The changes that have taken place in the Muskoka and Region waterfront and recreational marketplace in only the last three months have been unprecedented. As the Bank of Canada began to increase its benchmark rate in March the resale market, not only in the Muskoka Region but in almost every other marketplace, began to slow – dramatically. As the charts below indicate, it was in June that it became clear that the pandemic market, that is the market commencing in May of 2020, had come to an end.
The 103 waterfront sales reported for the month of June represent a 48.2 percent decline compared to the 199 sales reported in June of 2021. Interestingly the number of new listings that came to market in June declined by almost 10 percent compared to last year, but the fact that so few recreational properties sold in June the months of inventory increased by more than 140 percent. Last June the months were only 1.7, this June they jumped to 4.1 months.
What has yet to be affected by the change in market conditions is the average sale price for all waterfront and recreational properties sold. In June the average sale price came in at $1,527,892, 35.5 percent higher than the average sale price of last year, which hovered around $1,000,000. Although the prices achieved in June remain strong the sale price to list ratio indicates that buyers are not paying indiscriminate prices for properties, as they did last year. June’s sale price to list ratio was 97.9 percent. Last June it was 108.6 percent. June’s sale price to list ratio is consistent with sales to list ratios going back to 2012. On a year-to- date basis sales of waterfront property have dropped to historic norms.
Although there is some variation from region to region the overall picture that emerges in June is that compared to last year, sale prices are still strong, sales to list ratio has declined along with recorded sales, and inventory levels, for the first time since 2019 are rising.
It should be noted that in some of these markets the number of waterfront properties reported sold was small and therefore has caused some of the categories to be exaggerated, like the average sale price achieved in the Lake of Bays market and the fact that the Haliburton region was consistent with the number of sales achieved last year. Having said that June data reflects the overall direction in which the Muskoka and Region marketplace is moving.
Contrary to popular belief the most expensive and highest price market region, namely the Muskoka Lakes, has not been immune to the changes generated by the rising benchmark rate and mortgage interest rates. The year-to-date activity very specifically shows how the market has changed, and for the most part, this change is a reflection of what has happened in May and June.
Although the number of sales recorded on Muskoka’s three Big Lakes (Muskoka, Rosseau, and Joseph) declined dramatically in the first six months of 2022 compared to last year (by over 60 percent) the average sale price has remained eye-poppingly strong. That’s because more than 30 percent of all reported sales on the Big Lakes had a sale price that exceeded $5 Million. As the chart below indicates, the average sale price for all properties sold on Muskoka’s Big Lakes at the end of June was $4,636,425. Over the course of the pandemic, the average sale price increased by more than 50 percent. It will be interesting to see if these average sale prices hold during the second half of 2022.
Notwithstanding the changes that have taken place in the waterfront and recreational marketplace, Chestnut Park and its realtors had their most productive month in June, engaging in 30 sales and generating a dollar volume of almost $62 Million. On a year-to-date basis, Chestnut Park’s realtors have been responsible for over $200 Million in sales, almost 10 percent more than the volume of sales achieved by the end of June in 2021. Chestnut Park continues to outdistance its closest competitor brokerage in the Port Carling community by more than 25 percent in dollar volume.
In addition to rising mortgage interest rates that have caused not only the recreational market, but all markets in southern Ontario to reverse direction, the waterfront and the recreational marketplace is also being impacted by the fact that the conditions that drove it over the past two and a half years are no longer present. Recreational markets were driven by the anxiety and necessity of the pandemic. There was safety in waterfront properties with their open space and they were, and are, wonderful locations to avoid the crowds and density of cities. With travel and health restrictions being eliminated the recreation market will, during the later half of 2022, morph into a market resembling 2019.