Though corrections in the marketplace are seeing property values drop across the board, Muskoka’s waterfront properties remain in demand.
Now, with the crux of the pandemic in the rear-view mirror, many older cottagers are evaluating their options as they look to move on to new adventures.
Ben Imrie of the iMuskoka team at Chestnut Park Real Estate explains that a decent number of long-time cottagers are now ready to sell. Their reasons are varied: perhaps other family members already own a cottage, or their children don’t live close enough to use the property, or it’s simply become too much to maintain.
“After holding onto those cottages through the years at the behest of their children and grandchildren, they are deciding to sell the cottage and move to the next chapter of their lives,” says Ben, who is joined by his brother Dan, and more teammates.
As lifetime Muskoka cottagers themselves, the iMuskoka team knows how hard it is to give up a property that holds so many memories and emotional attachments.
“We’ve been managing it very well and treating the properties and clients with the respect they deserve through this tough process,” says Ben. “We’re very considerate regarding the timing and how it’s marketed.”
Many of these sellers want to see a new family take over whenever possible. They want to see the Muskoka traditions remaining alive and well.
“It’s about making new family memories,” says Ben. “Sometimes the right person or family is more important than the amount of money. Yes, price matters, but to those generational cottagers, feeling good matters too.”
Interest rate hikes and steady inflation have put a damper on much of the real estate market, with many properties being listed at reduced prices compared to the overheated seasons of 2020 and 2021.
While the market is still up over 2019 values, it has begun to stabilize.
“We’ve seen a 20 percent correction this year,” says Ben. “From spring to mid-summer, there was a decent correction for most of the properties that sold. We went up 115 percent during Covid, but even with the scaling back, over a two-year time frame, it’s still a really good increase compared to the pre-2020 market.”
Sellers who were unwilling to correct their valuations to match the overall market are seeing their properties sit unsold.
“The most staggering thing we have is just a lack of inventory,” he says. “Our unit sales dropped this year, down to 86 from around 115. This is the lowest volume of sales I’ve ever seen in my 20-plus years. However, our sales values are still strong, even with the 20 percent correction.”
Though Ben predicts some pressure on pricing to continue for the remainder of 2022 and into 2023, the lack of inventory in Muskoka combined with the consistent high demand for waterfront properties will keep values strong.
Unlike residential units in subdivisions, waterfront properties tend to pass down from family member to family member for generations. Ben notes that he can be on the water and still recognize the families who own the cottages from his time visiting the family cottage as a child. Third and fourth generation cottagers are commonplace throughout Muskoka.
“It’s why the properties are so scarce and demand is so high,” he explains.
Buyers are also getting back to pre-pandemic normalcy in terms of adding diligence clauses to their offers. This includes property inspections and financing, where necessary.
The iMuskoka team has also noticed more hesitance to engage in bidding wars, which were commonplace in 2020 and 2021. Although bidding wars still occasionally occur, they have also seen interested parties back off once a superior offer has been placed on a property.
“Most people are listing where they think the market should be,” says Ben. “Buyers don’t want to get bid up into a scary economic future. There is more uncertainty causing buyers to consider holding onto their funds.”
“Two years ago, we knew the market was only going up.” Now, there is a lot of uncertainty due to international factors such as the war in Ukraine and governmental change in key trading partners, as well as homegrown factors such as inflation and interest rate hikes.
Eventually, people will get comfortable with the uncertainty and return to regular spending ways, which will translate into real estate movement.
“If a buyer is going to buy, it may as well be now or early next year,” Ben recommends. “If you’re going to wait for a market bottom, it’s going to take a year or two and you’re looking at maybe a five percent downturn per year. If you’re going to rent a cottage, that’s how much a rental is per season, so you might as well start enjoying life on the lake now.”
The demand for waterfront in Muskoka will not dissipate, so jump at the opportunities being presented by long-time cottagers deciding to sell. It may be a long time before that happens again.
TEXT CHRIS OCCHIUZZI | PHOTOS ANDREW FEARMAN