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Why Are Cottage Prices Increasing In Ontario?


Cottage Prices

As prices continue to soar all across Ontario during the COVID-19 pandemic, many people are especially wondering “why have cottage prices gone up so much in Ontario?”. Especially in some of the best cottage areas in Ontario such as the Muskoka Lakes, Haliburton, Parry Sound, and Prince Edward County, the average cottage price has risen over 50% year-over-year. The main reasons for this drastic rise in prices are the following 5 factors:

Lack of Inventory

All across Ontario and especially in cottage countries, there has been a large shortage of inventory compared to normal times. For example, inventory levels in popular cottage spots such as The Muskokas and The Georgian Bay region have seen record low inventory levels. The Muskokas had only 10 days of inventory on the market as of April 2021, and the Georgian Bay region had less than 1 month of inventory on the market in the same month. With a lack of ample supply of cottages on the market to meet the record levels of demand out there, it has led to bidding wars and people ready to pay more to get a cottage because of the lack of availability. As well, with the COVID-19 pandemic making moving and selling a cottage less convenient, some sellers have held off on listing their cottage for sale.

Work From Home Flexibility

As many workers have adjusted to a new normal working from home, and with many companies planning to allow their workers to stay working from home for at least part of the work week, many people have used this flexibility to change their surroundings. Full or partial work from home jobs will now make it possible for people to move further from Toronto and other major cities, especially as housing prices in Ontario major cities continue to soar. This has led to a large influx of people looking to buy outside the city in areas that offer more nature, which has led to cottage demand skyrocketing. Even those who will go back to the office after the COVID-19 pandemic is behind us may now have the flexibility to work for more extended periods of time away from the office. This is making people more optimistic about getting to actually use a cottage if they buy one, also leading to increased demand.

Cottage Prices

Build-up of Wealth During The Pandemic

As housing prices across Ontario have risen at a record pace since the pandemic, so has the wealth levels of the people who own these properties. Besides just houses, different asset classes such as stocks, bonds, and businesses have also risen in value because of interest rates falling. This leads to a natural behavioural response called the Wealth Effect. The Wealth Effect is when people are more willing to spend and make big purchases because the value of the assets they own have risen in value. As well, rising asset prices mean that people will now have more options for funding the purchase of a cottage, which may include selling some assets, or getting a loan backed by one of these assets, such as a home equity line of credit. Overall, this has given more people the confidence to go out and purchase a cottage that they can spend time in during lockdowns and after the pandemic is done, while also giving these same people the ability to pay even more for cottages. All this has done is increase both the competition for the cottages on the market, and the number of people who are financially confident enough to make a large purchase like a cottage.

Record Low Interest Rates

In addition to people’s wealth rising during the pandemic across Ontario, record low interest rates and mortgage rates makes financing a property even easier. With low interest rates, people who are getting a mortgage to purchase a cottage are able to pay a higher purchase price because of less money going to interest on every dollar they pay. This also means that even if the purchase price of a cottage is higher, many people will still be paying the same or similar monthly payments as before interest rates fell.

Lack of International Travel & Extensive Lockdowns

The demand for cottages has increased with both the uncertainty of the COVID-19 virus impacting people’s ability and willingness to travel outside of Canada, and with Ontario’s economy being in lockdown for a large part of the past year and a half. With so many people wanting to go to a cottage as one of the only options for activities and travel, it has pushed some people to try and purchase one for this time and for after the pandemic. This helps to increase the demand for cottages to purchase and rent, helping to propel higher the purchase price of a cottage in Ontario.

Cottage Prices

In conclusion, cottage prices have risen because of the combination of low supply levels in the form of lower inventory, and rising demand because of short and long term factors. Although factors such as extensive lockdowns and lack of international travel may be almost behind us already, it remains to be seen whether a lack of inventory, work from home flexibility, record low interest rates and a build-up in wealth will continue to remain and will propel cottage prices higher into the future.


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