Pandemic Cottage Boom Turns into a Bust: Here’s What It Means for You

News Highlights

Jun 2

The dream of owning a cottage became a reality for many Canadians during the pandemic. With low interest rates and a shift toward remote work, people jumped at the opportunity to buy a second property in cottage country—often at sky-high prices.

But three years later, that dream has turned into a financial nightmare for many.

Recent market reports show that some cottage owners are now selling at a loss of up to $365,000. Yes, you read that right. And it’s not just a rare case—it’s becoming common across regions like Muskoka, Kawartha Lakes, and Simcoe County.

💸 Real People, Real Losses

Let’s break it down with an example. Imagine you bought a cozy lakeside cottage in early 2022 for $1.1 million, thinking it was a solid investment and an escape from the city. Fast-forward to 2025, and due to interest rate hikes, oversupply, and tighter short-term rental laws, the property is only attracting offers around $735,000. That’s a $365,000 loss, not even accounting for closing costs, renovations, or interest payments made during ownership.

And if you took out a mortgage with a smaller down payment, that type of loss could completely wipe out your equity—or worse, leave you owing more than the property is worth.

🤔 Why Is This Happening?

There are a few key reasons:

Rising Interest Rates: Pandemic-era buyers locked in low rates. Today’s higher rates have doubled many monthly payments.
Tighter Lending Conditions: It’s harder to qualify for second properties now, reducing the number of new buyers entering the market.
New Short-Term Rental Rules: Many towns now restrict short-term rentals to a few months a year, making it tough for owners to cover their costs through Airbnb.
Oversupply: Too many cottages, not enough buyers. That leads to price drops and extended time on market.

📉 What If You’re Holding a Cottage Property?

Even if you haven’t listed yet, this trend matters. You may be:

Feeling stuck with a mortgage that’s harder to manage with rising rates
Unsure whether to sell now or wait
Wondering if refinancing or restructuring your mortgage could free up some cash flow or reduce risk

Here’s the truth: the market is shifting again. Whether you’re looking to sell, stay, or simply reduce your financial exposure, you need a clear strategy—especially if your mortgage is up for renewal or you’re getting close to your trigger rate (when your payment no longer covers the interest).

🧭 Let’s Navigate This Together

If you bought a second property during the pandemic, you’re not alone—and you’re not stuck.

As Mr. Mortgage, I specialize in helping clients across Ontario navigate turbulent markets, from refinancing strategies to equity management and everything in between. Whether your goal is to keep your cottage, sell it smartly, or make your mortgage work better for your situation, I’m here to walk you through your options.

Let’s find the right move for you—before the market moves again.

📲 Reach out today for a no-pressure consultation. You can call/text me directly at (647) 554-2718 or DM me on Instagram too.