Happy September! We have another summer under our belts, and what a summer it was! Hot and dry…perfect weather (in my opinion). Hopefully, we’ll get another month of summer before autumn settles in.
The local real estate market remains an enigma. Late June ushered a spike in buyer demand after the cold and wet spring market and the rush lasted for about 4 weeks before slowing down. August activity was typical for the late summer period as is September (to date).
For the first time since the spring, I have had the opportunity to analyze the sales data for the local market and have found some significant trends. Earlier this month, The Parry Sound Real Estate Board’s statistics showed that our local market was down from 409 unit sales (yearto August 31, 2010) to 379 (year to August 31, 2011), not a huge amount but enough to take notice.
Over the course of 2011, I have certainly had more confidence in the non-waterfront residential market than the waterfront market, and the numbers prove it. In-town home sales to date are up 20% compared to the same period last year, with 60 unit sales this year compared to 50 in 2010. That’s a 20 percent increase in sales, with average prices creeping up a nominal 1.5 percent.
Rural residential sales are following a similar trend. To date, we have seen 60 out of town residential (non-waterfront) homes sell compared to 58 for the same period last year, and not a discernable difference between residential sales north of Parry Sound to those in the areas south.
Waterfront sales, however, show a completely different picture. Throughout this year, we have noticed a significant weakness in sales for waterfront properties in the areas north of Parry Sound, especially when compared to waterfront areas south (Seguin and South Archipelago Townships).
The north areas have seen cottage sales drop dramatically from 2010 numbers, down from 46 cottage sales last year to 30 this year. Waterfront lot sales have seen even bigger volume drops, from 25 lots sales last year to only 10 to date in 2011. Those drops translate to -35% and -60% respectively.
In comparison, south areas have actually seen gains in unit sales, with waterfront lot sales up 15% (on a relatively small sample of 5 units in 2010 and 7 units this year) and cottage sales up 15%, from 40 units last year to 46 for 2011.
So, what does this all mean? Well, it is my belief the house sales (again, non-waterfront) are being buoyed up by a continued strong regional economy. We are still seeing the positive spinoffs of the massive infrastructure projects that have helped keep the construction industry strong through the economical downturn, and the fact that some of our region’s largest employers are in the government sector, we have not seen the negative effects of plant closures that other similar areas in Muskoka have.
The waterfront market, on the other hand, is fed by demand in Southern Ontario (especially the Greater Toronto Area). Higher gasoline prices, the continued effects caused by the implementation of the HST (specifically on newly developed waterfront lots) and escalating construction costs have all had an impact on waterfront sales in 2011.
Government policy will continue to put pressure on waterfront lot sales. For instance, Ontario brings in a new building code in 2012 that will according to contractors I have spoken to, add 3%-4% to the cost of building. Average sales prices for waterfront lots in areas north of Parry Sound fell 4.5% in 2011 and there is no reason why this segment ofthe market will improve in the short to medium term.
Buyers in general are taking more time to buy and are looking at more product than ever before making a decision. When it comes to rural properties, they want as much privacy as possible (larger frontages for waterfront properties, larger area lots for rural homes and lots), convenient access (year round maintained roads) and easier-to-maintain, less topographically challenging lots. People looking to live at the cottage or home for most or all of the year typically do not want to be further than 30 minutes out of Parry Sound – the closer the better.
Nevertheless, as I said in the beginning of this quickly lengthening treatise, the market is a bit of an enigma and is frustratingly difficultto nail down. The public is continually buffeted by negative news on the economic front that tends to wear on even the most optimistic.
If you are looking to buy, there is good value out there. Selling, exercise some patience and take solace in the fact that even though the local market has been better, it still is not approaching what we experienced in the early-mid 1990s.
My best advice: stop watching/listening to the news, cancel your newspaper subscription – and notice how your mood improves.
That is what I have done!
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