Lots of buyers has made big dent in ‘for sale’ inventory
MANITOULIN – Manitoulin Island’s housing market has seen a record number of property sales in the past year, indicative of the number of people who wish to purchase a home, cottage or land on the Island that have brought the number of available listings down to levels not seen in living memory.
“I think I can safely say this is probably the first time we’ve ever broken 300 property sales in a year,” said Gore Bay’s Hugh McLaughlin, broker of record at McLaughlin Manitoulin Inc. Real Estate Brokerage.
Mr. McLaughlin began his real estate career in 1974 and said he has never seen the listings supply run as dry as it is now. He referenced a Multiple Listing Service (MLS) figure that 317 properties sold on Manitoulin in 2019. That number was 258 in 2018 and the 2017 sales totalled 273.
This newspaper has reflected the changing Island real estate market. The regular advertisements in the rear pages of this newspaper have shrunk considerably in recent editions, most visibly on the Bousquet advertisement on the outside rear cover. Last week marked the first time in nearly 20 years that the Bousquet advertisement only took up half of the back page.
Chris Bousquet, broker of record at Little Current-based J. James Bousquet Realty Inc., said the number of listed properties peaked in July 2015 at 517.
“This summer, we were still over 300 (available listings) and demand for the last few years has been quite strong,” said Mr. Bousquet.
January and February tend to be the months with the smallest number of active listings on Manitoulin Island. During the lowest month in 2015, which came in January with 351 listings, there were still more properties on offer than the peak month in 2019 (June, with just 326 listings).
Data for December 2019 shows 184 Island listings at that time—the only month that has dipped into the 100s since January 2015.
Rolston Real Estate Ltd. broker of record Steve Rolston said this reflects the cyclical nature of real estate on Manitoulin Island.
“These sorts of things take place every 10 to 15 years on Manitoulin, roughly speaking. We’re just going through another one of those cycles. Unfortunately, it’s tough on our clientele when we get into a market like this—either a strong buyer’s or seller’s market—because it can raise anxieties a bit,” said Mr. Rolston.
While the current market conditions may be anxiety-inducing for some, others find the present prospects positively promising.
“It’s the best market I’ve ever seen,” said Jordan Stephens of the Jordan Stephens Real Estate Team, a Royal LePage-affiliated brokerage.
He said homes are spending far fewer days on the market than ever before. Properties that would normally be tougher to sell, such as high-end waterfront homes, are now getting multiple offers and bidding wars.
“I’ve been working with one buyer for a year and a half now trying to find a suitable house in the $300,000 to $400,000 price range, and it’s almost impossible,” he said.
Mr. Stephens said the massive growth in the Toronto housing market has had trickle-up effects to the North and Manitoulin Island in particular. He said many of the people looking North are retirees.
Manitoulin’s appeal is aided by roadway improvements that make the journey from Toronto much easier than years past.
According to Mr. Rolston, however, Toronto has never been as connected to the Manitoulin market as are southwestern and central Ontario. He said Manitoulin’s popularity has been growing due to other cottage country areas.
“Some people in the Muskokas are saying it’s too busy there now, and we’re seeing some owners bail out for quieter, more peaceful locations like Manitoulin,” said Mr. Rolston.
He added that housing tends to follow a few years behind the global economy and the Canadian Mortgage and Housing Corporation predicts a continued upward pricing trend in the next year or two.
When comparing figures from 2015 to 2019, the changes are remarkable.
Manitoulin properties sold in 2015 totaled 192, a number that soared to 317 in 2019—a 65 percent increase.
Monthly active listings on Manitoulin, on an annual average, dropped from 441.8 in 2015 to 271.1 in 2019, or a 39 percent decrease.
The price of homes, however, shows a different perspective that reflects the laws of supply and demand. Selling prices in 2015 averaged $138,004, which rose to $187,416 in 2019. That’s an increase of 36 percent.
For perspective, a property worth $200,000 in 2015, if it were to follow the average increase in price, would have been worth $272,000 just five years later.
Even more of a change was within that five-year period, between 2018 and 2019, when home prices raised by 26 percent year-over-year.
Both Mr. Bousquet and Mr. McLaughlin agreed with Mr. Rolston that Manitoulin real estate tends to operate cyclically, with the pattern based on 10-to-15-year cycles.
“In the early ‘70s there was a push in prices. Fifteen years later in 1989 there was another push in prices, especially waterfront. Those tripled that summer,” said Mr. McLaughlin.
He said the last big push was from 2004 to 2006, and he has been calling for another rise in 2020-2021.
