The Muskoka cottage market has gone through some extreme shifts over the past five years.
The market has shifted from the pandemic-era adrenaline rush to a measured, fundamentals-driven rhythm, according to Gord Waites, Sales Representative with Johnston & Daniel in Port Carling.
Sellers are now benefitting from reduced inventory and less competition; buyers can secure historically attractive financing and perform due diligence on each property.
Despite the tariffs and economic uncertainty, the demand for waterfront properties and the lifestyle they offer remains strong and balanced on Muskoka’s Big Three lakes – Lake Joseph, Lake Rosseau, and Lake Muskoka.
The market for the remainder of 2025 is shaping up to be rewarding for well-prepared participants on both sides of the transaction, explains Gord.
The “pull-forward” effect Gord says that in a typical pre-pandemic year, there would be roughly 230 cottages changing hands on the Big Three Lakes.
“Then came COVID lockdowns, record low interest rates, and closed borders,” he says.
At that time, families planning to buy “soon” accelerated their timelines, propelling sales to 333 units in 2020 and 308 in 2021, about 45 per cent above normal.
“Think of it as borrowing buyers from 2022-2024 and squeezing them into a 13-month window,” he explains.
That dynamic helps explain why full-year sales fell to 151 in 2022, 140 in 2023 and 127 in 2024 without sparking a price decline. The buyer pool wasn’t gone; it had simply satisfied some of its demand early.
The same logic is visible in the first five months of 2025: unit sales match last year’s count, even though the narrative about mortgage rates and tariffs has evolved. In other words, we are witnessing a return to equilibrium.
The takeaway for sellers is reassuring: the run-up of 2020–2021 did not “use up” all of Muskoka’s demand. Although, it did compress the timing.
Positive futureA fresh cohort of millennials inheriting wealth and executives cashing out of urban real estate is already lining up behind the 2020–2021 wave, and they will be shopping into 2026 and beyond, Gord predicts.
For buyers, the lesson is equally clear: today’s inventory represents a brief window when selection has finally caught up to demand. Competition for prime shoreline is likely to intensify again, helped by the Bank of Canada’s 2.75 per cent overnight rate and the price growth forecast for recreational waterfront properties. Lower borrowing rates also benefit sellers because lower carrying costs expand the pool of qualified purchasers.
There were 92 cottages on the active inventory list, yielding 3.7 months of inventory (the amount of time it would take to sell all the cottages in the current market), representing a balanced market. Average sale prices remain only mid-single digits below the 2022 peak, thanks to the quality of current listings.
“Well-priced, well-presented properties are still finding buyers; they simply spend more time on the market,” says Gord. “Prices are expected to rise modestly for 2025. Overall, demand continues to remain resilient for waterfront properties in Muskoka.”
Domestic demand The U.S. tariffs and political flashpoint headlines around the globe have contributed to a continuation of the staycation culture in Canada. Having rediscovered local waterfront during the pandemic, Canadian buyers are still choosing to invest in cottage real estate.
An estimated $1 trillion in cash and assets is set to be passed down from Boomers to younger generations in 2026, creating a mixed bag of buyers and sellers.
In the recreational waterfront market, Boomers will pass down capital and a desire to continue the Muskoka family history. New owners inheriting property will need to consider their options. Some will sell, adding to inventory levels. Others will take over the family property and build on their Muskoka legacy.
Domestic buyers will dominate the waterfront market as U.S. and other foreign nationals are sidelined by Ontario’s 25 percent non-resident speculation tax.
With foreign buyers restricted, Canadians, mainly from the GTA and Golden Horseshoe, armed with inherited capital and flexible work, remain the principal engines of demand. Buyers in this market often have disposable income or savings, which makes them less reactive to financial shifts.
“Real estate investment in Muskoka waterfront properties remains a solid investment with a proven rate of return,” says Gord. “Prices are still rising, just at a more moderate pace.”
No matter whether you’re buying or selling, in these ever-evolving conditions it’s vital to work with a trustworthy, experienced Muskoka realtor who understands the nuances and complexities of the waterfront market.
