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Muskoka Real Estate | 2025 Market Outlook for Cottages & Homes
Waterfront Real Estate in Muskoka
Cottage Market Trends
The waterfront cottage market in Muskoka has always been divided between low to mid-range and luxury properties, but in recent years, this gap has expanded dramatically. Current market forces are intensifying this division, creating notable disparities in how different price segments are performing. As outlined in our 2024 market outlook, waterfront properties priced under $3 million remain the most susceptible to price erosion, while the luxury segment above $3 million has shown impressive resilience.
Since the 2021 peak, unit sales for cottages under $3 million have dropped by approximately 65%. In contrast, properties priced over $3 million have seen a more moderate decline of 44%. This divergence is even starker over a longer timeline: when adjusted for inflation, luxury cottage sales align closely with long-term historical averages, while cottages in the lower ranges have dropped nearly 50%.
It is important to note that some real estate brokerages in Muskoka sell their luxury properties via exclusive listings, not through Realtor.ca®. The data we publish is for closed transactions via the M.L.S.® as we do not have access to private or exclusive data. Most high-end transactions continue to take place on Lake Joseph, Lake Rosseau, and Lake Muskoka, with Lake of Bays also showing a solid presence in the upper-tier market.
Changing Landscape
Days on market—a key metric in our forecasts—have steadily risen in Muskoka since January 2022 for lower-priced cottages, with luxury properties following in early 2023. Currently, waterfront properties average nearly double the days on the market compared to 2022. Muskoka now has approximately 10 months’ worth of cottage inventory, a level not seen since mid-2016.
A significant number of cottage listings have had price reductions, providing insight into the market’s direction. During the COVID buying surge, properties sold at slightly above asking prices, but now they average around 7% below asking—a 13% swing. As sellers adjust to current market conditions, this gap should narrow toward a more traditional 5% under asking.
Notably, cottages priced over $3,000,000 now account for nearly 40% of total waterfront spending on the MLS®, up by 25% from 2020. This trend can create a perception of stable prices in Muskoka; however, the high-end market's strength is largely propping up the average, masking softening in lower price segments.
Muskoka Cottage Sales under $3,000,000
M.L.S.® Only - Does not include Exclusive or Private sales
Total Real Estate Transaction Volume in Muskoka 2010 - 2025
What we see coming for cottages .....
We anticipate a stronger initial wave of seasonal inventory this year, as sellers adapt to evolving market conditions and aim to list early. For cottages under $3,000,000, we expect moderate price softening, with properties priced below $1,500,000 and those on less popular lakes showing particular vulnerability. Early summer may see a standoff between buyers and sellers, potentially slowing sales initially. However, as prices adjust, motivated buyers are likely to re-enter the market. Overall, conditions strongly favor buyers.
Demand for luxury cottages should remain reasonably solid, especially for properties on The Big Three lakes and Lake of Bays. On the supply side, a rise in available listings, combined with unsold properties returning to the market in the second quarter, could shift the high-end waterfront segment in Muskoka towards a modest buyer’s market.
Another key factor in our market outlook for both recreational and residential real estate is Google Search Analytics. The vast majority of people start looking for property online so this gives us an invaluable window into market direction. If we look at Google Trends for search terms like "Muskoka Cottages for Sale" or "Muskoka Waterfront Listings" there is a clear trendline down.
Source : Google Trends
Residential Real Estate in Muskoka
Muskoka Home Sales under $1,000,000 | Non Waterfront
M.L.S.® Only - Does not include Exclusive or Private sales
Muskoka Home Sales over $1,000,000 | Non Waterfront
M.L.S.® Only - Does not include Exclusive or Private sales
Market Trends for Homes
Home sales in Muskoka have slowed significantly, reaching levels not seen since for many years. There has been a very slight uptick in the last 3 quarters but numbers are still low when comparing to historic averages. Higher-priced properties, particularly those over $1,000,000, have fared somewhat better but are still affected. After peaking in June 2021, sales have declined to approximately 700 units per month on a 12-month rolling average.
Luxury homes now represent around 10% of the total market in unit sales and contribute to about 25% of the dollar volume. Unlike the cottage segment, luxury homes have seen more stable sales activity, with less of the volatility affecting waterfront properties.
Average days on market have increased to about 47 across all price points, nearly doubling since 2022, but aligning more closely with historical norms. Sale prices are currently at roughly 95% of the original asking price, down from 105% at the market peak in April 2022, also returning to more traditional levels.
As shown in the chart below, new listings for Muskoka non-waterfront homes surged in 2024. On a 12-month rolling average, October saw the highest new listing numbers in over 15 years and we anticipate this trend to continue well into 2025.
New Listings for Homes in Muskoka | All Price Ranges
M.L.S.® Only - Does not include Exclusive or Private sales
What we see coming for Residential Real Estate in Muskoka
We expect demand for non waterfront homes in Muskoka to remain steady but tempered, reflecting trends seen across other Ontario markets. Many potential buyers come from southern Ontario, often relying on the sale of their current home to finance their Muskoka purchase. If the slower pace of sales continues in the south, this may further impact buying activity up north.
As we move into 2025, we anticipate inventory levels will rise, seasonally adjusted, through the second quarter before stabilizing. Similar to the waterfront market, sellers may need to adjust their pricing expectations to align with current market conditions. As this adjustment takes place, we anticipate sales will move closer to historical averages. However, a buyer’s market is likely to persist throughout 2025, offering potential opportunities for prospective home buyers.
The Outlook for 2025 In a Nutshell
Muskoka Waterfront Market
- Strong Buyer's Market for cottages under $3,000,000
- Modest Buyer's Market for cottages over $3,000,000
- Good inventory in all price ranges
- Prices softening into mid summer
- Sales volumes well under historical averages
Muskoka Residential Market
- Balanced to modest Buyers Market
- Good inventory in all price ranges
- Prices to remain steady
- Sales volumes under historical averages
U.S. Tariffs - Potential Fallout for the Real Estate Market
The outlier affecting the real estate market, not just in Ontario but across Canada, is the potential impact of U.S. tariffs on our economy. This is a complex scenario with many moving parts, making it difficult to predict exact outcomes. However, one thing is clear: the implications could be significant.
According to the latest Bank of Canada report, Evaluating the Potential Impacts of U.S. Tariffs, several possible scenarios are outlined, all pointing toward higher costs for many goods imported from the U.S. While I’m not an economist, it seems evident that such price increases will lead to higher inflation, which may, in turn, will further erode consumer confidence. A recent report released from Scotiabank Economics, states that potential retaliation on tariffs from the Canadian government, can cause up to a 3% interest rate hike.
The cottage market could see particular vulnerability as it could create the perfect storm of volatile interest rates, high cost of living and low economic confidence on top of the existing strong supply / weak demand challenges.
The Challenge to Our Economy - A Vicious Cycle Creating Uncertainty in the Market
If you would like an idea of the market trends on a specific lake or area just contact us. We can break down statistics for any area in the Muskoka, Parry Sound and Haliburton regions to help with an informed decision.
Questions or Comments about Muskoka Real Estate? We would love to hear from you! Call or text John Fincham directly @ 705 783 7718 or find our contact page here.
