The summer was for all intents and purposes “quiet” in the cottage waterfront real estate market.
Sure, there were a few sales here and there, but for a variety of reasons it was much slower than historical norms, says Bob Clarke of Royal LePage Lakes of Muskoka Clarke Muskoka Realty.
“By the middle of July, we had only sold 50 waterfront cottage units, where in a typical year we would do over 200,” he explains. “The summer market was very quiet. Not only was it quiet, but we saw what could be perceived as prices softening.”
Overall there was a 10 to 15 per cent drop in sales prices compared to what was listed in the spring. However, Bob says that number is slightly misleading because the drop was due to unrealistic listing prices that were not representative of true values.
“In the spring, as we were going to price out properties, we would tell a client their place is worth $2.5 million and they would say ‘great, let’s list it at $3 million,’” he recalls. “There was a lot of that going on. Because there weren’t many listings going on the market, agents were taking listings at much higher prices.”
Sure enough, as summer neared its end, the same clients who overpriced asked the questions: “Why isn’t my place selling? Why aren’t we getting showings?”
As sellers realized their strategy wasn’t bearing fruit, listing prices were reduced to more realistic numbers. Suddenly buyers began to see reductions of $300,000 and $500,000.
“The minute we started doing that, we started seeing multiple bids come in,” says Bob. “In the fall, we’ve seen a flurry of activity. September and October saw a lot of activity in the waterfront market. It’s been significant.”
Typical market fluctuations
There were also more properties listed in the fall, providing buyers more options to ponder.
Overall, despite a slower than average summer, this year was pretty normal in terms of the ebb and flow of real estate. It was busy in the spring and then again in then fall, with a quiet summer.
Fall is typically busy. Buyers have wrapped up their summer vacations and are looking to step into the cottage market in preparation for next summer, while sellers have enjoyed one last summer with the family and are now ready to list. Combined with the price corrections and a steady decrease in interest rates, that led to a busier fall season.
Though Bob notes that on the higher end of the market ($10 million-plus) interest rates don’t have much of an impact on sales, there does tend to be an overall boost in sales when interest rates decrease.
“We’re seeing a bit of that in the city, and we’re seeing that a bit up here too,” he says. “Our situation is unique compared to the city. Our market slows down at the beginning of November. Almost all the listings come off the board, but we still see activity up until that point.”
While there are often lowball offers turning up right before winter, there are also buyers who decide to purchase a cottage property in order to do renovations over the winter and have it ready to go for the spring.
Heading into 2025, Bob and his team are telling their buyers they should be getting into the market now, with good values still available.
“Almost everyone is targeting for interest rates to reduce by another point to a point and half by next spring,” says Bob. “What’s going to happen in our cottage market is we’re going to have no market from November to March, but we’re going to show back up and interest rates are going to be at 3 per cent instead of 4.5 per cent.”
He’s expecting that to cause a lot of activity, which will lead to a seller’s market with multiple bids and prices rising again. Bob says we could be at the pricing floor already, which means there is only one way to go in the new year.
Building cost implications
Understanding the building market is essential when deciding to buy a lot or buying a property that needs renovation or reconstruction.
The price of most building materials has dropped recently and availability has stabilized post-pandemic. Even though labour costs are still higher than they were pre-pandemic, overall building costs are not as high as they were a couple of years ago.
“It gives us a level of certainty on what is being quoted, which then allows us to better understand property values and how much a home or cottage would be worth upon completion,” says Bob.
With the real estate market reacting to these types of economic pressures, it’s important to work with an experienced realtor who will provide knowledgeable advice based on honest evaluations.
TEXT CHRIS OCCHIUZZI
