Cottages on Ahmic Harbour, Ont. Some realtors say a wave of mortgage renewals to higher rates could bring Ontario cottage prices down this year.Fred Lum/The Globe and Mail
There’s a saying that real estate agent Pauline Aunger often reaches for when talking about the Ontario cottage market: “God’s not making any more waterfront.”
Limited supply is a major reason why Ms. Aunger, a broker of record with Royal LePage based in Smiths Falls, Ont., predicts that 2026 will bring a modest 2-per-cent growth on average to property values in Ontario’s recreational-property market, even as larger Canadian cities deal with a prolonged downturn.
The cottage market could finally be stabilizing after a period of volatility since the onset of the pandemic, in which prices jumped and then dropped by more than 30 per cent in some areas. But some realtors say that a continuing wave of mortgage renewals to higher rates could drive owners to sell and bring prices down this year – particularly for lower-priced homes where owners are more likely to carry a loan.
Waterfront properties across the country struggled over the past year, with a recent Royal LePage report finding that the median price of a single-family waterfront home dropped by 5.2 per cent to $717,600 in 2025. About two-thirds of experts surveyed in the report observed an increase in the amount of time properties have spent on the market.
However, there is optimism that consistent interest from buyers and strength in high-end homes priced roughly above $4-million or $5-million could lift the market.
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Ms. Aunger says buyers at this price point are less affected by economic concerns, have less supply to choose from and aren’t worried about interest rates because they often purchase in cash.
Ms. Aunger describes buyers in the rest of the market as being engaged in a “marathon, not a sprint.” She says a steady stream of people are showing interest, but they’re taking much longer than usual to make a deal because they have more choice.
Meanwhile, for cheaper recreational homes, where supply is more elevated, John Fincham, a realtor at Re/Max Parry Sound Muskoka Realty, says interest rates are taking a toll on sellers.
“There’s a lot of people whose mortgages are coming up for renewal, and that’s going to play strongly this season,” said Mr. Fincham, who said cottage owners could find themselves with a depreciated asset that costs much more to own.
“A lot of them could be underwater.”
Mr. Fincham referenced one property that his company listed last year in the Muskoka region that was priced 32 per cent lower than what the owner paid in 2021.
Even at that price, it didn’t receive a single viewing or offer.
Sellers aren’t panicking yet, but Mr. Fincham says there may be more “fire sales” next year if sellers experience yet another year of not being able to make a deal.
That kind of strain on owners is why Mr. Fincham predicts that prices will drop by roughly 8 per cent, supply will increase by 8 per cent, and sales volume could drop by 10 to 15 per cent over the course of 2026, based on research his company conducts.
He forecasts that high-end cottages priced above $5-million will see a slight 0.3-per-cent increase in prices.
The hardest hit properties are on smaller lakes, or in slightly less ideal locations, said Mr. Fincham. Buyers are very picky today, but they’re willing to move quickly on well-priced units on sought-after lakes, he said.
Further north in Haliburton County, Re/Max realtor Jeff Strano is wary to make a prediction after his regional market swung from strong to weak in each of the past four years.
After peaking in 2022, the median sale price in Haliburton County dropped by 12 per cent in 2023. It rebounded by 10 per cent in 2024, but then dropped again by 9 per cent in 2025.
Last year, Mr. Strano said inventory peaked in May when there were 282 new listings brought to market. That’s more than double the figure in low inventory periods during the height of the pandemic.
He expects this year to be similar to the last, where buyers were cautious and slow to come to a deal. However, pent-up demand after slow sales in 2025 could help lift the market.
“Last year … even when you had a successful transaction, nobody felt like they won. Sellers felt like they didn’t get what they could have previously, and buyers thought they paid too much,” said Mr. Strano.
Cottage real estate markets usually begin to see more action in spring, ahead of the busy summer season. But this year is off to a very slow start after an intense, snowy winter that has made it difficult to access some properties.
It may take until May or June until the snow melts and the regular busy season resumes.
“A buyer can’t see the waterfront if there’s still ice and snow on the ground,” said Mr. Strano.
