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Buyers and sellers expected to be active this year

A rebound to a normalized real estate market is underway after an extended period of low volumes in sales and some price reductions during 2022 and 2023.

Those lows followed the historic highs in terms of values and sales during the height of the pandemic, which was a relatively predictable outcome considering what took place throughout cottage country and beyond.

The combination of inflation, rising interest rates and a lack of inventory aligned to cause the slow-down.

But there is optimism for 2024 for a variety of reasons, explains Bob Clarke, owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty.

“Interest rates are staying flat,” says Bob. “They were supposed to be cutting rates in early 2024 – the spring – but that keeps getting pushed later and later. However, there is confidence returning to the market because the rates have stayed level for a while.”

Some sectors of the market were more affected by change than others: while interest rates dramatically impact some buyers, those who can afford the big cottages on the big lakes kept buying as properties they liked were listed.

Supply and demandDespite a slow market last year, there wasn’t an unforeseen price drop – there weren’t many desperation sales to cause a ripple effect.

“There was only a 30-to-60-day window where a handful of sellers were finalizing deals well off their original number,” says Bob. “On the flip side, you’re still seeing some sellers and their agents listing numbers that were seen at the height of the pandemic.”

Bob says their team offers realistic advice to their clients, and shows them that even listing at today’s numbers, they’re still doing very well in the market.

“We explain that in many, many cases from 2019 to the peak of Covid, property values went up by 60 percent,” he says. “In the last two years, the numbers have slid by 10 to 20 percent. That’s when some people say, ‘oh my, we’re down 20 percent.’ But that’s not really the case. In reality they’re up by 40 percent.”

Bob is also optimistic about seeing more inventory come onto the market this year, something that his brokerage has already seen this spring.

However, the demand will still be higher than the supply, and there are many other factors at play which will keep prices steady for the foreseeable future.

New government regulations designed to help the market by adding extra taxes to property buyers who are realtors, builders, investors, or “flippers,” will have the opposite effect.

“That won’t moderate prices,” says Bob, who has 36 years’ experience as a realtor. “The government thinks it will help by removing all these players from the market, but it won’t. It will become an issue of supply again because there aren’t as many being built.”

Though the market correction reductions are expected, a drop to pre-pandemic values isn’t happening.

“We’re not going to see the 50 percent off sales, which is what many buyers are looking for,” says Bob. “We’re not going to see pricing adjustments, because we don’t see inventory.”

Not everyone is in a winning positionWhile most owners have seen increases in their property values – even those who purchased last year on the larger lakes – people who bought on smaller lakes at the height of the pandemic are not in the same situation.

Many are facing short-term losses in value, but they will be fine if they play the long game and don’t panic, explains Bob.

At the height of the pandemic, many people bought in Muskoka thinking they were going to be working remotely for an extended period of time. However, more and more companies are bringing back staff to the office, even if it’s only on a hybrid basis.

Travelling to and from the cottage without a place to stay in the city just doesn’t make sense for most people.

“As well, a lot of investors bought properties to rent them, but there is more supply than demand for rental properties, seeing adjustment in rental rates in cottages,” says Bob. “If this continues, those cottages could end up being listed.”

The outlook is bright for those wanting to purchase a piece of property in cottage country this year as more inventory is expected on the market: just don’t expect prices to drop as there continues to be high demand for little supply.

TEXT CHRIS OCCHIUZZI

www.MyMuskokaCottages.com

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