2025 Year in Review 

There's a particular stillness that settles over Lake of Bays each December—the kind that invites reflection and as I review the data from another year of waterfront transactions, I find myself thinking not about what the numbers say, but about what they mean for the families I serve.

Let me be direct: 2025 was not a year of record-breaking sales or bidding wars. It was a year of recalibration—shaped by economic uncertainty, U.S. tariff concerns and a broader return to fundamentals. For some, that word carries disappointment. For others—particularly those who've been patiently watching this market—it represents opportunity finally arriving.

The Regional Picture: Muskoka in 2025

Before diving into Lake of Bays specifically, the broader Muskoka context matters. According to CREA data, waterfront property sales across the Muskoka & Area region totalled just 49 units in Q1 2025—a 29% decline from the same quarter in 2024. The second quarter brought 285 cottage sales, down 9.5% year-over-year.

Perhaps more telling is what's happened to inventory. Months of supply—the time it would take to sell current listings at the present pace—surged to 21.2 months in Q1 2025, up dramatically from 10.2 months a year earlier. By Q3, that figure had moderated somewhat but remained above 12 months across the region. Put simply: it would take more than a year to absorb current waterfront inventory if no new listings arrived.

The pricing picture reveals an interesting divergence. Regionally, the median waterfront sale price held at approximately $990,000 in Q1 2025—essentially flat year-over-year. However, Q2 saw a more pronounced adjustment, with median prices falling 10.3% to $875,000. This reflects what I'm seeing on the ground: motivated sellers are finding buyers, but price expectations must align with current reality.

Lake of Bays: A Closer Look

Our lake occupies a unique position in Muskoka's market hierarchy—sitting between the ultra-premium Big Three (Lakes Joseph, Rosseau and Muskoka) and the more accessible options further afield. This positioning has made Lake of Bays particularly sensitive to interest rate pressures and buyer hesitation.

Twenty-six waterfront properties changed hands on Lake of Bays this year. To contextualise: we saw 43 transactions in 2024 and 90 during the extraordinary circumstances of 2020. The frenzy has well and truly passed. Properties now average 69 days on market—up from 46 days last year and worlds away from the breathless 21-day average we witnessed in 2021. Remember those days? Buyers waiving inspections, making decisions over a single weekend, writing offers $200,000 above asking just to get in the door? 

As one industry colleague noted to Cottage Life magazine, that era has ended: buyers now have the ability to request inspections, check the water and take their time—and if they don't buy one cottage, there's another option on the same lake.

The average sale price on Lake of Bays settled at approximately $1.95 million this year—down from $2.24 million in 2024 and notably below the $2.76 million peak we reached in 2023. Royal LePage data from September 2025 showed Lake of Bays with 9.3 months of inventory, 102 active listings and a sale-to-list ratio of 94.3%.

A Tale of Two Markets

One of the most significant trends I'm tracking is the growing divergence between price segments. The data tells a stark story: since the 2021 peak, unit sales for cottages priced under $3 million have dropped approximately 65%. Properties above $3 million have seen a more moderate decline of 44%.

Cottages priced over $3 million now account for nearly 40% of total waterfront spending on the MLS®—up 25% from 2020. The luxury segment is effectively propping up average prices, masking softening in the mid-market.

This bifurcation makes sense when you consider buyer profiles. Someone purchasing a $7 million cottage on Lake Rosseau typically isn't financing through conventional channels—they're writing a cheque. Interest rate fluctuations barely register. But the professional couple stretching for a $1.5 million property on a quieter bay? They feel every quarter-point movement in their borrowing costs.

The year's highest Lake of Bays sale came in at approximately $5 million—below the $8.7 million record set in 2022 and the mid-$6 million transactions we saw in 2023 and 2024. Even at this level, there's been cooling. For regional context, the highest Muskoka sale year-to-date was $15.15 million on Lake Rosseau—demonstrating that the ultra-premium market, while slower, remains active for truly exceptional properties.

The Pricing Conversation We Need to Have

During the pandemic surge, properties sold at slightly above asking prices. Today, they average around 7% below asking—a 13% swing that represents a fundamental shift in negotiating dynamics. On Lake of Bays specifically, buyers are paying approximately 92% of original asking price, down from 106% at the 2021 peak.

