Market
Market
Why May Not be the Time to Buy a Cottage in the Almaguin Area
Several weeks ago, I penned an article delving into the Parry Sound cottage real estate market. My motivation was simple—I wanted to empower clients with data, allowing them to make decisions grounded in reality rather than emotion.
The realm of buying or selling a cottage often becomes an emotional journey; staying rational can be a challenge. Even for someone immersed in the industry like myself, the struggle persists. Why is it that when we shop for a vehicle, we meticulously research, scour reviews, and consult Consumer Reports, yet when we stumble upon a charming cabin by a quiet lake, our hearts want to overpower reason?
Cottage Sales in Magnetawan
Magnetawan Cottages - Days on Market
Most cottage buyers I deal with as a real estate broker seem to fall into two broad categories:
Firstly, there are families seeking an enduring escape, a retreat that withstands the test of time. While houses may come and go, the cottage becomes a constant—a repository for memories, a legacy for children and grandchildren. It's hard not to succumb to emotions when contemplating such enduring significance.
The second group contemplates a cottage for retirement. Though the event may be months or years away, their sights are set on a place to settle into later in life—the culmination of years of dreams and conversations. This, too, is a deeply emotional purchase on many levels.
Of course, there are the investors, landlords, and flippers whose decisions are largely devoid of emotion. Their purchases are strictly business, and while pragmatic, this approach has its financial advantages. In my opinion, the role of a Realtor® goes beyond extolling a property's virtues. Anyone can read a feature sheet. The equally important aspect lies in pointing out flaws. Not just the property's flaws but also flaws in timing and pricing—balancing the emotional pull with the reality of the situation. This demands solid local knowledge, not just information gleaned from a search engine.
Waterfront property markets are hyper-local and lake-specific. Reliance on broad real estate board trends might offer limited value. When buying a condo in Toronto, collaborate with an agent entrenched in that city's nuances. Similarly, when buying waterfront, align with an agent deeply familiar with the area—someone who knows about algae problems in a particular waterway or a pending development on the seemingly quiet lake you're eyeing. These are details often missed on a computer screen.
Magnetawan Waterfront - Months of Inventory
Now, let's shift our focus back to the current scenario. Irrespective of how you analyze it, every indicator suggests continued price erosion into spring for cottages under $3,000,000, especially those under $1,500,000. While predicting the extent of price drops remains speculative, a 20-30% price decrease from the market peak seems not only possible but probable.
Examining the charts, the current trajectories are evident. Factor in the headwinds of the Foreign Buyers Tax, higher interest rates, and the lingering effects of the Covid mindset, and you have the perfect storm for substantial market deterioration.
Keep in mind that properties priced properly for the current market on good lakes are still in demand and selling.
Key Considerations:
- Over 200 recent price drops on the Lakelands Real Estate Board indicate agents and sellers starting to align with the market.
- Waterfront sales in Parry Sound for cottages under $3,000,000 this fall are at the lowest in over a decade.
- Many metrics are reverting or starting to revert to pre-Covid ranges.
- Constant market gyrations are expected until the market finds a base and the existing inventory begins to clear.
A things to keep in mind when interpreting these charts: They represent 12-month rolling averages, smoothing month-to-month fluctuations for a clearer trendline. As sales numbers dwindle, their significance diminishes, with a few property sales having the potential to significantly shift the scale. It's challenging to dispute the observable trajectory of the cottage market.
One more caveat: This data is specific to the Township of Magnetawan. It includes sales from all area lakes including Ahmic Lake, Lake Cecebe, Horn Lake and Neighick (Beaver) Lake to name a few. Additionally, it pertains to sales on the Lakelands Real Estate Board, excluding listings from other boards or private sales.
In a nutshell, if you are intent on buying a cottage now, make sure the price reflects the state of the market. When navigating a declining market, arm yourself with up-to-date data. Collaborate with a realtor® intimately familiar with the area, and above all, strike the elusive balance between emotion and the realities of the market.
