I just woke up to my phone buzzing with messages from three separate cottage owners asking if they should sell before things get worse. That’s usually my signal that something significant is happening in Canada’s recreational property market.
The Royal LePage 2024 Spring Recreational Property Report landed yesterday, and it confirms what many lakeside communities have been whispering about: our treasured cottage market is facing headwinds that could reshape vacation property ownership across the country.
According to the data, recreational property prices are experiencing their first meaningful decline since the pandemic buying frenzy, with the aggregate price of a single-family recreational home dropping 4.5% year-over-year to $607,600. For perspective, this time last year we were still seeing modest gains nationwide.
“After years of unprecedented demand, we’re witnessing a natural correction,” explains Phil Soper, president and CEO of Royal LePage. “The combination of high interest rates, steep building material costs, and general economic uncertainty has cooled the once red-hot recreational market.”
What’s particularly striking is how regional the impacts are. While Ontario saw recreational property values drop by 7.2% to $694,100, British Columbia’s recreational market has shown remarkable resilience with only a 1.1% decrease to $1,069,900, still commanding the highest prices nationally.
The Atlantic provinces tell an even more interesting story. Despite economic pressures, recreational properties in Atlantic Canada actually appreciated by 2.2% to $350,300, highlighting how the relatively affordable entry point continues to attract buyers from across the country.
I spoke with Morgan Ackerman, a cottage owner in Muskoka who purchased his property in 2020. “We bought at peak pandemic prices because we wanted somewhere to escape to. Now I’m watching my investment shrink while my variable rate mortgage keeps climbing. It’s a double whammy.”
Morgan’s experience illustrates a crucial market dynamic: the pandemic created a surge of emotional buying that drove prices to unsustainable levels in many regions. What we’re seeing now isn’t just a correction but a return to rationality.
The tariff factor can’t be overlooked. The federal government’s 25% tariff on Chinese steel and aluminum products has significantly increased building material costs. This has particularly impacted the new construction and renovation segments that represent a substantial portion of the recreational property market.
“Adding a boathouse or renovating a kitchen has become 15-20% more expensive practically overnight,” notes Emma Collins, a contractor specializing in cottage renovations in the Kawarthas. “I’ve had three clients put their projects on indefinite hold in the past month alone.”
The Bank of Canada‘s recent policy decisions have provided some relief, but the psychological damage to buyer confidence has already been done. The central bank held its benchmark rate steady at 4.5% in its latest announcement, but many prospective cottage buyers remain in wait-and-see mode, unwilling to commit to discretionary purchases while economic uncertainty persists.
This hesitation is reflected in inventory levels, which have climbed 17% year-over-year in recreational markets nationwide. Properties are sitting on the market significantly longer than the rapid-fire sales we saw during 2021-2022.
Statistics Canada‘s latest Consumer Price Index showed inflation cooling to 2.7% in April, approaching the Bank of Canada’s target range. This improvement in the inflation picture suggests interest rate relief might be coming later this year, potentially breathing life back into discretionary real estate markets.
The demographic dynamics also merit attention. Baby boomers, traditionally the backbone of the cottage market, are increasingly choosing to cash out. Royal LePage’s survey found that 38% of recreational property owners are now over 65, and approximately 22% plan to sell within the next five years.
“We’re looking at a generational wealth transfer in cottage country,” explains Heather Waters, a recreational property specialist with Royal LePage in Quebec’s Eastern Townships. “The question is whether millennials and Gen Z buyers can afford to keep these properties in Canadian families, or if we’ll see more foreign and corporate investment stepping in.”
This generational shift coincides with changing work patterns. The return-to-office mandates that gained momentum throughout 2023 have reduced the appeal of remote-work-friendly vacation properties located two to three hours from major urban centers.
Environmental concerns are also influencing the market. Severe flooding in cottage country regions of Quebec and Ontario last spring damaged hundreds of waterfront properties, raising questions about climate resilience and insurance costs. The Insurance Bureau of Canada reports that premiums for waterfront properties have increased by an average of 23% in high-risk areas over the past two years.
Despite these challenges, long-term optimism remains. Recreational properties have historically proven to be resilient investments over multi-decade periods. The limited supply of waterfront land combined with Canada’s growing population suggests the current downturn may represent an opportunity for buyers with patience and financial stability.
“We’re advising clients to think in decades, not quarters,” says Jordan Miller, financial advisor at Wellington Capital in Toronto. “Vacation properties have always been emotional as well as financial investments. The families who can weather this cycle will likely be rewarded for their patience.”
For potential buyers, the current market presents both opportunities and risks. Those with secure employment and substantial down payments can find motivated sellers and negotiating leverage not seen in years. However, counting on immediate appreciation would be a mistake in the current environment.
As we move into the prime summer cottage season, all eyes will be on inventory absorption rates and the Bank of Canada’s next moves. For many Canadians, the dream of a lakeside retreat remains powerful—even if the path to ownership now requires more caution, creativity, and financial planning than during the pandemic boom years.
