So, what is driving Muskoka and cottage country price appreciation and is it slowing? Following another record breaking year we expect to remain in a Seller's market until well into the summer. In the past year the average property in the Lakelands North Board sold for $891,687, up 21% year over year and up 139% since 2011. So what are the key drivers of real estate prices and is appreciation slowing?
Canadians Value Real Estate as an Opportunity to Build Wealth:
Numerous surveys including those by Royal LePage consistently affirm this point.
Pandemic Related Impacts:
Historically low interest rates, a shift in where Canadians want to live and increased savings. Canadian households accumulated the highest amount of excess savings amongst G7 countries during the pandemic. In Q3 2021 Canadas household savings was 11%, well above the 2%-3% average. Canadians had $280 billion in extra savings as compared to pre-pandemic times representing 10% of annual Canadian GDP. (Source: RBC Economics-Oct 2021).
Domestic Demographic Demand:
Foreign investment is not driving demand and accounts for a very small percentage of cottage country purchases. Boomers (born approximately 1945-1964) have been by joined by Millennials (born approximately 1980 - 1999) who are now entering the real estate market in full force. And just so you know we are already working with generation ALPHA on their aspirations!
Chronic Lack of Supply Coupled with a Growing Population:
In addition to our Boomer and growing Millenial demand, 55% of newcomers to Canada will buy a property within 3 years of arriving in the country. Though the primary newcomer demand is for larger urban centres, this dynamic is beginning to affect more affordable real estate further afield, including traditional cottage country. Lakelands North Waterfront unit sales were down 5% year over year, due to low inventory levels and we expect this to continue. The typical property in the North Lakelands Real Estate Board sold in just 11 days, the lowest average number of days on the market in past decade and down from 21 days year over year, while active listings dropped to their lowest level in the past decade down 23% year over year. Meanwhile in Muskoka, Unit sales across all property types increased from 2,175 to 2,260 with a record in both average sale price of $934,975 and a median price of $642,007. Average price is up 12.4% while median price is up 23.7% year over year as the lower priced end of the market appreciates fastest.
In Muskoka, these four drivers are playing out with record low supply and high, albeit with a slowing of, price appreciation in some submarkets. This is affecting the type of strategies realtors use to market properties and to buy them on behalf of their clients. If there was ever a time to make sure that you have a professional, full time, local, licensed realtor by your side to help you navigate the market, it is now. As has been widely reported, much of the demand in Cottage Country has resulted from the ability to live and work from home. As developers respond to this demand, in what was once a predominantly seasonal community, we are also seeing a growing clash of ideas on what responsible development means for lakes, towns and rural lands in between. Be sure to mark your calendar and stay tuned for updates on the municipal elections 2022.
If you would like a more detailed analysis on the impact of this market on your real estate investment you have only to ask! We are never too busy to help you. Simply contact us at email@example.com or call 705-385-9198.
ANNUAL MUSKOKA WATERFRONT HIGHLIGHTS
The pace of appreciation is slowing on the biggest three Muskoka lakes with an average price increase in 2020 of 27.4% and median of 36.1% versus 18.8% and 17.2% respectively in 2021. That said, average price across Lake Rosseau, Lake Joseph and Lake Muskoka is now a record breaking $3,092,290 while the median is $2,274,500. Across South Muskoka Waterfront this nuanced story is different. 2021 represented a year of continued strong momentum for price appreciation with an average price increase of 23.7% and median growth of 25.2% in 2020 as compared with 35.9% growth in average and 33.1% median in 2021 to an average of $1,006,226 and median $865,000.
ANNUAL NON WATERFRONT HIGHLIGHTS
Highlights for 2021 include 7 properties that sold for over $10,000,000 including the highest price at $19,000,000.00 on Armstrong Point Road in Port Carling.
Non-waterfront properties in the Lakelands north board increased by 37.2% year over year reaching $682,832. Within Muskoka, price appreciation outpaced the previous year in the submarkets of Huntsville, Bracebridge, Gravenhurst and Almaguin. The most expensive property in this category was a 98 acre parcel on Breezy Point that sold for $2,600,000.