Whats Brewing in the Muskoka Real Estate Market

2 crappy weather summers seem like a distant memory after the sun, heat and drought of summer 2016. It seems the boat sales market isn’t the only thing booming around the Muskoka area however. For the first time in over a decade there are bidding wars on cottages going down! In taking a gigantic overview of the Muskoka real estate market here’s whats up:

Sales up 23% as Inventory Continues to Decline

The Lakelands Real Estate Board, which encompasses Haliburton, Orillia and Muskoka, has seen a 23% increase in sales volume and as of July 30th 2016 has seen $919M in properties change hands … that’s almost 1B in real estate!! In Muskoka sales are up 5% as price concious buyers shop across Ontario’s cottage country to find the best combo of compromises.

Meanwhile, listings have declined by 12% year to date. There is a SERIOUS lack of inventory all around (circle back to the good weather and everyone wants to be on a dock so some might hold off until the fall!). For the first time since 2006, you’ve got buyers scrapping over properties on the big 3 (ake Muskoka, Rosseau or Joe) which is driving up both the bidding wars and the selling over-ask ratio.

So Whose Buying?

No, its not international buyers coming in thanks to the deep discount on the Canadian dollar … despite shops like Christies stating Muskoka is the second most desired destination in the world to Cannes, ie the South of France, its all hype and our secret is safe …for a little while longer!

Overall its not truly international jet setters coming in, rather expats who grew up around these parts but live abroad now, and are conveniently paid in other currencies like the US dollar recognize, who that there’s no time like the present to get in cheap – with a 30% discount thanks to currency swaps! Furthermore there’s alot of trading up to a desirable lake where their kids friends are (minimize drinking & boating etc) going on as prices increase all around.

Builders/ Spec Builds:

There is serious demand for luxury with first time buyers showing up in the +$4 mark. As a result builders buying vintage, demoing and replacing with modern meets luxury.

This crew is typically spend $1.2-2.5M for min 300 feet of prime shoreline so they can build a 2-story boathouse. To make the math work they HAVE to sell for at least $5M, so they take 1-2 years to build the cottage as they every bell and whistle and high end finish they can imagine. Think garages, landscaping, sports courts, pools, etc.

There are 23 properties over $5M in the build-for-resale category currently available on the big 3 lakes.

Cottagers:

Not all Muskoka real estate is going to developers. Cottages are much more emotional than houses because, as any cottager will tell you, the best family memories are formed at the lake and that means serious multigenerational use. Moreover as the city gets more insanely expensive by the week many are renovating their existing home and buying a cottage instead.

Most of the competition has been for Muskoka cottages in the $1-million to $1.3-million bracket; like 1.195M list is selling for 1.305M – as in for 1.9x over list!

Of the 252 waterfront properties that have sold so far this year, 57 have sold for over $1M including 4 for over $5M, with the highest at $11.4M.

94 properties over the $1M mark have changed hands in 2016 as opposed to 80 over the same time period last year.

In the $750,000 to $1M bracket anything decent, ie not falling apart, sells within 1-2 weeks. Notably 88 sales have occurred in 2016 compared to 49 last year in this bracket.

In the $500,000 to $750,000 tier, 228 properties had new owners by late July compared with 143 at the same time last year.

There are currently 18 properties listed for over $5M, with the highest price at $15.5M.

Note: if you’re looking to get a Muskoka cottage on the mainland expect to pay $650-700k for a small lot on the mainland (islands always cheaper).

Residents:

It should come as no surprise that retirees and snowbirds have evacuated the city and called Muskoka home for some time now, but we’re also hearing more younger families taking part in this trend. Both segments continue to purchase with rapid acceleration as both are cashing out of hot markets to the south.

Whether these segments are doubling down on properties between here and a warmer climate or just moving up they are driving demand so there is a lack of inventory across the residential market too. The seller’s market sentiment holds true.

In town the 5 sub markets of Bracebridge, Gravenhurst, Huntsville, Lake of Bays and Township of Muskoka Lakes sales are up 22%. The average price continues to edge upward to $338,121 as compared with $313,760 a year ago ….aka + 8%.

Interesting to note however that Lake of Bays and Gravenhurst sales haven’t shown any more sale volume but average prices are rising (pay attention deal hunters and up and comers!). Conversely average year to date sale prices in Bracebridge and Huntsville actually fell (BB from $314,818 to $286,627 ; H from $335,027 to $326,211).

The Bottom Line:

Sales in the Muskoka real estate market are typically robust March to June, and again in September through November. No matter which category you fall into given the market in the first half of 2016, and in particular the lack of inventory, it will be a BUSY Fall and buyers will continue to shop to find the best value for their money.

Our Picks:

Nothing will ever be move-in ready if you ask us so the value is in future potential. If you don’t see it immediately you’re not alone; we know we’ve got a special gift and that’s what we do – help you realize potential of a property whether you intend to live in or turn around and sell it. Tune in tomorrow when we start our Muskoka August picks series – by price point!