WHAT TO EXPECT FROM THE COTTAGE MARKET THIS FALL, INCLUDING WHO’S SELLING AND WHY

When it comes to cottage real estate, it’s safe to say that buyers have the upper hand right now. Ample inventory, along with lowering interest rates, are making it easier for buyers to enter into the market.

But overpriced waterfront listings coupled with buyers who aren’t interested in spending a fortune continues to drive a slow market this year.

To get properties moving again, real estate experts say that sellers must shed their pandemic-era revenue dreams and list their properties at market value.

“For sellers, if they don’t price it right, they will get shredded in this market,” says John Fincham, a real estate broker at Re/Max in Parry Sound, Ont. 

Fincham recently released an Ontario cottage market update detailing a sharp drop in cottage sales. This is in part due to buyers being more willing to spend extra time sourcing out well-priced listings, resulting in less sales and longer lead times for purchases.

“If you want to move the cottage, you need to know the market you’re working in,” he says.

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Who is selling right now?

As the old adage goes, the main drivers of real estate transactions are death, divorce, and debt. In general, this continues to be the case.

“People tend to sell cottages because they need to sell them,” says Martin Elder, an Ottawa-based real estate broker who specializes in cottage sales. 

Most of the sellers he works with are offloading their properties for personal reasons. Since the federal government decided to raise the capital gains tax (CGT) earlier this year, Elder says he only knows of one person who planned to sell prior to the tax change. 

In Fincham’s experience, he’s seen more Americans looking to pass down their Canadian cottages. He says they’re struggling to contend with the CGT on top of the 25 per cent foreign buyers tax. “It’s a big pill to swallow.”

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There are also the cottagers who bought properties during the pandemic and are having “buyer’s remorse,” says Fincham. Plus, there’s the sellers who couldn’t adjust with interest rate changes, he adds.

Cottage listings must be priced “spot-on” to sell, say experts

There’s currently an inventory of almost seven months worth of waterfront properties listed in Ontario, according to Fincham’s cottage market update.

These listings are now sitting on the market for an average of 29 days—nearly twice as long as they were sitting in 2023.

“A lot of sellers still have the Covid market mindset,” says Fincham. “And the buyers, of which there are very few, are far more savvy and on top of the market.” 

Sellers need to rein in their expectations of sales revenue from their properties and focus on reasonable listing prices to get their cottages sold. “They have to take the emotion out of it,” says Fincham.

And the experts agree that if you’re looking to sell, now is the time. 

“If I had a cottage, I would be tempted to list it now priced spot-on,” says Fincham. “The market may recover in the spring, but my gut is telling me that there is the potential for further deterioration.”

2024-09-04T18:40:19Z dg43tfdfdgfd