Muskoka Real Estate Market Update – January to September 2018

As the third quarter of 2018 came to an end, it remained unclear if a shift was taking place in the broader Muskoka and area marketplace. Generally, we see declines in the number of waterfront, recreational properties sold, concurrently with a strengthening of average sale prices, except for some isolated markets. At the same time inventory levels have increased in some regions, a shift from the previous three years which witnessed sharp declines.

In the broader market, year-to-date 1,126 recreational properties were reported sold in Bracebridge, Gravenhurst, Huntsville, Lake of Bays and the Muskoka Lakes. Last year 1,140 properties were reported sold over the same period, a mere decline of just over 1 percent.

Notwithstanding the foregoing not all markets and regions are performing similarly, as is demonstrated by an analysis of the market activity on Muskoka’s big lakes.

Lake Muskoka and Lake Joseph saw fewer listings come to market during 2018 than the same period in 2017. Last year 819 properties came to market during the first 9 months of the year on Muskoka’s big lakes. This year that number declined to 733, approximately 10 percent fewer listings than to September 2017. Not only did listings decline, but sales on the big lakes also drifted downward in 2018. There were 28 waterfront sales reported on Lake Joseph during the first 9 months of 2018. Last year there were 31. This year 27 waterfront properties were reported sold on Lake Rosseau, a slight drop from 31 sales that took place last year. In the case of Lake Muskoka, the decline was more significant. Reported sales decreased by more than 21 percent, from 156 to 123 properties.

Significantly the largest declines in reported sales on the big lakes were properties having a sale price of $3 Million or more. In 2017 there were 41 waterfront properties reported sold having a sale price of $3 Million or more. This year (as of the end of September) only 19 were reported sold in this category, a decline of more than 50 percent. Explanations for these declines vary: lack of good inventory, increasing cost of money, and longer-term concerns related to Canada’s financial stability. The recent turmoil in the world’s equity markets is likely to further aggravate this market price point.

It is not surprising that the average sale price for properties representing sales over $500,000 on Muskoka’s big lakes has declined year-over-year. Last year the average sale price for all properties sold in this category came in at $2,189,793. This year that number has dropped to $2,101,323. Clearly more properties with lower price points were selling than higher priced recreational properties. This represents a decline of approximately 5 percent. Days on market for properties in this category increased marginally.

In the broader markets listing inventories are increasing, particularly in the lower price points, although no distinct pattern is evident that allows for market-wide conclusions or patterns. For example, in the Muskoka Lakes region new listings increased in all price categories, particularly properties with a list price less than $1 Million. Conversely, in the Huntsville-Lake of Bays region new listings declined by more than 20 percent, with a 30 percent corresponding decline in sales. It would appear that a market inflection is occurring, but there is insufficient data to accurately explain or define what is happening.

Chestnut Park and its sales representatives continue to dominate the Port Carling office marketplace. Chestnut Park’s dollar volume sales exceeded the closest competitive office by more than 37 percent. Year-to-date Chestnut Park’s sales representatives have completed more than $251 Million in recreational property sales, only slightly off the record high sales of 2017, and were responsible for the sale of 3 properties having a sale price that exceeded $10 Million.

Urban markets have undergone pronounced changes in 2018. This is due primarily to the disappearance of cheap and easy money. There have been five interest rate hikes and now lending institutions are stress testing conventional borrowers. It would appear that this is the new normal and that for the foreseeable future we can anticipate rising interest rates and the continued disappearance of easy money. The natural consequence of these factors is stable and even lower sale prices. In Toronto and area, we have seen a moderation in sales and average sale prices as the cost of money has made exuberant buying prohibitive. There is little doubt that this will influence the recreational market, particularly if inventory levels continue to increase across the entire recreational marketplace. Due to the seasonal nature of the Muskoka and area recreational marketplace, the impact of these broader economic changes will not become apparent until the Spring of next year.

Toronto Real Estate Market Update – October 2018

Prince Edward County Real Estate Market Update – October 2018

Based on recent statistics released by the Quinte & District Association of REALTORS® (“the Quinte Board”), real estate trends that have been developing in Prince Edward County (“the County”) over the last few months appear to be playing out much as anticipated in our earlier reports. Market performance for the area remains strong but sustainable, with one notable qualification. A confluence of forces including consistent demand, relatively stable but limited supply, mixed with stubborn sellers unwilling to budge from their ambitious selling points, are all contributing to steady and relentless price inflation, making affordability the single greatest challenge to the County real estate market moving forward. That, combined with the successive increases in interest rates and the likelihood of more, compounded with the impact of the stress test in qualifying borrowers, means that buyers will have to show ever greater resourcefulness, fortitude and determination in the months to come to secure their property of choice.

October’s numbers simply reinforce this prognosis as most indicators point to more of the same. While new supply was relatively stable, falling year over year by only three listings, sales surged more than 36%. Specifically, 85 new listings came onto the market as compared to 88 in 2017 – a decline of a little more than 3%, bringing the year to date numbers to 1141. This amounts to approximately 5% more than last year’s 1082. On the sales side, 60 properties sold in October across the wards that make up the County compared to 44 one year ago. Year to date sales still lags behind last year’s frenzied market by approximately 16%, coming in thus far at 493 sales compared to 584 at this time last year.

But given these underpinnings and the influence of the factors set out above, the average sale price continued its impressive positive year over year surge for yet another month coming in at $458,766, a whopping 25% gain over October 2017 when the average sale price was reported as $365,619. This builds upon the double-digit price increases that the County has been racking up since the spring of this year. With prices reaching these levels, and financing becoming ever more challenging and expensive, and sellers continuing to insist on top dollar before relinquishing their properties, it comes as no surprise that the pace of sales is somewhat slower. In October the average property took 77 days to sell compared to 69 one year ago, an increase of approximately 12%. Buyers must seriously assess the suitability and value of the property in question, and once committed, engage in tougher negotiations to settle on a price that is acceptable to the seller, but still makes sense and is sustainable to the buyer in all of the circumstances.

That said, there appears to be no decline in the level of interest or appetite for properties in the County. The area continues to be situated in a sweet spot for an increasingly broad demographic, reflecting value despite its escalating price point, to say nothing of its natural attributes, attractive location and characteristics that garner so much attention in the zeitgeist of social media, culture, and the press.

To reiterate, while the market and demand for properties in the County looks positive for the foreseeable future, price and buyers’ ability to pay and manage the cost of servicing their debt load will inevitably be one of the greatest challenges to the ongoing robustness and health of the County real estate market. The broader economic outlook shows promise on a variety of fronts including job creation, output and greater trade stability. But these very factors will likely only further contribute to the likelihood that money will become even more expensive and pose increasing challenges to buyers’ ability to balance their finances and justify that next significant expenditure and foray into the real estate market. And while the County remains comparatively well placed on the affordability front, it is not immune from the potential pressures that a squeeze on borrowing and debt load may impose.

Collingwood Real Estate Market Update – October 2018