‘Stubborn’ sellers, ‘sidelined’ buyers have Lake Erie cottage sales at a summer standstill

Cottage sales in Norfolk County are at a summer standstill as buyers remain leery of high interest rates and sellers wait for prices to rebound.

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The market is “very slow” in Long Point and Turkey Point, according to realtor Gail Bouw of Coldwell Banker, who said the few cottage sales that have closed this year all involved a price cut.

Cottage owners are dismayed to learn the lakeside properties they bought at inflated prices during the height of the COVID-19 pandemic — when stressed-out urbanites fled to Lake Erie to cope with lockdowns and travel restrictions — are worth hundreds of millions of dollars less in today’s market.

“Prices are definitely down from the craziness of COVID,” said Ray Ferris, broker of record at Erie’s Edge Real Estate in Long Point, where there are close to 20 cottages currently on the market.

Only six have sold this year, Ferris said.

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“We should be looking at upwards of 20,” he said.

And while that sounds “grim,” Ferris said the picture is rose than in 2023, when six cottages sold in Long Point all year.

With another 24 cottages for sale in Turkey Point, Norfolk is facing the same issue as hot spots like Muskoka and Georgian Bay — high inventory and few sales.

As reported in the Toronto Star, prices fell in more than half of Ontario’s cottage markets in the first quarter of 2024, and even luxury cottage sales are sluggish.

The Star cited figures from real estate data platform Information Technology Systems Ontario indicating there were seven months of cottage inventory — how long it would take to sell available properties at the current rate — in the first quarter of 2024, compared to 3.5 months of inventory in the first quarter of 2021.

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Ferris said prices have stabilized but cottages along Lake Erie “are taking a heck of a lot longer to sell” because there are fewer prospective buyers and “very stubborn” sellers reluctant to budget on price.

“Buyers are in the driver’s seat right now,” he said.

“During COVID, you could sell a property in a couple of days. Definitely less than a week. Right now, you’re looking at a minimum of three months to probably six months.”

Ferris closed a conditional sale of a cottage in Long Point last week, but it took three rounds of negotiation after the first offer came in $100,000 under asking.

“Which was also unheard of a few years ago,” he said. “You didn’t negotiate. One offer was it.”

Buyers are ‘waiting and seeing’

Realtors expected cottage sales to surge this year as buyers leapt back into the market, but the Bank of Canada cutting the key interest rate in June for the first time in four years did not move the needle.

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“A lot of buyers have been sidelined, just waiting on the Bank of Canada,” said Jacob Atkinson, a realtor with Royal LePage based in Norfolk.

The 0.25 per cent rate cut announced on Wednesday — bringing the rate down to 4.5 per cent — “is hopefully going to help the market get moving again,” Atkinson said.

But some real estate experts told The Star a cut of two per cent is needed to spur sales on what for most buyers is their second property.

“Buyers are still waiting and seeing,” said Bouw, who has had a Long Point cottage on the market for just over a year.

“It was overpriced, and they’ve just moved things down in the last few months a little bit. Then they moved down more and more,” she said.

“They always thought Long Point was lots of money, but cottages have come down in price. And they need to come down, especially if they’re an older cottage.”

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The recent change to the capital gains tax — sellers now pay more if their capital gains are greater than $250,000 — has prospective buyers “thinking twice about how to invest money,” Bouw added.

Ferris said he “heard the chatter” about cottagers rushing to unload their properties before the tax changes came into effect last month.

“That didn’t happen,” he said. “Cottages are a very emotional piece of property. It’s where people go to create memories. People generally don’t want to sell their cottage.”

In his experience, it is more common for cottages to sell because family dynamics change, and the gap between first thinking of selling and finally putting a cottage on the market is three to five years.

Banking on a fall rebound

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Ferris predicted an “uptick” of cottage sales in the fall, after renters and visitors to Norfolk get a taste of the lakeside lifestyle over the summer.

Prices will “probably” rebound in the fall as well, he added, but Bouw does not expect enough of an increase for sellers who bought during the pandemic to recoup their investment.

The slowdown in cottage sales makes for “a better market for buyers,” Ferris said, since many offers are again conditional on home inspections and water quality testing.

“During COVID, there was always a bidding war. Buyers were foregoing home inspections just to get that upper hand,” Ferris said.

Now transactions are taking longer to close, “and that’s a good thing for consumers,” he said.

“They can make decisions in a more relaxed way.”

JP Antonacci is a Local Journalism Initiative Reporter based at the Hamilton Spectator. The initiative is funded by the Government of Canada.

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