April 14, 2026

I have not seen any specific numerical value to express “wealth effect” but there is no doubt that as the value of people’s real estate has risen, there is a “wealth effect” that spurs on consumer spending. When a family has bought a summer property for “X” and then discovers that it is now worth “X times 15% for example”, buying a nice new boat seems like a very reasonable thing to do. But what if interest rates are rising, mortgage renewals are at significantly higher rates and at the same time, the global economic picture is looking far less rosy?  

A recent online article in the Globe & Mail, stated that since the onset of the pandemic,  when cottage prices jumped and then dropped by more than 30 per cent in some areas, a wave of mortgage renewals could now force vacation property owners to sell, bringing prices down. A recent Royal LePage report found that the median price of a single-family waterfront home dropped by 5.2 per cent to $717,600 in 2025.

Obviously, not all waterfront is the same. I’m still hearing stories about prime Muskoka properties going for shocking sums because they are unique in some significant way. Over my lifetime, there have been many economic downturns yet, I have rarely seen Muskoka prices drop.

The very wealthy can simply hang on until things improve. They almost never sell low. But even the very wealthy might delay a new boat purchase. That’s the concern.

There is wide-spread expectation of a wave of mortgage renewals coming this year given Canadian’s tendency to take out 5-year mortgage terms. I used to think that the wealthy had no need of mortgages, but it seems that some (especially those with very strong cashflow and top-tier wealth management services), mortgage their properties to the hilt to re-invest in the markets – a risky but heroic move that sometimes pays off handsomely.

Knowing your clients as well as you possibly can, really helps to judge what to expect, but getting that kind of knowledge is rare. So, will the wealth effect start to unwind in the cottage market?

If I were a boat dealer, I would be cautious but I would also want to have some inventory. You can’t sell what you haven’t got and after the whip-saw events and news stories in the past few weeks, anything could happen. Look to your financial experts in the floor-plan finance business, talk to the associations and talk to your peers in the business. I believe that collectively, we are a pretty smart group of business people. I think we have survived worse than we will see this summer.

Andy Adams – Editor