Kahshe Lake, Muskoka





Anyone searching for a cottage in the Muskoka region will instantly notice one thing- the real estate market is still running red hot. A well-priced waterfront listing sells very quickly with the once-rare multiple offer situation now occurring far more frequently. Many theories have been put forth as to the reason for this. Here is my perspective as a broker covering the Parry Sound and Muskoka areas.





1. Demographics

The majority of our cottage buyers are between 45 and 60 years old and are falling squarely into the Gen X category. With an eye to the future, they're purchasing waterfront properties to be used now as a cottage and eventually as their retirement home. This is underlined by the fact that quite often the buyer's wish list includes year round access, gentle slope to the lakefront and proximity to heath care.

2. The Toronto Market

Although the Toronto market has cooled off slightly, the fact remains that if you already own a home there, you've basically won the lottery. The average home price was approximately $352,000 in 2007. That amount barely buys a parking spot today. With average current prices approaching $900,000, owners have a great deal of new-found equity and are leveraging that by purchasing a vacation property.

3. New Canadians

We are very fortunate to live in a country as diverse as Canada. Many new Canadians come from cultures that embrace the cottage lifestyle. Think the Russian dacha, Swedish summer stugas or European country villa. Many newcomers have a yearning to continue those deep-rooted family traditions in their new homeland and the result is a new stream of purchasers. Last year almost 1/3 of our waterfront sales came from 1st or 2nd generation Canadians and this trend will most certainly continue.

4. Low Interest Rates

There are two sides to the low interest coin that impact real estate. The obvious one is low rates = low payments. In addition, with low rates come low returns. Sub 2% GICs are less than attractive. Since this demographic has gone through the last financial crisis, their appetite for equities has also been diminished. Real estate, right or wrong, is perceived as a low risk, safe haven for investment. There's also something very mentally comforting about a tangible asset you can enjoy, as opposed to a piece of paper.

There is much talk of bubbles. Condo bubbles, commodity bubbles, stock bubbles. Froth everywhere. The real question is, of course, whether cottage real estate is ready to pop. While my crystal ball remains quite murky, the fact remains that the underpinnings driving the market are both broad and deep. A softening of the Toronto market will not affect immigration. A correlation between demographics and interest rates does not exist. From my perspective in the midst of the mayhem, demand for recreational waterfront properties will, if anything, become stronger in the coming years. 


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