“What we’re finding is that individuals are able to meet some of those new OSFI stress tests because they’re borrowing money from family and friends,” he said. “It’s seen as their money, but in fact, it’s someone else’s.”

Many of those informal arrangements happen between young Canadians and their parents, who are increasingly willing to give their adult children a leg up to get into the housing market. That breeds new questions about whether those young adults should pay the money back. It might not be an issue for some older Canadian parents who had an inheritance set aside anyway, but others who had to take on debt or dip into their nest egg will likely need and expect a repayment.

“There’s going to be pressure on a lot of people’s finances as we come out of this over the next number of years,” Pollock said.

The hidden costs of cottage properties

Canadians rushing headlong into the real estate market could overlook other critical pitfalls.

One thing that happens too often, Pollock said, is that buyers keen to purchase larger properties or second properties forgo hiring experts to do a house inspection. Even if they look at a cottage for themselves, people from cities are not typically familiar with requirements for electrical systems, insulation, and other architectural elements.

“A number of people are saying ‘Oh, we’ll figure that out in the future,’ but that can invite significant additional costs down the road,” Pollock said.

Another potential surprise, he said, involves the costs of protecting the property. While the cost of fire protection and ambulance services may be included in property taxes paid for dwellings within cities, the same isn’t always true for rural areas. In cases where a fire breaks out at a cottage and the local fire departments responds promptly, many new cottage owners will be shocked to get a hefty bill for the government-provided service afterward.

“Sometimes people buy cottages and suddenly decide to buy a boat or some ATVs,” Pollock added. “Those are risky activities, so they should also be getting insurance to protect themselves in case the unfortunate happens.

As Pollock stressed, there’s nothing inherently wrong with investing in a cottage or second property. Canadians who have gotten a windfall amid the pandemic are perfectly within their right to spend it how they want, particularly if they’ve got their emergency fund, their retirement fund, and other investments taken care of based on their financial plan.

“What’s critical is for people to be mindful of debt management. That’s where advisors can provide a lot of value-add for these clients,” he said. “They can offer some sober second thoughts as people are excited about re-entering the pre-pandemic world.”