The allure of the second home has long been an aspiration for Torontonians who long for a place to unwind from the hectic lifestyle of the city. It might not seem like Muskoka and Toronto real estate are connected, yet the two markets have close ties that might not be obvious on the surface. Here’s why Muskoka and Toronto real estate are connected.
The Muskoka Real Estate & Cottage Market
Inventory is up and median prices are down for waterfront properties in Muskoka with a drop of 18 percent year over year. Interestingly, non-waterfront properties rose by 28 per cent bringing it up to $36,000 thanks to low supply. Once again, the inventory issue continues to affect pricing, even 2.5 hours away from the heart of Toronto.
Toronto Success = More Second Home buyers
Toronto money very clearly has an influence on property ownership in Muskoka. When Torontonians are successful, they are earning more and therefore spending more on big ticket items.
Not everyone making a better living will opt to buy a cottage in Muskoka, but it still increases demand as more people can afford to do so.
The Toronto job market is strong and is seeing expansion as more companies are drawn to the city. Tech companies are one of the main industries attracted to the city, and inventory in the commercial real estate sector is seeing change. Toronto is leading the way in the office leasing category when it comes to Canadian cities. It experienced the lowest office vacancies with Vancouver not too far behind. Demand is becoming so high in Toronto that even a whisper new office space is available leads to pre-leasing. This means new jobs are on the horizon.
More Work-From-Home Options & Retirees
Let’s not forget the way people work is changing quickly.
The telecommuting trend is growing. If more people can work from anywhere, many will be able to choose where they live.
Workers close to retiring are also semi-retiring slightly earlier than normal and sometimes working from outside of the city for themselves as consultants or in other occupations that allow remote work. Muskoka is capturing this chunk of folks.
The idea of having no commute and working with a view of a stunning North Ontario backdrop is an appealing lifestyle alternative that will attract more and more people.
You can have a fulfilling career, find affordable living and not really make too much of a sacrifice. Trendy areas like Muskoka offer all the urban living amenities including a vibrant nightlife and fine dining options, at least in the summer.
More employers are becoming more open to the idea of telecommunicating. In 2017, 47 per cent of employees reported they worked from outside their employer’s main offices for half the week or more.
Toronto Real Estate Inventory Shortages
The ongoing issue of inventory of listed homes in Toronto real estate will continue in 2020. Although the move to the suburbs has been the solution for this issue, many Torontonians are watching prices rise while inventory drops. The market is pushing people further out, but that will eventually fuel demand issues in the suburbs.
Toronto was listed as the second most overvalued market in the world on the annual global real estate bubble index. The publishers of the report don’t see this correcting itself any time soon. With growing inventory challenges, this is even more likely to be the case. So, while the suburbs are calling to more Torontonians who dream of home ownership, some are looking for different solutions to their home ownership woes.
Cottages Are a Cheaper Option
For a growing number of people ready to throw their money at a property, the idea of owning a cottage is a new consideration. It’s not just Torontonians either. Two-thirds of Canadian millennials would consider buying a recreational property in the next decade.
As Muskoka cottages see higher sales, it could be because Torontonians are tired of being kept out of the real estate market because Toronto prices are so high.
With extremely affordable options in cottage country available, out of the box thinkers have looked for new opportunities and that has led them to Muskoka. Buyers will get far more home for their money in cottage country when compared to the tiny Toronto condo. And you get a waterfront view, with no fears some builder will block it out with a new condo development in a year.
What you spend on a one-bedroom or studio condo apartment in Toronto will get you a three-bedroom cottage you can enjoy on weekends and vacations. This has many Toronto homebuyers finding the option a no brainer.
Cottages Rising in Value
As demand continues to present problems in Toronto and provides a good reason for more people to buy in cottage country, demand will grow, inventory will drop, and prices will begin to rise. As a result, cottage buyers will see a return on investment that can make it even more worthwhile. As well, cottages not in use during the week can bring in some cash if owners are so inclined to decide to rent them to vacationers. It’s kind of a win-win situation; especially considering how new Toronto regulations are challenging investor’s rights to rent out their condos on sites like Air BnB.
Torontonians Cashing Out
It is not just first-time buyers turning their sights northward. Many Toronto homeowners are looking at the market as a way to make some money. It is not uncommon for homeowners to sell their Toronto properties and purchase a lower-priced, extremely enticing Muskoka property. This trend to cash out is going to continue to impact inventory. Even small numbers of people opting for this idea will be adding more listings in Toronto and decreasing inventory in Muskoka markets.
Many Toronto renters aren’t buying because they have been priced out. Another option? Keep renting a home they like conveniently located in Toronto and buy a cottage as their weekend retreat.
There are many reasons to do this including:
- It takes way less time to save for a cottage down payment then it does for a Toronto property
- A cottage mortgage payment will then be lower than a Toronto mortgage
- Mortgages can be supplemented by renting out the cottage when it is not in use by the owner
Investing in Muskoka real estate gives you the best of both worlds. You have a permanent rental home close to work and a recreational property to go to on weekends and vacations.
As you can see, the Muskoka and Toronto real estate market have many factors connecting them. If you would like more information on how you can take advantage of either or even both markets, speak to our experts today.