Cottage country real estate, particularly waterfront in Muskoka and Georgian Bay, continues to maintain its exceptional value despite what’s happening in other market segments.
While residential properties in urban centres – particularly condominiums – are offering great deals for buyers and grief for some sellers, cottages are a very different story.
Bob Clarke, owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty, explains that it’s a matter of supply and demand. Those seeking to purchase a waterfront property of their own – especially on the most popular lakes – are finding a distinct lack of inventory to choose from.
Though overall unit sales are down compared to recent history, the sales prices remain steady and have even increased at the upper end of the market.
“There have been a handful of agents who have had very good years,” Bob says. “For example, I had a potential buyer contact me and asks about getting on the Big Three lakes (Joseph, Rosseau, and Muskoka) for $5 million. I had to explain that there was nothing at that price.”
Even when the buyer upped his budget to $10 million, the available properties were scarce.
Most people looking to invest in a cottage – be it for personal or financial reasons – have become much more diligent about ensuring the property has almost everything they’re looking for, even when it’s priced appropriately at market value.
But when they find the right property, buyers are willing to close deals. In many cases the buyers are families looking for a cottage to enjoy. At that point, it’s less about the dollar amount and more about the feeling.
“Some big sales in terms of total dollars have taken place this year, including one at $29 million,” says Bob. “Still some potential buyers are thinking that if we don’t have a free trade agreement by next spring, the Canadian economy is going to be in the dumpster. In contrast, every seller says, well of course we’re going to have a free trade agreement and then everything’s going to go crazy again.”
Cost to build
The cost of building a dream cottage, or even a modest one, isn’t going down either. Though material prices have normalized in most cases, labour costs remain higher than in previous years. And due to a lack of building lots on the water, building usually means buying a property with existing structures that need to be torn down.
This all drives up the value of move-in ready properties.
To illustrate the current building climate, Bob uses an example of a non-waterfront property where the owner wants to build a home.
“Say I want to build about 2,500 square feet, maybe with a basement. And I want a few acres,” he says. “That’s $800,000 to $1 million. Most people can’t believe it. But it’s what the market is like right now. Now think about building a 5,000-square-foot cottage and a bunkie on land that has already cost you one or two million dollars.”
What’s in store for the future?
Having a solid and long-term Canada-United States-Mexico Agreement (CUSMA) free trade deal in place will go a long way to bringing back confidence in the economy and investment markets like real estate.
“It is definitely a waiting game right now. And then, hopefully in the spring, everything starts to look up again,” explains Bob. “If CUSMA gets renewed, and we don’t have any free trade challenges, I think there will be a lot of strength coming back to the market.”
Though Bob isn’t expecting to see a huge jump in sales numbers immediately, he does believe having a free trade agreement in place by spring will have an overall positive impact on the market.
“I do think things are going to firm up and we’ll be seeing a more robust market.”
TEXT CHRIS OCCHIUZZI