“Maybe this (listings) shortage is just the quiet before the storm. As realtors, we hope so,” said Mr. McLaughlin.
Mr. Bousquet said high demand and lower amounts of available properties are visible across Canada due to a lack of new housing inventory. Manitoulin, however, is unique in the many recreational and waterfront properties that have been driving demand.
“Lots of people are getting out of the cities and the stressful life, and are looking at more affordable areas where they can change their lifestyles a bit. The cottage and waterfront properties here are very affordable compared to down south,” said Mr. Bousquet.
The tight market makes things challenging for the 25 active real estate agents working on Manitoulin Island. Mr. McLaughlin said the market conditions tend to be the same in all communities from Gore Bay to South Baymouth. Western Manitoulin has always been—and continues to be—a different (and much slower) market altogether from the portion in Gore Bay and to the east.
Mr. Rolston said he had faith that his team would pull through the challenging market conditions.
“I’ve got a great crew here. I’m telling our salespeople to keep concentrating on getting what listings we can,” he said.
By all indications, property owners on Manitoulin who may be looking to move elsewhere are in the most advantaged position in the present market.
“If anybody is thinking about selling their place, now is the time. It’s a strong seller’s market,” said Mr. Stephens.
Although the current real estate market may seem overwhelming in some ways, Mr. Rolston said turning to professional realtors will make the process much easier to handle.
“If I can recommend anything, it’s to find a good salesperson, stick with them and hopefully things will work out without too much stress,” he said.
Mr. Bousquet added that Island-based realtors who live, work and play on Manitoulin and understand the lifestyle will be best prepared to handle the changing market.
As for the current listings lagging behind the strong demand, some choose to view it as an endorsement of all that Manitoulin has to offer.
“We live in the greatest place in the entire world; honestly, it’s surprising we haven’t seen this sooner,” said Mr. Rolston.
While the term real estate is familiar to most people, understanding the intricacies of what the term encompasses might be a different matter. Real estate is a type of property that can include different land, buildings, or both. It is a tangible asset that is owned or leased and depending on the nature of your lease or ownership, you’ll have certain rights to use and enjoy the land and its buildings.
People purchase or lease real estate for different purposes including as a principal place of residence, a vacation home, an investment, commercial purposes and a rental property. Here we dive a little deeper into what real estate is, the different types of real estate and the benefits it offers.
Types of Real Estate
In general, there are three categories of real estate:
Residential real estate can be single-family or multi-family dwellings that are owned or rented by individuals and include undeveloped land, houses, condominiums, and townhouses. Their sole intent is providing a home.
Commercial real estate includes nonresidential structures intended for business use which can be a single-use property such as a small shop, restaurant or doctor’s office, or a multi-purpose structure such as shopping centers or office towers. Properties include office buildings, warehouses, and retail buildings.
Industrial real estate includes factories, business parks, mines, and farms.
So basically, the type of real estate is based on the purpose it serves whether that is a home, to generate revenue or to produce a product.
Residential Real Estate Ownership
Residential property provides the opportunity for homeownership. When buying a home to live in, your property is considered to be owner-occupied. Residential properties allow you to build equity and gain wealth. That’s always a good thing. Most homeowners acquire their homes through a mortgage, a loan specific to real estate. Residential properties can also be purchased as rental properties to earn income.
Commercial Real Estate Ownership
Commercial real estate is used for business purposes from shopping malls to skyscrapers and freestanding shops to houses converted for business use. The difference between commercial and industrial properties is that it is intended for “commerce” while industrial space is used for manufacturing products. Although multifamily buildings such as high-rise apartments do generate money for their owners, they aren’t considered commercial properties.
Real Estate Investment
Investing in real estate can prove to be very lucrative, as almost all properties tend to appreciate over time. As well when purchasing properties for lease you can often not only regain the money you pay for the property from rent but also continue to generate gains as the property appreciates in value. There are several ways you can invest in real estate including:
Buying tracts of land
Buying shares in real estate through publicly traded real estate investment trusts (REITs)
Buying mortgage-backed securities (MBS)
The benefit of real estate investment is that it takes severe market issues such as a major recession, for properties to depreciate. There can also be other unexpected factors such as investing in “swamp” land, which would greatly reduce your odds of reselling the land for profit.
Land is not likely to make any gains if it is lacking purpose or is not located in an area where demand is likely to increase. Both at the time of buying and the time of selling, investment value is dictated by a number of factors including the local economy, employment rates, local transportation, the availability and quality of municipal services, property taxes and even the quality of schools if investing in residential properties.
