Muskoka and Lake of Bays Market Report: January - December, 2011

In assessing 2011, it is worth recapping what has been set out in previous market reports. The early months of this year began by underperforming the same period in 2010. The recreational property market place is very sensitive to broader economic conditions. This was particularly evident in the early stages of 2011. The US economy, its bi-partisan debt ceiling struggles, the fallout from the tsunami that hit Japan, and of course the heightening and spreading European sovereign debt crisis, were all reflected in the number of reported sales early in 2011.

Sales rebounded in the summer and early fall. By the end of September, numbers provided by the Muskoka and Haliburton Association of Realtors indicated that although not quite equal to 2010, the early market gap had been dramatically reduced. As we compare year end figures, the same can be said about recreational sales in the Muskoka Lakes, Lakes of Bays, and sales generally throughout the region. The gap was reduced but not eliminated.

For 2011 the Association reported 743 recreational property sales. This compares to 812 in 2010, a decline of 8.5 percent. The results were similar on a localized basis as well. On the Muskoka Lakes 212 properties were reported sold for the year. This compares to 228 for 2010, a decline of 7 percent. Almost identical results were achieved in Lake of Bays. In 2011, 82 recreational properties were reported sold, compared to 88 in 2010, a similar decline of 6.8 percent.

It is not surprising that inventory of recreational property was generally up during the course of the year. With sales off as compared to 2010, more properties were on the market available for buyers to view and purchase. Active listings at year end, which are not necessarily indicative of annual inventories, came in as follows. Throughout the region there were 528 recreational properties available to buyers. At year end 2010 there were 505, an increase of 4.5 percent. On the Muskoka Lakes there were 108 recreational properties, an increase of 22 percent compared to year end 2010. In Lake of Bays, somewhat surprisingly, there were only 65 properties available for sale, a decline of 8 percent compared to the 71 properties available in 2010. Throughout 2011, the Association processed 7383 new listings. In 2011, 7191 were processed, an increase of almost 3 percent.

Any attempt to determine average sale price changes is difficult, given the diversity in waterfront locations and amenities offered by the recreational properties that have been reported sold. It would appear however, that as a general assessment, average prices were off by about 14 percent in 2011 as compared to 2010. In the case of Chestnut Park, the number of properties sold in 2011 was up by about 5 percent, however the dollar value of recreational properties sold declined. This is due to many more lower end properties selling in 2011 as compared to 2010. Chestnut Park’s average sale price for all properties sold in 2011 was approximately $1,025,000. Chestnut Park continued to dominate on the Muskoka Lakes. Its dollar volume of sales totaling more than 100 percent more than the nearest competitive office.

At this point in 2012 it does not appear that many of the global issue that impacted the Muskoka Lakes and Lake of Bays market places in 2011 will be soon resolved. If that is the case, then it can be anticipated that sales results 2012 will be similar to those achieved in 2011. What we do not anticipate is a further softening of prices. Average sale prices have not returned to the highs achieved in 2007. The 2008-9 recession further impacted prices, an impact that continued through to 2011. Desirable, well priced properties will continue to sell, including higher priced properties. The key is pricing. Recreational properties represent discretionary purchases. In times of economic instability discretionary purchasers, not driven by need, become more deliberate and price conscious.  Realistic pricing will overcome the broader economic consideration influencing buyers

Prepared by: Chris Kapches, Senior Vice President