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Parry Sound Real Estate Market | Review & 2023 Outlook
A Real Estate Market in Flux
The Parry Sound real estate market has been on a wild ride the last few years to say the least. It went from years of reasonably predictable growth and prices to the frenzy of pandemic buying in a heartbeat. The question is, for both buyer and sellers, what's next? It's a classic push/pull struggle with potential purchasers not wanting to over pay and sellers not wanting to leave any money on the table. With this in mind we decided to take an in-depth look into market statistics to try and provide some clarity.
The market trends in Parry Sound tend to go in loose lockstep with the Muskoka region but the swings tend to be a little delayed and somewhat muted. Often people searching cottages for sale will look in both areas but prices in Muskoka are generally higher with I would largely attribute to the shorter driving time.
In the Parry Sound region, waterfront properties are by far the largest real estate category by dollar volume. This would include sales of lake homes, cottages and vacant land. Areas include Parry Sound, Seguin, Burks Falls, Sundridge, Emsdale, South River, McKellar and Whitestone among others. For the following statistics they do not include condominiums, property leases, commercial lands or timeshares.
2019 - 540 properties sold with a median sale price of $422,500
2020 - 823 properties sold with a median sale price of $505,500
2021 - 719 properties sold with a median sale price of $715,000
2022 - 411 properties sold with a median sale price of $800,000
* Data source - The Lakelands Association of Realtors®
A deeper dive into the numbers for waterfront properties can reveal critical insights about the market's potential direction.
Although it's true that the median price for waterfront properties has dropped, it's important to note that this only tells part of the story. Specifically, the median price of high-end cottages valued at over $3,000,000 has been on the rise. This trend highlights the growing demand for luxury waterfront properties.
Furthermore, while the total number of sales in the waterfront category may be in fact beginning to stabilize, the percentage of sales for high-end properties has increased. In contrast, the proportion of sales for properties valued under $1,000,000 has been declining.
A Changing Cottage Outlook
The sales volumes and prices of waterfront properties have been declining, and the trend is even steeper when luxury cottages are excluded from the equation. When comparing 2020 to 2022, sales of waterfront properties valued under $1,000,000 have fallen by a staggering 58%, while those valued at over $3,000,000 have only fallen by 43%. This discrepancy cannot be attributed solely to price increases, as other factors such as interest rate increases, economic uncertainty, and tighter financing rules are contributing to a decline in demand. Higher-end buyers, while not immune, tend to be less affected. This gap has been widening and is skewing the numbers.
While these statistics are lagging indicators and do not necessarily indicate that existing trends will continue, there is a leading indicator that has proven to be quite accurate - Google search analytics. Analyzing search volumes for keywords such as "Parry Sound Cottages for Sale" or "Lake Joseph waterfront listings" and comparing them to historical numbers provides valuable insight. As the following chart illustrates, search volume peaked in mid-2020 and has moved seasonally, but overall search numbers are down about 45% year over year. This means that significantly fewer people are searching for cottages in Muskoka and Ontario.
Another red flag to consider is the cottage rental market. Many clients purchase waterfront properties intending to rent them out during the summer months to offset some of the carrying costs. However, we may be reaching a tipping point with potential rental saturation. I have noticed a recurring theme of thinning bookings and lower rates being offered to fill vacancies, indicating a potential oversupply of rental properties.
In conclusion, the declining sales volumes and prices of waterfront properties, especially those valued under $1,000,000, are concerning. The lagging indicators suggest a challenging market, and the leading indicators provide valuable insight into the potential future direction of the market. The cottage rental market also warrants attention, and oversupply may negatively impact the market further.
Google Views on our site for Waterfront Real Estate
****May 2023 Update****
In May 2023, the MLS® System recorded a total of 524 units sold for residential non-waterfront properties in the Lakelands region. This represents a moderate gain of 6.1% compared to the same period in 2022.
However, residential non-waterfront sales were 6.4% below the five-year average and 12.6% below the 10-year average for the month of May. Looking at the year-to-date figures, residential non-waterfront sales reached 1,795 units over the first five months of the year, showing a notable decline of 22.7% from the same period in 2022.
As for waterfront properties, 149 units were sold in May 2023, indicating a slight gain of 0.7% (one sale) from the same period last year. Unfortunately, waterfront sales were 20.5% below the five-year average and 27.8% below the 10-year average for the month of May. On a year-to-date basis, waterfront sales totaled 366 units, falling 22.6% from the same period in 2022.
Matthew Lidbetter, President of the Lakelands Association of REALTORS®, noted that non-waterfront home sales experienced a year-over-year increase in May, the first in two years. On the other hand, sales of waterfront properties remained flat compared to the same month last year. Lidbetter mentioned that warmer weather might be necessary to stimulate the waterfront segment, even though demand is surpassing supply. This is evident from the surge in the median price of waterfront properties, which climbed back above $1 million in May.
To assess price trends more accurately, we rely on the MLS® Home Price Index (HPI) rather than average or median price measures. In May 2023, the overall MLS® HPI composite benchmark price was $715,000, reflecting a 12.8% decrease compared to May 2022.
Specifically, the benchmark price for single-family homes in May was $743,600, representing a 12.8% year-over-year decrease. For townhouse/row units, the benchmark price was $572,100, down 13.9% from a year earlier. The benchmark apartment price was $468,200, showing a decline of 10.5% from the previous year.
The median price for residential non-waterfront property sales in May 2023 was $695,000, a decrease of 6.1% from May 2022. Looking at the comprehensive year-to-date median price for residential non-waterfront properties, it stood at $685,000, down by 13.2% compared to the first five months of 2022.
For waterfront property sales in May 2023, the median price was $1,085,000, representing a gain of 6.6% from May 2022. However, the comprehensive year-to-date waterfront median price was $961,250, showing a decrease of 16.4% from the first five months of 2022.
In terms of total dollar value, residential non-waterfront sales in May 2023 amounted to $400.9 million, indicating a decrease of 4.3% from the same month in 2022. On the other hand, the total dollar value of all waterfront sales in May 2023 was $218.4 million, showing a small gain of 3.2% compared to the same month in 2022.
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