The rapid growth of rental prices in Ontario’s cottage country seems to be slowing as more people return to travel and an influx of supply hits the market, but rates still sit far above prepandemic levels, rental agents say.
In June 2020, Craig White, owner and operator of CottageLINK Rental Management, had the busiest 10 days in his company’s 20-year history. The rental management agency was turning renters away because everything was booked.
Not wanting to be shut out again, potential renters started booking in the fall of 2020 for the following summer. That helped push rates up between 20 and 50 per cent, according to Mr. White. Properties that could sleep more people had the highest rate increases, as families sought to reconnect after lockdowns, he added.
“Fortunately for rental guests this year, there are some dampening factors.”
For starters, international travel is becoming easier and more children are returning to summer programming, which means demand is slightly down.
“A lot of returning guests are now saying, ‘Oh, we can take the kids to Disney now. We’re going to do that,’ ” said Cheryl McCombe, owner of Cottage Care Rentals, which operates primarily in the Haliburton Highlands region northeast of Toronto.
Another factor is an increase in the supply of cottages available, Mr. White said.
Pandemic lockdowns and travel restrictions saw buyers flock to cottage country, and prices soared.
“All those people that have been buying over the last couple of years at much higher prices are now renting out,” Mr. White said, “because they have to do that as part of their financing.” He expects inventory to increase by 15 to 20 per cent compared with last year come June.
In the western Kawartha Lakes region, northeast of Toronto, purchase prices more than doubled from 2019 to 2022, according to David Donais, owner of the brokerage Kawartha Waterfront Realty Inc.
With such high sale prices, more cottages were listed, which meant fewer available for rent, Mrs. McCombe said.
This year, she’s seeing an increase of families who are renting their cottages for the first time after having difficulty keeping up with the inflating costs of ownership, including higher maintenance fees and increased propane costs.
Mr. White said another aspect of the supply increase is a new type of investor.
Traditionally, the majority of CottageLINK owners would be families who are renting their cottage for a few weeks a summer to help cover expenses.
“We’re seeing far more people now coming into the market and buying cottages as an investment vehicle, and essentially saying, ‘I want to rent the entire summer,’ ” he said.
Jay Katzeff, president of Cottage Vacations, another rental management agency, said some of his owners who purchased with rental in mind have had to decrease their prices after seeing unsustainable increases last summer.
“We’re getting to a point where we’re calling owners saying, ‘Hey, at $8,000 I can’t rent this, but I’ve gotten three different people saying they’ll pay you $6,000,’ ” Mr. Katzeff said. “And then owners will say, ‘Okay, I’d rather take that than vacancy.’ ”
Despite these dampening factors, Mr. White still estimates a cottage that his company would rent for $1,700 a week in 2018 will rent for $2,600 a week in 2022.
Jayne McCaw, president of Jayne’s Luxury Rentals, which offers cottages that can reach prices of $85,000 a week, said she has also seen some stabilization in the high-end market. But “by and large, we’re still well above where we were in 2019.”
Some of the largest increases in cottage rental rates during the pandemic came through digital platforms such as Airbnb and Vrbo. The average daily rate of an Ontario cottage-country rental on those two sites grew by 121 per cent from February of 2019 to 2022, according to data from AirDNA, a short-term rental analytics company. (AirDNA’s data covers the Parry Sound, Muskoka and Haliburton regions, the Kawartha Lakes, Bancroft and northern Hastings County, the Ottawa Valley and Prince Edward County.)
In comparison, from February, 2021 to February, 2022, the average daily rental rate increased by just 17 per cent, which indicates prices may be softening. Some of the 17-per-cent year-over-year increase may be owing to new tax rules – as of July 21, HST must be applied to short-term rentals booked through a digital platform – but because of different tax collection and remittance protocols for the companies, it’s unclear how much of an impact the new mandate had.
Despite the overall stabilization, some areas continue to see large increases, according to AirDNA. The average daily rental rate in Seguin Township, in the district of Parry Sound, increased by 72 per cent from February of 2021 to 2022.
But rental agents say that rental rates on AirBnB and VRBO are set by individual owners, who may not have a realistic idea of how to price a property in the current market.
“It’s a different kettle of fish, you know, as far as I’m concerned,” Mrs. McCombe said. “Those are not professional people in the industry. Just individuals deciding to rent their cottage.”
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