35% Drop in sales by mid-summer is making headlines
But some context is worth keeping in mind
Unit sales in Muskoka and Almaguin fell 35% in a year over year (Jan 1 to July 31) comparison. Both waterfront and residential markets experienced sharp declines with drops of 38% and 34% respectively. Yet prices, in general, continued their upward trends. Inventory, as it has for the last two years, has remained low across the board.
2017 Historical Highs
Sales figures across virtually all areas and property types hit historical highs in 2017. Last year sales totals followed strong year over year increases of over 20% in both 2015 and 2016. So while I’m certain no one predicted this sharp decrease in sales in the first seven months of the year, a fall back in activity was not a huge shock. A 35 per cent drop is certainly significant but it’s worth keeping in mind that sales in 2017 were the highest on record. Moreover, sales up to the end of July 31 are almost identical to the ten-year unit sales average.
Inventory- Historical Lows
Muskoka, like many parts of the province, is experiencing a significant shortage of listings. In summary, at the end of July 2018 active residential listings are down 62% compared to July 2015. Waterfront listings have fallen from 1041 in July 2015 to 464 listings in July 2018 – a 55% reduction.
This obviously has had a restrictive effect on sales. Add an adjusting GTA market, more strenuous financing criteria and a three year run of double-digit growth and we had the makings of an ebb in the first half of the year.
Despite the decline we saw in the first half of the year it’s worth bearing in mind that is not at all like what we experienced in 2008 when demand completely dried up. Most markets (and Muskoka is a collection of varied sub-markets) still have strong buyer interest and we are still seeing above normal levels of competing offers on appropriately priced properties. Furthermore, the fall market is historically strong so a cautious optimism is prevailing. The best advice for Sellers is to rely on a thorough market analysis for pricing. And for Buyers, enter the market fully informed and be prepared to act prudently but quickly.
Author: John O’Rourke, Royal LePage Lakes of Muskoka Brokerage, Broker of Record & President.