The price of Quebec waterfront cottage prices dropped 8.3 per cent in 2023

Waterfront cottage (pexels.com)

The price of waterfront cottages, considered coveted properties, fell by nearly 8.3 per cent in 2023 in the wake of high interest rates, according to a Royal LePage report released Wednesday.

The median price of a single-family home on the waterfront stood at $424,900 in Quebec resort areas, according to a review by the brokerage firm.

Waterfront properties still hold strong appeal for aspiring second-home buyers, said Royal LePage Laurentian real estate broker Éric Léger.

"I just think it's consumers' budgets that have made them go for something more affordable," he explained in an interview.

The location of those sales in 2023 could also explain the decline, added Annick Fleury, a broker in the Outaouais region for the same company.

She noted that more customers are opting for lakes that are farther away from major centres, to enjoy greater privacy. The price of these properties is generally lower.

"It allows for a slightly lower 'waterfront' budget, but that doesn't necessarily mean that the value of lakefront homes decreases," she said.

Overall, median prices rose slightly for single-family properties in major resort markets, despite rising interest rates. The median price rose by 2.6 per cent in 2023 to $396,900.

"Prices rose sharply during the pandemic and stabilized in 2023," said Véronique Boucher, a broker in the Eastern Townships region at Royal LePage. "The recreational market is still doing well despite the economic context, which is a little different from other years."

Activity in the recreational property market has moderated, however, despite prices holding firm. In 2023, a total of 6,956 single-family homes were sold in resort markets, representing an 11 per cent decrease from last year.

The three brokers noted that transaction times are longer now than during the height of the pandemic, but the overbidding and quick sales at that time were unusual.

The 2024 outlook

In its report, Royal LePage forecasted that the median price of a single-family home in recreational areas will increase by 2 per cent in 2024.

The firm anticipated that anticipated lower interest rates should give a boost to the resort markets.

"I feel it will encourage those who were perhaps waiting to find out if the mortgage rate was to rise," said Fleury.

"Because if interest rates go down again, there's going to be even more demand," she said. At that point, the rivalry between buyers will be as intense as ever.

Some homeowners will also be thinking about renewing their mortgages in 2025. For those who bought during the pandemic for a five-year term, renewal is likely to be at a significantly higher rate.

Some homeowners may choose to sell their second home rather than see their budget worn down by higher mortgage payments.

"Not the majority of people, perhaps not so many in the recreational sector either, but some people will have to plan for the future," said Boucher, "so we'll probably have a better inventory of homes to offer customers." 

- This report by The Canadian Press was first published on March 20, 2024.