The Ontario Fair Housing legislation, announced in April, and now in effect, had a dramatic impact on the housing market in the greater Toronto area (GTA). Specifically, the 15 per cent tax on foreign buyers has had a profound impact on both the volume of sales and the average sale price of re-sale properties. In April, the average sale price for all housing types in the GTA was approximately $920,000. By the end of August, the average sale price had tumbled to $732,000, a decline of 20 per cent. Sales volumes are off by more than 35 per cent during the same period.
Fortunately, the Ontario Fair Housing legislation has not had any appreciable effect on recreational property sales in the Muskoka and area market place. The more important factor affecting the market is the lack of resale inventory.
The Muskoka-Haliburton Association of Realtors reports that as of the end of August there were 874 active recreational property listings. Last year at this time there were 1,134 a decline of 23 per cent. This is a continuation of a pattern that started in 2015. At that time there were 1512 active recreational property listings. In two years available inventory has been reduced by almost 50 per cent.
It is not surprising that in varying degrees inventory levels are down in all regions. At the end of August on the Muskoka Lakes, there were only 259 listed properties, almost 20 per cent fewer than the 319 that were available last year. In 2015 there were 433 recreational properties on the market.
The situation is most acute in Lake of Bays. At the end of August there were only 93 properties available to purchase. Last year there were 135, a decline of 31 per cent. In 2015 there were 147 properties listed by Lake of Bays and area realtors.
It is not surprising that with inventory levels as low as they have been throughout 2017, sales, for the most part, have declined. For example, for the entire Muskoka and area region sales are down by 7 per cent from 900 last year to 837 this year. The area with the biggest decline is the Haliburton Highlands where sales are off by almost 18 per cent compared to last year, from 265 in 2016 to 219 this year.
Sales volumes are also off in the Muskoka Lakes region, in this case by 10 per cent. Last year at this time 252 recreational properties had been reported sold. This year that number has declined to 237.
The only area that is bucking the trend is Lake of Bays. Sales in the region are up by 11 per cent, from 74 last year to 82 this year.
With listing volumes in sharp decline it does not come as a shock to see that average sale prices continue to rise. The average sale price for all properties reported sold on Lake Muskoka, Rosseau and Joseph with a sale price exceeding $500,000 rose to $2,220,839 in August. In 2016 the average sale price in the same category of sales was $1,962,797, an increase of more than 13 per cent.
Notwithstanding the lack of inventory and declining sales throughout the recreational market place, Chestnut Park’s sales volume and dollar volume are exceeding 2016 results, a year that was itself record breaking. Sales volume is up 5 per cent, and dollar volume of properties sold, currently at almost $250 million, is up by 10 per cent.
As the peak selling season comes to an end, the concern is the availability of recreational properties for sale. If we move through the last quarter of 2017 and into 2018 without more properties coming to market the situation will be critical next year. The decline in inventory will put tremendous pressure on sale prices. These shortages may be due to demographic trends, in which case they are not likely to be reversed in only one year. Once again, we will monitor urban markets to see if what is happening there, particularly in Toronto, has a psychological impact on buyers looking to buy recreational properties.
Prepared by:Chris Kapches, LLB, President and CEO, Broker
More articles courtesy of Elissa Boughen, Sales Representative, Chestnut Park Real Estate Ltd.
The Muskoka Lifestyle. It’s how Elissa grew up, how she lives today, and what she loves. Elissa knows this area intimately, from its lakes and waterways to its towns, villages, roadways and trails. She is the agent to help you find your way here – whether you are new to the area and looking to make the Muskoka lifestyle a part of your cottaging or full time living plans, or whether you are familiar with this magnificent area and looking to make a change.
With an extensive background in sales and negotiating, dedication to outstanding customer service, and a genuine interest in achieving the best for her clients, Elissa will help and guide you with your real estate needs and goals. Confident, personable and professional, Elissa has the local area knowledge and the real world skills to get the job done. Thinking of buying or selling a home or cottage in Muskoka? Let’s talk: 705 787 5463 or [email protected]