Muskoka Market Update – April

A Guide for Buyers and Sellers

Current Market Overview

The Muskoka real estate market has experienced significant shifts over the past year. Understanding these changes can help buyers and sellers make informed decisions.

Non-Waterfront Property Sales

• April 2024 Sales: 386 units, down 13.6% from April 2023.
• Comparison to Averages: 19.9% below the five-year average and 28% below the 10-year average for April.
• Year-to-Date Sales: 1,230 units, a 4.4% decrease from the first four months of 2023.

Waterfront Property Sales

• April 2024 Sales: 112 units, up 43.6% from April 2023.
• Comparison to Averages: 6.8% below the five-year average and 15% below the 10-year average for April.
• Year-to-Date Sales: 257 units, a 24.2% increase from the first four months of 2023.

Market Insights

According to Bonnie Looby, President of the Lakelands Association of REALTORS®, the demand for waterfront properties has outpaced non-waterfront properties despite similar supply trends. This may be due to potential buyers of principal residences exercising caution, possibly awaiting further interest rate cuts. Additionally, proposed changes to the capital gains tax exemption limits in the federal budget could influence cottage owners to expedite selling plans.

Price Trends

The MLS® Home Price Index (HPI) offers a more accurate reflection of price trends than average or median prices.

• Overall Composite Benchmark Price: $692,900 in April 2024, a slight decrease of 1.2% from April 2023.
• Single-Family Homes: $721,700, a 1% reduction year-over-year.

Median Prices

• Non-Waterfront Properties: $700,000 in April 2024, unchanged from April 2023.
  • Year-to-Date Median Price: $671,500, a 1.2% decrease from the first four months of 2023.
• Waterfront Properties: $955,000 in April 2024, a 1.9% decrease from April 2023.
  • Year-to-Date Median Price: $950,000, a 2.2% increase from the first four months of 2023.

Total Dollar Value of Sales

• Non-Waterfront Sales: $304.1 million in April 2024, a 12.3% decline from April 2023.
• Waterfront Sales: $137.1 million in April 2024, a 24.5% increase from April 2023.

Economic Factors Influencing the Market

Interest Rates

Interest rates play a significant role in real estate markets. Higher interest rates typically lead to higher mortgage costs, which can deter potential buyers, particularly in the non-waterfront segment. Conversely, lower interest rates can stimulate buying activity. Currently, there is cautious optimism that interest rates may decrease, which could spur activity in both market segments.

Federal Budget and Tax Policies

The proposed changes to capital gains tax exemption limits in the federal budget are creating speculation and influencing market behavior. Sellers, particularly cottage owners, might accelerate their selling plans to avoid potential tax implications. This could lead to an increase in listings and possibly impact prices.

Economic Growth and Employment

Economic conditions, including employment rates and overall economic growth, directly influence buyers’ confidence and purchasing power. A robust economy with low unemployment rates generally supports a strong real estate market. Conversely, economic uncertainty can lead to reduced buyer activity and more cautious market behavior.

Inflation and Cost of Living

Rising inflation and the cost of living can impact disposable income, affecting buyers’ ability to afford new properties. This is particularly relevant for non-waterfront properties, which are often primary residences. Buyers may delay purchasing decisions until there is more economic stability.

Migration Trends

Population movements, particularly migration from urban centers to  Muskoka, have been a significant driver of the real estate market. During the pandemic, there was a noticeable trend of people moving away from cities in search of more space and a better quality of life, boosting demand for both waterfront and non-waterfront properties.

Notes for Buyers

1. Waterfront Properties:
   • Increased Demand: With sales up 43.6% from last year, waterfront properties are in high demand. Be prepared to act quickly if you find a property you love.
   • Price Trends: Although prices have seen a minor decrease recently, the year-to-date median price shows an upward trend. This could mean potential for future appreciation.
2. Non-Waterfront Properties:
   • Buyer’s Market: With a significant decrease in sales and prices remaining stable, now might be an opportune time to negotiate a good deal on non-waterfront properties.
   • Interest Rate Watch: Keep an eye on interest rate changes. If rates drop, it might be a good time to secure financing.

Notes for Sellers

1. Waterfront Properties:
   • Seller’s Advantage: The high demand and increased sales value make this a favorable time to sell. Highlight unique features and amenities to attract premium buyers.
   • Market Timing: With potential changes to capital gains tax exemption limits, consider the timing of your sale to maximize returns.
2. Non-Waterfront Properties:
   • Pricing Strategy: With a decrease in sales and stable median prices, competitive pricing is crucial. Ensure your property is well-staged and marketed to stand out.
   • Market Conditions: Monitor interest rates and market trends closely. Adjust your strategy accordingly to attract cautious buyers.

Conclusion

The Muskoka real estate market shows varied trends, with waterfront properties seeing a rise in sales and prices, while non-waterfront properties experience a slight decline. These insights can help buyers and sellers strategize effectively. Whether you’re looking to buy a luxurious lakefront property or sell your home, staying informed about market conditions is crucial. For more personalized advice and guidance, feel free to reach out to me at The Richardson Team, Lake of Bays. We’re here to help you navigate the market with confidence.