The roller-coaster ride of the last few years’ real estate market has come to an end in Muskoka, according to Gord Waites, sales representative with Johnston & Daniel Rushbrooke Realty in Port Carling.
In fact, one year ago – at the end of May 2022 – the pandemic-fueled market suddenly slowed.
Now that the high-flying loops are in the rear-view mirror, Gord says buyers and sellers wonder what’s on the horizon for the cottage market in Muskoka.
Market comparison
While comparing the first five months of 2023 to the same period of 2022 is like comparing apples and oranges, Gord says the market data over the past year doesn’t lie. For two years, prices grew by 20 to 25 percent a year and up to 40 percent of properties sold over list.
By comparison, in the past 12 months, overall prices have fallen by 16 percent as demand has tapered.
“It wasn’t just the number of properties that sold over list price that made the market so unusual during the pandemic, but how early in the year there was activity at this level,” says Gord. “Historically, the first portion of the year is considered off-season: when the ice is still on the lakes, no leaves are out, and many buyers are outside the country. It traditionally is not a time to market recreational properties.”
Today, the market is much calmer in Muskoka. Gord says they have seen signs of improvement, with sales up 15 percent YTD in 2023, and particularly strong sales in the $5M+ range.
Market performance
When looking at the real estate market, Gord says one of the best metrics to look at is supply and demand, or what the industry refers to as Months Of Inventory (MOI). This measures the amount of time it would take to sell the current inventory at the current sales rate.
If it takes less than four months, it’s considered a seller’s market. Four to six months indicates a balanced market, and over six months is a buyer’s market.
At the height of the pandemic, the MOI reached an unprecedented 1.3 months as demand far outstripped supply, giving sellers a strong upper hand. During 2022, MOI climbed to a balanced four months.
Currently, the MOI has extended to six months – reaching the upper end of a balanced market. It should be noted that waterfront properties have a long-term average of 5.2 months of inventory.
2023 outlook “The demand for market-priced cottage properties is clearly there,” says Gord. “And these properties are not sitting on the market long.”
His team started seeing sales in April this year, with buyers picking from cottages that were already available.
“Our team believes that activity levels will continue to improve this year.”
While it’s tempting for sellers to point to market comparables from the past few years when determining their cottage’s market value, Gord says it’s important to remember that pandemic prices are in the past.
Likewise, buyers need to recognize that massive price reductions aren’t in Muskoka’s real estate market forecast.
“The progression in the recreational market this year has been positive,” says Gord. “If properties are appropriately priced, they’ll represent good value to both the buyer and seller.”
KEY TAKEAWAYS
Buyers:
Prices have fallen and multiple offers are uncommon (but still exist);
There is more selection and more time to consider a purchase compared to previous years;
Prices are near, if not at, their bottom.
Sellers:
There continues to be good demand for waterfront property;
Pricing must be in line with current market conditions;
Even though prices have declined, they are still well above pre-pandemic levels.
Whether you’re curious about your cottage’s worth or beginning your cottage-buying journey, the best first step is a phone call.
“We’d be happy to share our knowledge about buying and selling cottages in Muskoka,” says Gord.
“Our goal is to bring our clients outstanding service and success using the latest technology, marketing tools and research. Nothing is more rewarding than seeing a client fall in love with their new cottage.”
