Muskoka housing market to favour sellers in 2021, prices expected to increase 13%
The Muskoka housing market has been hot in 2020, with continued growth expected in 2021. Current conditions favour sellers, with limited housing inventory and rising prices persistent throughout the year. Low supply has been a common trend across many Ontario housing markets, which is putting upward pressure on prices. Indeed, the Muskoka housing market saw average residential price rise to $466,154 in 2020 (Jan. 1-Oct. 31) compared to $387,490 in 2019 (Jan. 1-Dec. 31). Looking ahead, low supply and rising prices are expected to continue in 2021, with an expected increase of 13% in average priceto $526,754 across all property types.
Muskoka currently has 1.3 month of available inventory. Days on market in 2021 are expected to decline as demand continues to grow.
Who’s driving demand in the Muskoka housing market?
Muskoka’s highly active housing market has recently been driven by out-of-town buyers in search of more space. This has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more square footage and green space outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, the desire for more space and less density, as well as lower housing prices.
Housing supply is currently a challenge in Muskoka. This is likely to continue in 2021 with even more buyers expected to flock to the region, directly impacting average home prices in 2021.
The typical first-time homebuyer is Muskoka is a family household, commonly looking for single-detached homes within a price range of $300,000 – $400,000.
Meanwhile, move-up buyers in the area also tend to be families. Since the start of COVID-19, many hesitated to move forward with purchases, based on economic uncertainty.
Muskoka’s luxury housing market has been unaffected by the pandemic and is anticipated to remain in 2021. Luxury buyers are most often from larger cities within the province and will typically spend $2,000,000+.
New construction developments in the region are facing delays due to cost increases in materials and a shortage of labour.
The top neighbourhoods in the region for home sales are Huntsville, Bracebridge and Gravenhurst. This is expected to continue in 2021, as they’re the largest towns in Muskoka.
Canadian Housing Market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
52% of Canadians believe real estate will remain one of the best investment options in 2021
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
The Muskoka housing market experienced a near standstill following the initial COVID-19 lockdown, but market activity returned to full swing as of June 1, according to the RE/MAX Fall Market Outlook Report. Buyer interest in recreational markets increased dramatically, with many looking to cottage country to escape the confines of their urban dwellings. However at the same time, many prospective sellers decided not to sell their recreational cottage properties, given this same pandemic-induced desire for a great place to escape, which lowered overall supply. Increased demand, along with the fact that many full-time professionals are able to work remotely, has put the Muskoka housing market in strong seller’s territory.
Average home prices are expected to increase as more people look for properties outside of city centres, and busy market activity should continue this pace over the next 12 months. The luxury market in the region has also seen a surge in the number of sales this year over last year. However, with American and other international buyers unable to enter the country, this could prompt the selling off of foreign-owned luxury properties.
Overall, the value of the entire Muskoka housing market is expected to remain as it is or continue increasing. A 15% – 20% increase in the average residential sale price is expected for the remainder of 2020.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.
Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
48% of Canadians would like to live closer to green spaces
48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
33% of Canadians would like more square footage in their home and have realized they need more space
44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
Lydia McNutt is an award-winning editor, with more than two decades of experience specializing in Canadian real estate. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand through housing market reports and market news, as featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at email@example.com