A sobering statistic emerged this year from Terranet's analysis: properties purchased in Muskoka during 2022-2023 and subsequently resold experienced a median loss of $240,000. Approximately one-quarter of those who bought during the frenzy and then sold have done so at a loss.
Yet context matters enormously here. If you acquired your cottage in 2018 or earlier, you're still looking at substantial appreciation. For two decades before the pandemic disrupted everything, Muskoka waterfront delivered steady, reliable returns in the 4% to 5% annual range. We appear to be returning to that pattern—and for those thinking about waterfront as a legacy investment rather than a speculative flip, this normalisation is healthy.

The Economic Backdrop

The Bank of Canada held its benchmark rate at 2.25% in December 2025—down dramatically from the 5% peak in June 2024. Governor Tiff Macklem indicated this level is "about right" for current conditions, though uncertainty around U.S. trade policy continues to cloud the outlook.
This matters for recreational property because so many Muskoka buyers rely on GTA home equity or conventional financing. Lower rates have begun to ease borrowing costs, but the psychological impact of tariff threats and economic uncertainty appears to be keeping many would-be buyers on the sidelines. The GTA residential market's health typically forecasts ours by about six months—and that market remains cautious.

What This Means If You're Considering a Purchase

You have time. Perhaps for the first time in five years, you can view a property on Saturday, sleep on it, bring your family back the following weekend and still make a considered offer. The days of writing unconditional offers from your car bonnet are behind us.

You have leverage. That 92-94% sale-to-list ratio represents genuine negotiating room. Sellers who priced optimistically at the start of the season are now facing reality and thoughtful offers are being taken seriously.

You have selection. With approximately 700 active waterfront listings across Muskoka—and over 100 on Lake of Bays alone—inventory is broader than we've seen in years. If you've been searching for a specific bay, exposure or configuration, your patience may finally be rewarded. The $1 million to $2.5 million range shows particularly elevated inventory.

What This Means If You're Considering a Sale

Pricing strategy has never mattered more. The properties that sold well this year—and some did sell very well indeed—shared common characteristics: they were priced accurately from day one, presented beautifully and marketed to the right audience through the right channels.
The days of testing the market with an ambitious number and adjusting later are costly now. Buyers are sophisticated; they track price reductions. A property that's been reduced twice reads as flawed, regardless of its actual merits. Industry observers estimate that nearly 50% of new listings do not reflect current market reality—and many "new" listings are actually relisted properties that failed to sell previously.

I won't sugarcoat it: some sellers will find this market frustrating. But there are buyers—good buyers, serious buyers—still searching for the right property. They're simply more discerning and they absolutely expect value for their investment.

Looking Toward 2026

Predicting markets is a fool's errand, so I'll offer observations instead. Economic uncertainty—particularly around U.S. trade policy and its ripple effects—will continue to influence buyer confidence. The Bank of Canada has signalled rates are currently appropriate, though they stand ready to respond if conditions change.

Inventory is expected to rise further through early 2026 as sellers who held off in 2025 test the waters. Analysts anticipate conditions will strongly favour buyers, particularly in the sub-$3 million segment. Luxury demand should remain reasonably solid on the Big Three and Lake of Bays, though even this tier isn't immune to broader pressures.

My honest assessment? We're finding our footing. Not the wild swings of the pandemic years, not the anxiety of a collapsing market—something more measured. More sustainable and for those with a long-term view of waterfront ownership, that's genuinely encouraging.

A Final Thought

After more than two decades helping families navigate this market, I've learned that real estate statistics tell only part of the story. The other part—the part that matters most—is what these properties mean to the people who own them.

A cottage isn't just an investment; it's where your grandchildren learn to swim, where old friends gather each August, where you finally have time to read that stack of novels. Markets rise and fall, but those moments compound in ways no spreadsheet captures.

Whether you're contemplating a purchase, weighing a sale or simply curious about what your property might fetch in today's environment, I'm always happy to have an honest conversation. Every situation is unique and numbers only mean something when they're applied to your specific circumstances and goals.

Wishing you a peaceful holiday season and a promising new year.

Jay 


Data Sources:
• Canadian Real Estate Association (CREA) Q1-Q2 2025 Statistics
• Royal LePage Lakes of Muskoka Brokerage Market Analysis 
• Bank of Canada Rate Announcement 
• Cottage Life Magazine Market Analysis 
• Terranet Property Analysis