Now is a great time to buy a cottage

Vacation property prices haven’t increased in 5 to 7 years

by Romana King – March 25th, 2015

If you’ve ever dreamt of owning a cottage, now is a great time to buy.

For the better part of a decade prices for lakefront real estate and chalets in key Canadian vacation hot spots rivaled the housing prices of the finer neighborhoods in Toronto, Calgary, Vancouver and Montreal. But this has changed in the last few years.

“It’s a buyer’s market when it comes to [Canadian] vacation homes,” says Tim Harris, owner of Tradewinds Realty which services the South Shore area of Nova Scotia. Prior to 2008, about 50% of Canada’s second home purchasers were American, says Harris. But then came the U.S. housing crash American property owners started to sell. As a result, Harris has watched the Nova Scotian vacation property market drop by 20%. And it’s not the only vacation property area to experience a dip in pricing. “Americans started rationalizing their vacation home purchases and started selling in droves,” says Harris.

But the U.S. economy is stronger now, you say. That means prices should be picking up. Not yet, says Harris.

Despite a steadily growing U.S. economy buyers from south of the border still haven’t come back to Canada. “Instead, we saw an additional 10% drop in average prices over 2014,” says Harris.

Internet is hurting Canadian vacation property market

Part of the problem, according to Harris, is the internet. “There was a time when it was really hard to find a vacation rental property in places like Nova Scotia,” says Harris. “Then along came the internet.” Property rental sites, such as AirBnB and, make it easy for vacationers to track down, book and pay for a rental property. “They can even pay using a smartphone,” says Harris.

Harris believes that the ease and speed of being able to find a rental unit has decreased the need to buy a vacation property. “It used to be so difficult and inconvenient finding a cottage or lake front property. Now it’s just a swipe of the finger.”

Because the U.S. buyers haven’t come back to Canadian soil, there’s been no sales pressure and this has meant that prices continue to decline slightly, or stay stagnant, depending on the market. “It’s still a buyer’s market when it comes to vacation properties,” says Harris.

Tips for buying a Canadian cottage

This is good news for anyone looking to buy a cottage or vacation property in Canada. But to get the most for your money you’ll need to get organized.

First, determine your primary use. Will the place be used for family gatherings? To enjoy during regular vacation times, or will it be more regularly used now that you’re in retirement? Do you plan on earning some extra money by renting the place out? Answers to these questions will dictate what you buy and where.

For instance:

→ A vacation property that will double as a retirement retreat should have easy access to

amenities, such as grocery stores, gas stations and hospitals.

→ A family cottage should have adequate sleep areas for a growing family (remember, the kids will want sleepovers) and adequate kitchen and eating areas.

→ A rental place needs to be located in a high-demand area, such as on a lake or near sought-after sites (such as near Fundy National Park in New Brunswick).

Once you know what you need and want it’s time to get your finances in order. Make a budget for annual maintenance, property tax, propane fuel refills, septic tank cleaning and garbage dump fees. You’ll also need to come up with a hefty down payment—second properties require buyers to put down at least 20%.

When looking for that ideal retreat, keep in mind that places closer to major urban centres carry higher price tags but other factors can also drive up a property’s price. “The size of a lake will dictate a larger price,” says John Sallinen, a Re/Max broker in the Muskoka, Ont., area. “Most people want to be on a large lake.” Get off the big lakes and travel a bit further and prices begin to drop, sometimes dramatically. (Although, you may not command as high a rental price for these off-the-beaten path properties.)

To narrow down your choice of locations, consider tapping into market research. Every year in May, Re/Max releases its Recreational Property Report, which offers insight into costs and availability in the nation’s prime vacation spots.