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Clarke Muskoka

Real estate sales at normal pace, but prices much higher

Many realtors have been talking about how slow the market has been so far this year, but Bob Clarke says that’s not been his team’s experience.

The owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty says spring was extremely busy, particularly in the weeks before June 25. That’s the day new capital gains tax rules came into place, so many cottage sales had that date as a hard closing deadline.

“A lot of it seemed to have been driven by the capital gains push,” he explains. “Our season has been fairly strong due to that. However, we still seem to be a bit of an anomaly in how busy we were as most people are saying their spring and early summer were very slow.”

In the few weeks following the capital gains tax deadline, Bob says there was a noticeable drop-off in showings, listings, and sales. But, he adds, that’s exactly how the market used to behave before the pandemic-driven frenzy of the past few years.

Late June and early July tend to be quieter, particularly in recreational properties. The kids are out of school, families are arriving at properties they own or rent for the first time in months and are deciding whether they should list or not.

“We tend to see activity start to pick up again in late July and early August,” says Bob. Once the summer hits, he adds, even those who have listed are happy to enjoy another month or two (or three) at the cottage.

“Most people are not in a hurry to sell.” Some hold off on listing until the cooler months arrive or only take offers at or above their asking as they happily make a few more memories.

“This is the time I also start getting calls asking what the best time is: should they list this fall or wait until spring?”

No more price drops
Prices are still up considerably over pre-pandemic levels, and experts predict we could still see some big jumps. The capital gains tax will have an impact on pricing.

“We saw some flexibility in the spring because of the capital gains scenario,” says Bob. “But there is less flexibility now, because sellers are going to bear the brunt of that capital gains tax.”

What’s next?
There is still a lot of uncertainty, as the jury is still out on whether the Bank of Canada will hold its prime lending rate, decrease it, or even increase it as the year continues.

The inflation rate increased from May to June in Canada, which means any planned rate cuts have been put on hold.

As well, U.S. banks are holding rates steady, for now, and have stated they need to see more indication that things are slowing down before they make any changes.

The U.S. is also in a holding pattern due to the upcoming presidential election, and that can have an impact on the Canadian markets as well.

People are definitely watching what’s happening down there before making any significant investments. That includes the many U.S. residents who own recreational properties in Ontario who aren’t making moves yet.

“All these factors play their part in the cottage market here,” says Bob. “There is still a lot of uncertainty regarding the economy, particularly when it comes to interest rates.”

Optimistic inquiries
Though there is still a touch of trepidation and cause for pause, Bob says there are reasons to be optimistic about the current state of affairs and the future.

He explains that the sales numbers are basically in-line with those from 2018 and 2019, prior to the short-term explosion from 2020 to early 2022. Comparing apples to apples – comparing today’s market to the years prior to the pandemic frenzy – the real estate market is moving at the normal pace.

When properties do sell, they’re going for much more than they would have only five or six years ago.

“While it seems quiet and sort of like the market slowed down, our sales numbers are similar to pre-COVID, and our sales prices are way higher,” says Bob. “That is a bit weird to see slow sales numbers accompanied by much higher prices, but it’s not unprecedented.”

He adds that material prices having stabilized (though labour is still up), so more and more buyers are returning to the idea of buying a property to build their dream home.

“We’re starting to see some more building activity,” says Bob. “I’m talking to clients who are interested in buying properties and building.”

It’s a good sign when people are willing to make those kinds of investments in their future.

TEXT CHRIS OCCHIUZZI

www.MyMuskokaCottages.com

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