Last year was a record-setting year for the recreational cottage market in Muskoka. Unprecedented demand coupled with low inventory led to multiple offer situations that drove up prices in all segments.
One of the main drivers of demand was Covid travel restrictions limiting options for family vacations. More families elected for cottages rather than international travel. Many cottage owners found they were using their cottages more than ever and working remotely when possible. Despite rising prices, they were reluctant to sell their Covid retreats, leading to a supply shortage at a time of increasing demand.
The GTA experienced a similar trend. As people were spending more time at home and less time travelling, many began to look for a property more suitable for a “work at home” environment. Demand for houses rose quickly, and again prices followed.
In the spring of 2022, we began to see a calming of the GTA market. As Covid restrictions on travel were lifted and many returned to the office to work, coupled with an increase in interest rates and a soft stock market, demand began to ease, and prices in some areas and sectors have pulled back somewhat.
This trend has made its way to Muskoka. With international travel rules being relaxed and working remotely declining, demand has waned, bringing a calming wave to the cottage market.
“We have seen a slowdown in demand across Muskoka,” says Gord Waites, lead of the Gord Waites Team at Johnston & Daniel Rushbrooke Realty in Port Carling. “While the drop in sales is significant compared to the same period in 2021, we are above 2020, 2019 and 2018 levels. At the same time, inventory is increasing, with the average months of inventory reaching three by May 2022.”
“A balanced market is generally considered to be one with four to six months of inventory available, so we are still on the sellers’ side,” says Gord, who has been a cottager in Muskoka for more than 30 years.
We have observed a slight softening in sold prices as well. In 2021 the average sale to list price peaked at 113 percent (in other words 13 percent over list on average) as many properties sold with multiple offers. We are now seeing average sold prices closer to 100 percent of list. The long-term average is between 95 and 96 percent of list.
“There is a silver lining for buyers: more selection, less competition and the ability to add conditions like home inspections (which were mostly foregone in multiple offer situations). For example, there were 54 listings on Lakes Muskoka, Joseph and Rosseau in May, a level we haven’t seen since September 2020.”
Many buyers understand that cottages are unique and waterfront properties in Muskoka are finite. “They are not making any more waterfront land,” says Gord. “A good cottage on desirable land is still in demand and will continue to be for the foreseeable future. A cottage in Muskoka has always been a solid investment.”
And he adds that if you are selling in this market, “it’s essential that your realtor understands the Muskoka recreational market and provide exceptional marketing. Above all, a well-researched pricing strategy is paramount during this adjusting market. There are fundamental questions your realtor needs to address when listing. Answer them correctly, and your property will find a buyer.”