CREA). New listings jumped 6.3 per cent in the same period to mark a cumulative gain of about 35 per cent from the 20-year low recorded in March, CREA says.

The national average home price gained 2.5 per cent in September compared with the same month last year to stand at $655,507.

Traditionally, cottage sales have tended to slow during times of economic strain: Buyers are cautious about spending when they fear recession or job loss. Sellers, meanwhile, are more likely to sell a cottage than a primary residence when they are financially stressed.

Mr. Strano believes buyers in the spring were cautious about spending and taking on debt after the Bank of Canada lifted its benchmark interest rate with a series of increases.

Mr. Strano says the gap between the expectations of sellers and buyers sometimes presents a challenge in the current market.

“We do have a lot of sellers who have sour grapes because they’re really sorry they missed the peak,” he says. “On the other hand, you have buyers who think the market’s crashing and they want a deal.”

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For the year to the end of September, the average price for residential waterfront in Haliburton was $988,000, says Mr. Strano. That compares with an average price of $1.048-million for the same period of 2022, he says.

Prices have remained fairly stable because inventory has been low, adds Mr. Strano. Many of today’s buyers are paying with cash, he adds.

He notes there were 207 sales of waterfront properties in the region to the end of September this year compared with 416 sales in the same period in 2021 when demand for cottages was at a pinnacle.

“Everyone has just sort of held off on selling if they don’t need to sell.”

Mr. Strano recently sold a three-bedroom cottage on Benoir Lake at the edge of Algonquin Park after 15 days on the market.

The cottage was listed with an asking price of $1.099-million and sold for $1.08-million.

Mr. Strano says the asking price for the winterized cottage with 120 feet of waterfront and deep water off the dock was set at a realistic level to reflect the current, slower market.

Alexis Victor, real estate agent with Royal LePage Signature Realty, says the market in Orillia on Lake Couchiching and towns along the east side of Lake Simcoe has become more balanced after a deep slump in 2022.

“Last year was like literally standing in quicksand,” she says of sinking sales and prices.

Ms. Victor believes that the lack of froth in the market now means that purchasing a property is less risky for buyers than it was at the peak.

Today buyers are able to attach conditions to their offers and require a longer time until closing so they can sell their current home.

Ms. Victor says cottage prices had soared so dramatically during the early part of the pandemic that some people began to think that flipping a cottage after a few months or a year was a quick way to make money.

She points to an example near Brechin, Ont., where Ms. Victor helped buyers reach a deal for the private purchase of a small, vintage cottage in April, 2021. The clients paid $750,000 for the two-bedroom house that backs onto a river leading into Lake Simcoe.

Those clients renovated the cottage and sold it in August for $921,000.

Eight months later, in April, 2022, the purchasers listed the cottage at 1295 Furniss Dr. with an asking price just below $1.08-million.

After a series of price cuts, the property was taken off the market for a while, then relisted in May, 2023 with an asking price of $795,000. It sold at the end of June for $790,000.

A three-bedroom cottage on Peninsula Lake near Huntsville, Ont. was listed with an asking price just below $4.3-million in June, 2022. The asking price was cut to $3.75-million in November and Ms. Victor helped her clients to purchase the property at 1021 Sawmill Lane in April for $3-million.

Gradually sellers have realized the market has shifted and become more realistic with their prices, says Ms. Victor.

Ms. Victor advises buyers looking for a bargain in cottage country to continue their search into the winter.

“You can get crazy deals in the winter because no one is buying. And if there’s a cottage on the market in the winter, those people want to sell.”

CREA says incoming data over the next few months will determine whether Ontario is an outlier or just the first province out of the gate to show the kind of softening price trends that would be expected to play out in at least some other parts of the country, given relatively high interest rates.

CREA senior economist Shaun Cathcart is predicting a quieter-than-normal winter for real estate sales with buyers keeping a close watch on the Bank of Canada.