“People who romanticized rural life during the pandemic can’t come back”: A GTA mortgage broker on cottage buyers’ remorse

At the start of the pandemic, a wave of Torontonians traded their cubicles and cramped condos for remote work and the wide open spaces of cottage country. Now, with many companies mandating a return to the office and the allure of rural isolation having lost its lustre, some urban transplants are eager to move back to the city. The snag: they’re finding themselves priced out of the Toronto real estate market. Here, Laura Garetson, a GTA-based mortgage broker, explains the financial barriers city skippers are facing and when they might be able to return to Toronto.

What led to the exodus from Toronto to cottages during the pandemic? During lockdown, we were confined in close quarters for weeks on end: parents were working remotely, and kids were going to school online. Unsurprisingly, families felt suffocated—especially ones without a yard. At the time, the Toronto housing market was at its peak, so people realized they could sell their homes and use the profits to buy cheaper cottage properties that offered the freedom of more square footage and green space. Many buyers were also motivated by promises from employers that remote work was going to become the new norm. And interest rates were invitingly low, so people thought, Why not make the move?

Related: Five families on leaving Toronto, regretting it and finding their way home

So what’s changed? Over the past two years, businesses have been summoning employees back to the office. In some instances, employees were given assurances that they could work remotely in perpetuity only to now be informed that that’s no longer the case. A few employees got their remote work guarantees in writing, but not everyone had the foresight to take that step. Facing a daunting commute of two hours or more from their cottage to the city—even if only once or twice a week—many buyers realized they’d have to sell and move back.

Another trend among cottage movers, including some of my clients, was that they romanticized the idea of relocating to idyllic rural locales. The pandemic was a difficult and scary time, and people craved a different, exciting experience as a distraction. But they quickly discovered that the reality was different from their expectations. A quiet weekend country getaway can be relaxing. However, it’s quite a different prospect to spend an entire cold winter up north, dealing with occasional blackouts and being periodically snowed in. A lot of cottage movers also found themselves struggling with the hidden costs that come with cottage ownership.

Such as? Many cottages have wells as their primary water source and septic tanks, and those necessities may require unexpected—and costly—repairs. These unanticipated expenses compound for waterfront properties. Docks can be blown away in storms, for example. Costs can also add up for simple things like snow removal, particularly if the cottage property is remote or can be accessed only via a private road.

What about investors who purchased cottages to rent them out? It seems like all these new luxury cottage rentals started popping up on Airbnb soon after the pandemic began. When international and interprovincial travel were restricted, Torontonians didn’t have many options for vacation destinations besides rural Ontario. Demand surged for cottage rentals, and there were tons of social media posts about the revenue some Airbnb hosts were earning. In the most coveted areas like Muskoka, people boasted about making upward of $1,000 a night. A lot of investors got excited and acquired properties to convert them into rentals. Some of my clients bought over market value, believing their rental income would offset their costs. Their decisions made sense, but only in the short term. Once international travel resumed, demand for cottage rentals dropped back to normal levels. Outside of the high season, renting out a cottage isn’t anywhere near as lucrative—especially during a mild winter like last year, where activities like skiing and snowmobiling also saw demand plummet. Right now, many of these Airbnb owners are operating at a loss and struggling to sell.

What’s the main challenge preventing cottage movers and investors from selling? High interest rates. Cottage values in some areas have almost doubled, so you’d think cottage buyers could make a tidy profit on their initial investment, whether they’re movers or investors. But, because of those high interest rates, there simply aren’t many takers in the market right now for cottages at virtually every price point. Mortgage approval requirements have become more stringent and prohibitively costly: down payment percentages, qualifying income levels and monthly mortgage payments are all higher right now. These challenges apply to the Toronto market too. For cottage movers specifically, even if they’re willing to sell low and take a loss, they can no longer buy back in the city at the price they sold at a few years ago. While sales numbers in the Toronto market did slow down because of this high interest climate, average sale prices haven’t declined, and they will actually continue to rise for the foreseeable future. These realities mean that cottage movers are priced out and trapped at the moment.

When do you think cottage movers will realistically be able to sell and return to the city? It’s difficult to put a precise timeline on it, but there’s been positive news indicating that they won’t have to wait too long. In April, inflation hit its lowest level since March of 2021. Based on this encouraging figure, the Bank of Canada began cutting interest rates this summer and will likely continue to do so. For cottage movers looking to get back to the city, I expect a strong seller’s market next spring. However, rising inventory and increased market optimism could present great opportunities as early as this fall. Since we’re still at the beginning of the rate-dropping process, my advice for cottage movers aiming to return to the city is to be patient and establish a financial plan to stay afloat while they wait for the market to open up.

What advice would you give to urbanites still considering making the move to the country? Find the area where you’d like to move and rent there for at least a year before purchasing a property. You’ll experience what life is like and what unexpected challenges crop up. Beyond those septic tank and weather-damaged dock examples from earlier, it’s important to figure out things like education and transportation for your kids as well as access to medical services in case of emergencies or for existing health issues. It’s also a good idea to get a sense of the local culture and community, because once you’ve made the commitment to move, it’s hard to reverse course. Renting will give you a perspective on all of these new things you’ll be adapting to—and help you decide whether you’re truly up for rural life.

This interview has been edited for length and clarity.