Benefits of Owning Property
The main benefit of owning property is the fact that in most cases, if you buy at the right price, your property will tend to appreciate. The trick is to ensure you never pay more for a property than the fair market value, the average price properties are selling for in the area. This price can vary greatly, even for neighbourhoods a few kilometers away. So, working with a real estate agent who understands property values in a specific area is very important as they will guide you on true values and negotiate a price that makes sense.
For example, if you had purchased a home in Toronto or Vancouver around 2015 in a high demand downtown neighbourhood, chances are you overpaid for your home at the time.
Pros and Cons of Real Estate Investment
The pros of owning investment properties include:
If you find and maintain steady tenants, it will generate steady income
In most cases, you enjoy capital appreciation
It is an excellent way to diversify your portfolio
It can be bought with leverage
Can pay for itself and then become strictly profit generating
If rented, your tenants pay for the property, eventually making the property strictly an income generator
There are also cons to property investment including:
It is not liquid
There can be influences that will greatly reduce value making it difficult to sell
It does require larger upfront capital unless you choose REITs or MBSs
Requires management of some type even if just basic maintenance unless REITs or MBSs
Of course, the type of real estate you buy impacts the pros and cons.
Understanding Real Estate Appreciation
Appreciation in real estate builds over time, starting from the time of your purchase. For example, if you buy a home in Toronto for up to $500,000 (very unlikely, but this is for simple math purposes) in value all you need for a down payment is 5%. So, your down payment amount for your personal property is considered equity because you own that part of the property out and out. The average increase in home prices in Toronto rose 12.3% from January 2019 to January 2020. So, in a year, if you sold your home, you would have gained $150,000, which includes the $25,000 for your down payment, plus the $125,000 roughly gained in appreciation. Factors such as interest rates determine how quickly equity builds.
The best way to see gains in real estate is to find a neighbourhood in the “gentrification” stage where homes are still selling at lower prices in a less trendy or developed area. As people catch on the neighbourhood has potential, they begin to buy homes in the area that attracts trendier cafés, restaurants, shops and services. This increases the value of your property.
For commercial properties such as vacant land, prices can skyrocket if a natural resource is discovered such as oil. Office space can rise in price as a city begins to attract a certain industry such as tech companies that increases the demand for office space.
Regardless of the type of real estate, appreciation also rises based on basic rules of supply and demand, so the lower the inventory available in the real estate market, the higher the prices.
If you are shopping for real estate whether it is commercial or residential, the experts at RE/Max can help.
According to OREA, the legislation was called back for a third reading on Wednesday, and, at 11:50 am on Thursday, the Bill unanimously passed third and final reading and TRESA amends the Real Estate & Business Brokers Act, 2002 (REBBA).
Morrison said the passing of TRESA is a “huge win” for its realtor members, their clients, and Ontarians.
“Thanks to the Ford Government’s newly passed legislation, Ontario’s homebuyers and sellers can have greater confidence that the Realtor at their side during the largest financial transaction of their life has the highest professional standards, training and modern tools in North America, such as the ability to form personal real estate corporations.”
The passing of the Bill will help “enhance professional standards, create a more fair and efficient business environment, and better protect consumers dealing with those who trade in real estate in Ontario, including realtors.”
OREA says it’s been advocating for a review of REBBA for over a decade and the passing of the legislation is “historic” as the rules of the former act were outdated and over 18 years old.
“By strengthening consumer protection and fixing the broken real estate discipline system, the Government of Ontario is showing Realtors and home buyers and sellers that it is on their side,” said OREA CEO, Tim Hudak.
“Ontarians deserve the best when it comes to making the biggest financial transaction of their lives and TRESA will make this province theNorth American leader once again when it comes to a well-regulated real estate market.” Speaking with Toronto Storeys earlier this month ahead of the bill’s passing, Hudak explained that it would put Ontario realtors at the “forefront of professional standards.” Adding that while real estate is changing, “trust in a realtor remains king”.
TRESA is one of the few pieces of legislation in Ontario to receive bi-partisan support with positive and constructive debate in the Legislature led by Minister Lisa Thompson and NDP Consumer Critic Tom Rakocevic, as well as other MPPs.
Now, OREA says it will continue to work closely with the provincial government to develop regulations for the Bill and work towards enacting the legislation into law.
NEWS RELEASE ENGEL AND VÖLKERS ************************
Engel and Völkers Collingwood Muskoka is reporting a strong current trend of affluent baby boomers selling their luxury Muskoka properties and relocating to Collingwood to live full time.
