Wealthy investors and families looking for a place in the Canadian sun this summer may find the high-end recreational property market a bit complicated, experts say.
“It’s kind of a buyer’s market right now, but it can be tricky,” says Jack Janssen, a specialist in luxury leisure properties and a veteran real estate agent with Chestnut Park in Port Carling, Ont., in the Muskoka cottage country district.
Why is it tricky? Some of the factors include a disconnect between supply and demand, uncertainty about the economy and mortgage rates, changing expectations among buyers, and property taxes that apply only to foreigners, Janssen says.
“In general, buyers are pickier than they were before the pandemic. For one thing, buyers are looking at properties at the lower luxury end, up to $3 million, and they want to know whether the property last changed hands in the early 2020s during COVID,” he explains.
“If it did sell then, a lot of potential buyers back off. They think the last buyer paid too much and now they want to buy at a huge discount.”
If you’re in the market, say, to sun your nose on your own island, you can bargain right now, Janssen adds.
“There’s one on Lake Joseph [a popular high-end lake] that came on the market last year for $32 million,” he says. “That was a ridiculous price, and it dropped to $20 million. But there are still no takers.”
Across Canada, the recreational property market, though not dormant, is uneven. In March, Royal LePage reported that while demand for recreational homes nationally is still strong, it is “slightly depressed as a result of geopolitical tensions and uncertainty.” Obviously, neither of those factors has abated since then.
The uncertainty effect
Either symbolically or by coincidence, Prime Minister Mark Carney is due to meet on July 22 with the provincial and territorial premiers in Huntsville, in the heart of Ontario cottage-land, to discuss how Canada should respond to ongoing trade threats and attacks by U.S. President Donald Trump.
Earlier this month, Trump sent a letter to Carney saying the U.S. will impose a 35 per cent tariff on Canadian goods (exempting those under the existing Canada-U.S. Mexico Agreement) on Aug. 1 if a trade deal is not reached by then—then followed up by saying on July 14 that the letter itself “is the deal.”
Meanwhile, the Bank of Canada’s key lending rate, at 2.75 per cent, is relatively low compared to recent years, but opinion is divided as to whether it will remain there or drop if the trade and tariff wars deliver a shock to the economy.
There are Americans and other foreign visitors who come to look around, but they don’t like Canada’s foreign buyers tax.
Jack Janssen
For many would-be buyers, it all adds up to an incentive to wait and see, says the real estate website Mortgage Sandbox. And REMAX Canada’s 2025 Cabin and Cottage Trends Report, released in May, reported that many potential buyers who would otherwise be interested in recreational property are sitting on the sidelines.
While “the underlying desire” to buy a cottage or cabin is still there for many people, “markets don’t like uncertainty, and we’ve seen that sentiment manifest in a quieter-than-normal spring market across recreational and traditional residential properties alike,” says Don Kottick, president of REMAX Canada.
“We are optimistic that recreational activity could pick up later this season, but there’s a big ‘but’ looming,” he adds. “Buyers and sellers will need further clarity around Canada’s approach to tariffs.”
Economic uncertainty, however, is only one factor keeping the market relatively slow in Muskoka, Janssen says.
Taxes on foreign buyers are a headwind
“There’s about 13 per cent foreign ownership on our main lakes in this area, and most of the foreign owners are American,” he explains. “There are Americans and other foreign visitors who come to look around, but they don’t like Canada’s foreign buyers tax.”
Foreign companies, non-Canadian citizens and those who aren’t permanent residents are subject to a tax of 20 per cent in British Columbia and 25 per cent in Ontario if they buy residential properties in those provinces. The tax is due to expire Jan. 1, 2027, but in the meantime it’s an obstacle, Janssen says.
“The tax was designed to deal with rising prices in big metropolitan areas like Toronto and Vancouver,” he says. “I get that idea, but it applies across the board and it’s not appropriate for recreational properties.
“Buyers can get around it if one member of the family is Canadian, but otherwise, if someone is going to come up here and spend $20 million on a property, they don’t want to add another $5 million in tax.”
One of the rare upsides to a sluggish recreational property market has been a boom in high-end luxury rentals, says Jayne McCaw, founder and president of Jayne’s Luxury Rentals in Port Carling, which brokers and manages vacation stays.
“I have heard that rentals are down in U.S. destinations like the Hamptons and Nantucket, but that’s not the case here at all,” McCaw says. “My business right now is up about 15 per cent from a year ago.
“A lot of the growth is driven by U.S. families. The highest-end rentals [which can go for tens of thousands of dollars per week] have tightened a bit, but we’re getting a lot of last-minute decisions to rent,” she says.
“A lot of people don’t want to commit right away [either to rent or buy]. But they come up anyway, because you can escape from it all.”
David Israelson is a writer, editor, consultant and non-practising lawyer. He is principal of Eon Communications and Research, which he founded after more than a decade as a senior public relations executive. David contributes regularly to national and international print and online publications in addition to corporate and institutional writing across all media. He writes extensively on business, finance and investment, sustainability, conservation, energy, housing and land-use planning, international trade, travel and transportation politics and real estate, among other areas.
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