Market
Market
Ontario Cottage Market Update
The cottage selling season is in full swing throughout Ontario and some clear trends are beginning to emerge. As we predicted in our Muskoka cottage forecast last year, waterfront listings have been steadily ramping up throughout the province. After bottoming out in April of 2022 with around 8300 units listed* (12 month rolling average) there has been a steady march upward to just under 10,000. This represents an increase of just over 20% and is the highest since April of 2020.
Conversely, cottage sales across all price ranges are experiencing some of the lowest figures in recent memory. By the end of April this year, only about 3400 waterfront properties were sold in Ontario* (12-month rolling average), compared to 6199 the previous year, a decline of over 40% and the lowest in over two decades.
Another significant metric, the average number of days a listing spends on the market, has also surged to 29, nearly doubling from last year. Currently, there's an inventory of almost 7 months' worth of waterfront properties in Ontario, up from 3.4 months in January 2023.
Clearly the often quoted thesis of inadequate supply being the culprit of lagging cottage sales does not stand up to serious scrutiny. Provincially they are trending in completely opposite directions and have been for over 12 months.
Factors Contributing to Lagging Cottage Sales
So why are waterfront cottages just not selling at the same pace as the pre-covid era? There are many key factors and each, while not earth shaking, combine to move markets.
- Interest Rates - Obvious and not new.
- Non-Resident Speculation Tax (NRST) - Also not new but beginning to have an effect on the luxury segment.
- Over-Priced Inventory - In my estimation almost 50% of new listings do not reflect the current market.
- Regurgitated Inventory - Many "new listings" are actually old listings that haven't sold and are re-listed with new photos and write-ups.
- Capital Gains Increases - Has the potential to increase inventory (short term) and lower demand (long term).
Ontario Cottage Sales
Ontario Cottage Listings
Our Provincial Outlook In a Nutshell
Our market outlooks are widely followed and factor in many weighted variables. Some of them include Google Search Analytics, article traffic volumes, current market direction, rate of change and general sediment. We are very fortunate to be in communication with many stakeholders including economists, mortgage companies, appraisers and real estate brokerages of all stripes that give us the "straight goods".
We aim to provide actionable insights and neither want nor give sugar coated reports.
That being said, they are fallible views & predictions always to be taken with a grain of salt.
- Firmly a Buyer's Market throughout 2024 in all price ranges
- Cottage listings to increase 15-20% year over year into the third quarter and then seasonally adjusting downward.
- Price erosion in most areas of an additional 5-10% into the third quarter and then leveling off.
- Higher price vulnerability for cottages under $2,000,000.00, vacant waterfront lots and properties on smaller lakes.
- We anticipate unit sales to drop another 5% from last year to a 20 year + low.
- Expect dollar volume to drop 10% from last year from a softening luxury market.
Advice for Buyers & Sellers
Cottage Buyers
If you're searching for a cottage you have several advantages currently; Greater inventory to choose from in most areas, substantially lower prices than pandemic times and very few of the dreaded bidding wars. With that in mind, here are a few suggestions.
- Take your time. The pressure is off so don't rush into anything.
- Be informed - You need accurate, current data to know if the listing is correctly priced for the market
- Use a Realtor® and lawyer that actually know waterfront real estate. You're not buying a condo in the GTA.
Cottage Sellers
If you're considering selling in the current market things are challenging but by no means disastrous. Properties priced well are still moving in all price ranges.
- Think very pragmatically, take emotion out of the transaction. It can be very difficult to think objectively. Once again this can be very difficult, particularly if the property has been in the family for some time.
- It is imperative to have a realistic listing price right from the start. Overpriced properties will get crushed in this environment and days on market are not your friend.
- Talk to a reputable real estate agent that really knows your area, your lake and the market. Waterfront real estate is not the same as selling a condo in Toronto.
Although we report trends and forecasts for all of Ontario's cottage country we know the lakes best where we live and paddle the most. If you're pondering buying or selling in Muskoka just contact us, we would love to help. You can find the current Muskoka Cottages for Sale here.
Contact John Fincham, Broker @ RE/MAX Parry Sound Muskoka Realty Ltd.Brokerage.
* Data source ITSO which covers most of Ontario's cottage country.
**** Market Update ****
New data will be released in the coming days and a preliminary look shows an acceleration to the downside. Homes, cottages and vacant land sales have been extremely weak in all price points. It appears that there will be under 200 total units sold in the entire District of Muskoka this month. As of this writing only 68 waterfront properties have changed hands in the month of August.*
- Freehold properties sold on the Lakelands Association of Realtors Board