At the same time, boomers from Toronto, and a new wave of millennial buyers, are showing interest in making Collingwood their full-time residence.
The area’s walkability and proximity to hospitality, recreation and entertainment. are attracting both young families and retirees who enjoy the year-round active lifestyle.
Collingwood has shifted from a seasonal vacation market to a popular full-time residential market with increasing investment. Private schools are growing in popularity due to the influx of new families, and its millennial buyers are entrepreneurial, opening breweries, fitness studios, interior design studios, restaurants and other service-related businesses.
A blooming cannabis industry in the area has seen an uptick in inquiries for agricultural land, and the first cannabis shop officially opened its doors in December, hiring 15 people. Another major segment is comprised of a cohort of professionals who work remotely, particularly in tech industries.
According to 2016 Census data, Collingwood is one of the fastest-growing communities in Canada, ranking 24th on the list of fastest-growing municipalities located outside a census metropolitan area. Collingwood saw a 13.3 per cent jump in population, increasing to 21,793 from 19,241.
Collingwood is currently a balanced market with conditions favouring sellers due to a supply shortage, particularly within the condo market.
Demand remains high within the luxury segment with new-to-market residential freehold properties between $1 million to $2 million selling quickly.
In 2019, Collingwood experienced increased construction activity, seeing it become a hot destination for long term living – particularly for new families and high net worth baby boomers – a major trend to watch in the area.
Last year ended strong, with residential sales in the Southern Georgian Bay Area totaling 158 units in December 2019, up 22 per cent year-over-year.
Home sales in the western region, which includes Wasaga Beach, Clearview Township, Collingwood, The Blue Mountains, the Municipality of Meaford and Grey Highlands numbered 89 units in December 2019. This was an increase of 11.3 per cent (nine sales) from December 2018. An In-Depth Look
Home sales in the western region numbered 1,997 units over the course of 2019, up 10.6 per cent from the same period in 2018.
MLS reported that home sales improved throughout 2019, with the average price of homes sold in the Western Region in December 2019 reaching a record $594,714 – a drastic increase of 20.7 per cent from the previous year.
Active residential listings numbered 751 units at the end of December 2019, up 4.2 per cent from December 2018. This pick-up and interest in market activity is expected to grow in 2020.
The Blue Mountains remains as the top luxury hotspot in the area with average prices hitting $926,070 in January 2020. Following close behind is Collingwood, particularly in the infill, with the area seeing a lot of new luxury developments and interest in tearing down and building new properties.
Waterfront properties along Georgian Bay ranked the highest in terms of top-selling luxury properties in Collingwood and The Blue Mountains. The market saw more buyers seeking and building custom contemporary builds with flat roofs, large glass windows and smart home tech integration. This is expected to continue.
According to Engel & Völkers Collingwood Muskoka, Thornbury is experiencing an increase in interest and is expected to see a pickup in luxury real estate. Meaford is also growing as people are beginning to migrate west for residence.
Engel & Völkers Collingwood Muskoka currently has 14 listings priced at over $1 million in Collingwood. In 2019, the shop closed 11 deals over $1 million with the most expensive sale at $2.2 million.
This luxury segment of $1 million-plus properties represents 8.4 per cent of Engel & Völkers Collingwood Muskoka’s total transactions in 2019. Currently, the most expensive property listing from the shop is 449 Island View Road, priced at $2.99 million.
Engel & Völkers Collingwood Muskoka expects prices in the region will increase by 10 per cent within the Collingwood market. The Collingwood market is projected to grow at a healthy, steady pace in 2020, with the average sale price across all property types up 30.9 per cent to $618,571 in January 2020 compared to January 2019. In the Western District, the average price grew from $594,714 in December 2019 to $663,552 in January 2020. With this rapid price growth in January alone, Engel & Völkers Collingwood Muskoka expects the market to remain a real estate hot spot that will grow further into 2020.
Three trends to watch in 2020 include the movement of millennials and baby boomers to the market, the end to the market correction, and a steady uptick in average home prices with new interest in the luxury segment.
Overall, home prices in Collingwood are expected to rise with the popularity of the recreational market and increasing desire for long-term living in the area.
Mortgage rates are expected to be on the decline in 2020 as some have dropped below 4 per cent. For example, Royal Bank of Canada, the country’s largest mortgage lender, has reduced its rate to 3.09 per cent in January 2020 and TD Bank has recently cut its rate from 5.34 per cent to 4.99 per cent. Rates are predicted to continue to decline – posing a good opportunity for buyers to enter the market.
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.