By Steve Haddock
So you’re interested in waterfront property, eh? Well, join the crowd. During the last few years, we’ve experienced an unprecedented rise in the cost of waterfront properties, as buyers have flocked to escape big cities. And, of course, the ability to work remotely greatly incentivized and commodified rural properties. This market – and the real estate market in general – was firing on all cylinders up until April 2022, when the party seemed to end. A rapid rise in interest rates caused many buyers to pause to see how it would affect the market.
Will this be the case going forward? Well, let’s have a closer look and see when the best time is for you to enter the market. Sales volumes were down significantly during the last year, as were listings, and while prices were down, they hadn’t dropped precipitously.
So what is going on?

Rising interest rates are expected to stabilize early in 2023, with inflation coming down and putting rate increases off the table. TD expects both sales and average home prices to post gains this year once the economic picture clears, with prices expected to rise by 3.9% and sales growing 18.9%, on average, nationally.
The economy should also be growing again as high immigration levels fuel population growth, juicing demand for homes, which will help sales and lift prices. The challenge for you in your search for the perfect home away from home is the lack of waterfront property on the market, especially quality waterfront. With up to 500,000 new immigrants to Canada, many lured by Toronto’s diversity and opportunity over the past year, the number of buyers in the market has grown. While many of them have to meet rigid financial qualifications, it should be noted that the recent ban on foreign buyers purchasing GTA properties does not include recreational properties. Additionally, increased wages and rising material costs have led to significant increases in construction budgets for lake houses, which has only helped justify the current cost of the properties.

Many buyers in the luxury waterfront segment are not necessarily interest rate-sensitive. However, many of these same buyers have sat on the sidelines, hopeful that prices will drop, which drastically slowed sales. Furthermore, sellers in this unique market don’t need to sell, which contributes to the shortage of inventory – which is propping up prices.
So should you get in now? Buyers who pull the trigger in the near future are far more likely to get a reasonable deal and will avoid having to compete once the market stabilizes and rates start to go lower. With such a significant rise in prices during the last few years, many buyers are afraid of paying too much – and who can blame them? But keep in mind that demographic trends are a tailwind for vacation properties.
Population growth, the lack of available waterfront, the drop in construction, the cost of labour and materials, a shift in flexible work locations, and the fact that a large percentage of affluent GTA buyers strive to own waterfront property, are all factors. A recent poll found that 3.2 million Baby Boomers are looking to move in the next five years, and 56% of them want to move to a recreational or rural property. It’s a trend that started in the mid-2010s due to rapid appreciation in cities.

Additionally, another poll indicates that 75% of Millennials strive to own a waterfront property in the not-too-distant future. So a lot of Millennials, a lot of Boomers, and not a lot of waterfront property all continue to challenge your ability to find waterfront property. At this moment, we are not seeing a lot of inventory coming onto the spring market, which will continue to mean a constrained market that should prop up prices.
If you see something that, for the most part, suits your family’s desires, then consider this: we can’t create additional waterfront here in Muskoka. We have low inventory and high demand for the prestige and fulfillment behind the Muskoka waterfront cottage dream.
Unless you’re willing to pay a premium and have an extra five to ten years to wait for a cottage that checks an extra box or two, then I suggest you jump at what you see!
I always like to say, “Life is short; buy a cottage.”