Cottage prices expected to tick up: report

Hey there, time traveller!
This article was published 20/03/2024 (565 days ago), so information in it may no longer be current.

Amid the social distancing rules of the COVID-19 pandemic, those who could afford to headed to the lake.

With a dearth of inventory on the market, cottages were going for unheard of prices. According to Royal LePage, in 2020, the aggregate price of a house in Manitoba cottage country increased 21.8 per cent year-over-year to $239,323. It was up another nine per cent in 2021.

But the pandemic restrictions have since been dropped, interest rates have gone way up, and while everyone still agrees the majority of Manitobans love going to the cottage, the market has decidedly cooled down.

The 2024 version of Royal LePage’s Spring Recreational Property Report released today forecasts a 0.5 per cent increase in prices this year over last. This is on the heels of a 0.9 per cent decline in 2023.

The big influence in the market these days is, of course, interest rates.

The Bank of Canada has held its key rate at five per cent since summer 2023. Economists expect cuts in the near future (perhaps June or July), but no one knows exactly when.

According to Rolf Hitzer, a broker/owner at Winnipeg’s Royal LePage Top Producers Real Estate, that makes for a more balanced, healthy recreational property market.

“During COVID, it was very buoyant in the cottage market,” Hitzer said. “Prior to COVID, it was a little stale, a little tough going. Now there is interest and buyer activity and properties selling at more normal rates.

“The crazy times, at least in the short term, may be behind us.”

Phil Soper, president and CEO, Royal LePage, said: “Demand has been building quietly on the sidelines. Our regional experts tell us that buyer interest is steadily ramping up as the spring market approaches.”

Because of the mild weather last week — and much of the winter — Manitoba’s spring cottage country market has started early.

Sarah Parent of EXP Realty, whose business is split between the Winnipeg and cottage sectors, is a big advocate of getting her clients to list a property for sale before the typical April-May window.

“It has been proven to be a successful strategy,” Parent said, adding she’s got 12 listings already — more than she’d typically have at this time of the year.

The number includes a $475,000 property on the lake at Lester Beach, some 100 kilometres northeast of Winnipeg.

Not surprisingly, she said, high-priced lakefront properties will move much quicker than premium properties not on the water.

However, the calm, organized local market may yet be hit with another wrinkle.

While people are waiting for interest rates to come down — “Consumer confidence in general will get a boost when we see a cut to the Bank of Canada’s key lending rate, expected later this year,” Soper said – it remains to be seen what the legacy of mortgages north of five per cent will be.

Hitzer said he has already fielded a few phone calls from people whose low-rate, pre-pandemic mortgages are coming due, worried about their ability to keep up payments on two properties.

It remains to be seen how many people will fall into that situation, he said. “I don’t know if that is going to happen, but I do suspect that will be in play to some degree in 2024 or 2025.”

Another wrinkle in the recreational property market in Manitoba: the recent phenomenon of multiple buyers putting in offers — which hasn’t been seen since the early 2000s, Hitzer said.

“All of a sudden, there’s multiple offers on cottage properties.”

Parent agreed, adding buyers are concerned about making a offer competitive with other potential bids. “It’s now a standard question from many buyers to ask if there is an offer date.”

Regardless of vicissitudes of the market, the dream of owning a property at the lake is still alive in Manitoba, advocates said.

“We are a water province,” said Hitzer. “People love either owning a cottage property or heading to some destination in Manitoba where there is water.”

Development of public amenities is also catching up, which could aid the recreational property market.

For instance, the Rural Municipality of St. Clements (which includes a fair amount of cottage country from Beaconia north to Grand Beach) has broken ground on the South St. Clements Activity Centre and Park, a $6-million development.

“As long as I have been mayor, I’ve been patiently waiting for this project to get off the ground and be built. That project has been in the works since 2015,” Mayor Debbie Fiebelkorn said.

martin.cash@freepress.mb.ca