The coronavirus pandemic might have permanently altered the Canadian real estate market in a myriad of ways. While a lot of industry observers are paying attention to the massive pop in sales activity and prices since the height of the COVID-19 outbreak, there are plenty of other long-term trends forming across the housing sector. One of these developments has been the great exodus from urban centres to rural communities, including areas that are traditionally known as Ontario’s cottage country.
Muskoka has turned into a top destination for city dwellers who are keen to leave the buzzing GTA behind. For a long time, families needed to reside in some of the country’s biggest cities and surrounding suburbs to minimize their daily commute to work. However, with more companies adopting work-from-home policies and many municipalities investing and expanding public transit, households no longer need to be chained to urban centres.
The Muskoka real estate market may not be like Toronto or Vancouver, but its performance in recent months has been extraordinary and record-breaking. And, based on the latest estimates, there is no slowdown in sight as all-season cottagers are making Muskoka their new home.
Record Highs in the Muskoka Real Estate Market
According to the Canadian Real Estate Association (CREA), residential non-waterfront sales surged 34 per cent in August, with 410 units changing hands. Year-to-date, non-waterfront sales have advanced 10.2 per cent from the same time a year ago. Meanwhile, waterfront property sales hit an all-time high in August, rising 23.1 per cent from August 2019, with 325 transactions.
The median price for residential non-waterfront homes increased 31.8 per cent in August, to a record-crushing high of $461,250. Waterfront property sale prices also gained 31.4 per cent year-over-year to $676,500.
Neighbouring towns are doing just as well, too, including Haliburton, Orillia and Parry Sound.
“With current record levels of demand likely stemming from people looking for more space outside the city considering the ongoing social distancing measures, it will be interesting to see if this is just the beginning of even more buyers coming to the Lakelands region in search of an escape from the urban setting,” said Catharine Inniss, President of The Lakelands Association of Realtors, in a news release.
One aspect of the housing sector that is doing well is the luxury market, which has seen a dramatic surge in the number of sales year-over-year in the last few months. Analysts do note that with travel restrictions in place for American and other international buyers, foreign-owned luxury properties could be added to the small supply.
Overall, the Muskoka real estate market has been a frenzy, which has surprised a lot of local professionals this year. Many anticipated a weak summer at the beginning of the public health crisis, suggesting that nobody could have expected what is currently unfolding.
Typically, during the autumn months, many cottagers pack up their belonging and board up their properties until the following spring. Not this year. It looks like a growing number of people will be staying in Muskoka, based on the RE/MAX Fall Market Outlook Report. This is not surprising, given the adoption of remote work policies by many businesses country-wide, allowing professionals to clock-in work hours, lakeside.
With demand projected to remain high and low inventory levels, the average residential sale price in Muskoka is forecast to increase 15 to 20 per cent for the remainder of 2020.
It also helps that borrowing costs are at historical lows. To support the Canadian economy, the Bank of Canada (BoC) cut interest rates to 0.25 per cent, plus it lowered the five-year mortgage rate to below five per cent. The central bank has signaled that it does not intend to raise rates until 2022 or 2023. This means that accessing credit markets will be cheaper for another couple of years – at a minimum. It has only been a few months since the central bank took this drastic action. Still, industry experts say that homeowners and homebuyers are taking advantage of the opportunity by either upgrading or relocating to another city. Analysts recommend the housing sector to pay attention to the luxury market, which has seen impressive growth in many cities across the country.
With more people working from home, more municipalities investing in public transit, and more properties becoming available in these types of rural markets, how much more growth can there be over the next six to 12 months? Many experts are suggesting that these unforeseen trends could usher in a new normal for Ontario real estate.
Will Muskoka’s Small-Town Charm Attract More People?
Will the glitz and glamour of big city living forever be forgotten in lieu of lake breezes and a slower pace of life? Is this a permanent lifestyle decision for homebuyers, or will we see a triumphant return to urban centres once pandemic fears have subsided? The future remains uncertain, even over the next few months as Canada battles through the annual cold and flu season alongside the coronavirus pandemic. For now, Muskoka is going through a huge market rally never seen before. If everything remains the same, the home of the Bala Cranberry Festival, and some of the most breathtaking lakes in Ontario, should see sustained growth in the future.