Lake Scugog, a popular lake in the sought-after Kawartha Lakes region, has long been home to beautiful recreational properties on the waterfront.
In the heart of the district, a classic bungalow containing three bedrooms and two bathrooms with ample green space and direct views of the lake, attracted a flock of buyers during the pandemic. In January 2022, the home sold for $1.1 million — a stretch for the 1,100-square-foot home.
The following summer the property was re-listed but there were no takers. After a series of price reductions it finally sold for $735,000 last April — a whopping $365,000 loss in just three years.
“It’s an anomaly to see such big price drops,” said Alex Blenkarn, real estate salesperson at EXP Realty, based in Hastings, Trent Hills — a 30-minute drive east of Peterborough.
And it’s in large part due to the cottage feeding frenzy during the pandemic when interest rates were ultralow, he said.
A flood of buyers from cities pocketed recreational properties in cottage country all over the province, pushing prices to unseen heights. Now, after interest rates doubled, those pandemic buyers are trying to off-load their properties, and many are struggling to break even.
Across Ontario, the median loss for properties purchased in 2022 and 2023 and then subsequently sold was $45,000. In the GTA the median loss was higher at $56,000. But Muskoka experienced a median loss of $240,000, (although the volume of transactions was relatively low), according to a first-quarter 2025 report from Teranet, a real estate registry services company.
“During the pandemic, it was basically free money and it was easier to qualify for a secondary property,” Blenkarn said. “This is the fallout of that initial rush into the cottage market.”
In Kawartha Lakes, of the 63 properties sold since January, around 89 per cent of them sold for asking or under asking, he added.
To sell in the current market, sellers have to price the property “just right,” he said. This can mean difficult conversations between realtor and seller, as the seller oftentimes has a bigger price tag in their head. The proposed price can be a shock, he said, but also a reality check of how much the market has changed.
“It’s always an extremely tough conversation,” added Steve Haid, realtor and partner at PSR Brokerage based in Muskoka. “We have to try and get to them the right number because if it’s listed above market value it will sit.” feast
Too much inventory and a lack of demand will continue to dampen the market moving forward, with little relief in sight for the rest of the year, realtors told the Star.
“We’re seeing a lot of properties have multiple price reductions of $50,000 to $100,000 before they do sell,” Blenkarn said, “and if we run into economic difficulty over the next six to 12 months prices could start to fall further, as the first thing to sell could be the family cottage.”
Pandemic cottage buyers’ financial blow
Nestled in the Township of Tiny, located in Simcoe County, a three-bedroom and two-bathroom property with a classic wood cabin interior was snatched up by a family in February 2022 for $760,000.
The parents bought the property with their son and daughter-in-law — they wanted a family escape and, when they weren’t using it, to rent it out for short-term use. They put more than $100,000 into renovations. During the pandemic, the home was a popular rental, being just a short walk from the local beach.
But when the township introduced strict regulations on short-term rentals, it killed demand and the supplementary income that allowed the owner to keep the property.
“You now have to have people stay for a minimum of one week (from April to October), but most people want long weekends,” the owner said (The Star granted them anonymity due to the sensitivity of their financial situation). On top of that, the property could only be rented out for 92 days a year.
The new regulations also came into effect when interest rates began to climb.
“When you did the math, it just didn’t work out anymore,” said the cottage owner.
In May 2024, they listed the property for $769,000 but received no offers. They terminated the listing, and put it back on the market a year later for $699,000 — more than $60,000 less than what they bought it for, and it still hasn’t sold.
Because cottage prices skyrocketed in the pandemic, they have further to fall, experts said.
However, they said analyzing data in cottage country can be difficult, because there are fewer sales compared to cities. For example, Teranet’s reported price loss of $240,000 in Muskoka for pandemic buyers is significant, but it’s based on less than 10 transactions, which can skew the data, experts warned.
Demand won’t catch up to supply
Prices are expected to rise in 60 per cent of Ontario cottage regions while 40 per cent are expected to see prices decline amid steady inventory and more listings expected in the warmer months, according to Re/Max Canada’s 2025 Cottage and Cabin Trends Report.
“There’s a lot of inventory to flush out. I don’t see the market being balanced this season,” said broker John Fincham, founder of real estate agency Find Your Muskoka, noting months of inventory, the time it takes sell based on current trends, rose from less than two months to 10 months over the last three years. He expected it will remain a buyers’ market for the rest of year, and maybe into 2026.
Consumer confidence is also down due to U.S. tariffs, with many Canadians waiting to see if the economy will go into a recession.
“It’s not just the tariffs themselves — it’s the uncertainty they create, weighing heavily on both buyers and sellers. Hesitation around major capital investments is only overshadowed by the anxiety of current owners, unsure if they’ll still have a job next month,” Fincham wrote in a market analysis report.
Bad weather also heavily impacted the spring cottage market, Haid said.
“The outlook for 2025 was positive but the harsh winter and ice storm totally pushed out the spring market,” he said. “People are still fixing their properties from the storm.”
Sell now or sell later?
While the cottage market has been sluggish, in the last couple of weeks there’s been more showings at open houses for appropriately priced properties, experts said.
But for now Blenkarn said he can’t see demand picking up enough to meet the supply, as the market is oversupplied with many properties that didn’t sell last year coming back online this year.
“Motivation is the most important, do you have to sell or want to sell?” he said. “If you want to sell, can you wait until the market catches up?”
