Will the changes we are currently experiencing across Canada’s real estate market be permanent? Or are they temporary, destined to subside when life eventually returns to normal? There’s no doubt that 2020 has seen some seismic shifts in Ontario real estate, rural and urban lifestyles, and the economy. At this time last year, nobody could have forecasted what would transpire in a few short months. While some industries have been more severely impacted than others, real estate has continued with surprising resiliency.
The cottage industry has been one part of the housing sector to witness incredible change and growth. For years, Ontario cottage country had been the go-to destination for families seeking a respite from the eternal struggle of the asphalt jungle. Through the balmy months of the year, many households would pack up their water coolers and jet skis, and head to Muskoka or Lake Nipissing every weekend. Today, many of those same people have made the permanent decision to make cottage country their permanent home.
Canada’s real estate market is going through a dramatic transition amid the COVID-19 pandemic. Before the virus outbreak, living in Vancouver and Toronto was the goal for many people who were willing to pay a premium even for a small space, because of the proximity to museums, art galleries, restaurants, and employment opportunities. Circumstances have changed and a lot of these amenities are temporarily shuttered to the public, requiring urban dwellers to stay home in their 700-square-foot one-bedroom suites.
With more companies adopting work-from-home policies, many professionals are no longer constrained by the need to live close to the city in order to develop their careers. Instead, they have the flexibility and freedom to fulfill the duties of their occupation anywhere, whether it is in the big city or by the lake.
Ontario cottage country has been attracting city folk, what about U.S. real estate homebuyers?
Ontario Cottage Country Attracting USA Real Estate Buyers
U.S.-Canada border travel has been restricted, except by air. This has hurt the economies of many border towns, but it has also disrupted broader commerce in both nations. Prior to the coronavirus, many Americans would head up north to Canada to enjoy the best sights and sounds the Great White North has to offer. Nobody knows when the border closures will be relaxed, especially as both countries experience a second wave of the highly infectious respiratory illness.
When the border reopens, will Americans flock to Ontario’s cottage country once again? This migration may be difficult to forecast due to changing consumer patterns, political developments, tax policies and housing valuations. Cottage country, whether in Ontario or the rest of Canada, has witnessed explosive growth in terms of prices and sales activity since the aftermath of the first wave of the coronavirus. Demand has gone through the roof, while supply has been shrinking. Inventory levels may not recover anytime soon.
Indeed, since the beginning of the coronavirus pandemic, many industry professionals have adapted to the conditions by using digital tools, virtual tours and e-documents. With some transactions taking place exclusively online, this has made local markets accessible to remote homebuyers from across the country and across the border, many of which are taking advantage of the historically low interest rates in Canada and the lower Canadian dollar. This translates to affordability for American buyers. In fact, prior to the recent American election, U.S. traffic to Canadian property searches was on a steady incline, with more that half of US visitors looking at homes within Ontario cities and resort communities. While sales from American buyers may have accounted for a small percentage of the skyrocketing sales this year in Ontario’s cottage country, it is evident that American interest persists, and may escalate once restrictions decrease.
So, what should you do if you are an American homebuyer looking to purchase a summer or all-season property in Ontario cottage country? Here are a few things to be aware of:
- Ensure that your real estate attorney is involved in your transaction.
- Locate a reputable Canadian real estate agent who is familiar with your area of choice.
- Understand the process of making an offer, such as the deposit amount, required closing date, the period for which the offer is valid, and any other financial details.
- Know the true cost of buying a home in Canada, including land transfer tax, home inspection costs, legal fees, home insurance, and the 15-per-cent Non-Resident Speculation Tax, or NRST (if applicable).
Real estate opportunities abound across Ontario’s cottage country, but with increasing competition, you have to be willing to fight for it.
Will Canadian Real Estate Continue to Attract American Buyers?
Since uncertainty seems to be the buzzword for 2020, it can be hard to prognosticate the future of American interest in Ontario cottage country and the broader Canadian real estate market. Currently, similar trends are playing out south of the border, with homebuyers fleeing the big cities and seeking homes in resort towns. Those Americans drawn to the rich Canadian landscapes may be patiently waiting on the sidelines, ready to jump into the market once border restrictions ease up.