Working With A Registered Real Estate Broker Provides Some Protection

The decision to use a brokerage — or not — is entirely yours to make.

But the Real Estate Council of Ontario (RECO) strongly recommends working with a registered salesperson, or broker, when you buy or sell a property for the simple reason that navigating your way through a real estate transaction can get complicated, especially if you’re inexperienced. Unlike some other do-it-yourself projects, buying a home is the largest single purchase most people will ever make, it involves a binding legal contract, and it’s a decision you may have to live with for a long time.

In Ontario, salespeople, brokers and brokerages must register with RECO if they wish to trade in real estate, and that registration provides consumers with three pillars of protection:

Knowledge: Real salespeople and brokers must complete courses to qualify for registration before they can practise their trade, and RECO requires them to complete additional continuing education courses every two years to keep their knowledge up to date.

Salespeople know their territories. If you’re selling, they can provide you with a comparative market analysis so you can set a listing price that works for you yet is realistic and attractive to buyers, and help you market your home by hosting open houses, arranging to have it professionally staged for visitors, and employing other creative promotional activities.

And if you’re buying, your salesperson can help you find properties that meet your needs in your area and answer any questions you might have about the neighbourhood, arrange showings, recommend other professionals such as appraisers or home inspectors, and possibly negotiate on your behalf.

Professional Standards: Real estate salespeople and brokers are required to comply with the Real Estate and Business Brokers Act, 2002 (REBBA), and its Code of Ethics, both of which are enforced by RECO. We expect members of the industry to treat anyone involved in a transaction with fairness, honesty and integrity, and to protect consumers. In the rare instance when something goes wrong and it can’t be resolved with the brokerage, a consumer can file a complaint with RECO against a salesperson and we will investigate.

Insurance: RECO established and administers an insurance program that includes consumer deposit protection. Consumers can rest assured their hard-earned deposits will be protected against loss, insolvency or misappropriation.

Salespeople and brokers may vary considerably in terms of their knowledge, experience, fee structures, and services as well as the types and locations of properties they trade. We encourage consumers to interview at least three candidates before they sign on as a client with a real estate brokerage, and to look up salespeople on the RECO website using the search tool located on every page.

Muskoka Market Update

The Muskoka real estate market fell short in the third quarter in a year over year comparison. Despite the drop, the numbers actually marked an improvement from the first two quarters of the year – which saw an aggregated downturn of over 35%.
Downward pressure was applied across many fronts; low inventory, a cooling GTA market, consumer edginess regarding changing U.S. relations, and a general cooling following the frenzied activity in 2016 and 2017.
Third quarter residential sales hit 216, a drop of 11% from 2017 and recreational sales fell by 19% with sales of 240 units from 295 in the third quarter of 2017.
Average and median prices continued to climb, although the rate of appreciation slowed slightly. The average price for a residential home in Muskoka in the first nine months of the year increased by 8% to $359,728 and median price rose by 9% to $346,000 in the first none months of the year.
Recreational property prices saw average prices increase by 4.14% to $1,060,497 and median prices surge by 15.4% to $750,000. This gap in average and median growth was driven by two factors; price increases across most price points which drives the median value; and a stall at the top end (3M+) of the market which softened average price.
Available properties still remained exceptionally low. At the end of September only 184 residential listings and 279 recreational listings were available for sale. This continues the trend we’ve seen for the last couple years and remains, in my opinion, the single largest factor driving prices and restraining sales.

Scarcity Boosting Ontario Cottage Prices

(From The Globe and Mail)

People from the Toronto area who are looking to buy a lakeside retreat north of the city are finding relatively few sellers in cottage country this year.

The scarcity is in turn pushing up cottage prices on some of the most sought-after lakes.

“It’s kind of the classic squeeze that the supply is going down but the demand is static or going up,” says real estate agent Paul Crammond of Chestnut Park Real Estate Ltd.

The trend which spreads from Orillia up to Muskoka, Lake of Bays, Parry Sound and Haliburton, mirrors the Toronto market, where the number of listings has also shrunk from this time last year and the increased competition is boosting prices in key neighbourhoods.

Across that swath of cottage country, there were 117 sales of waterfront properties in April, compared with 238 a year earlier, Mr. Crammond says .

That marks a 51-per-cent drop. At the same time, the median price jumped 39 per cent to $600,000 in April from $432,000 in April, 2017.

Mr. Crammond adds that not every property saw such a dramatic surge in price: the mix of cottages sold tilted towards the high-end segment this year. “Prices did go up but there more expensive properties sold in April this year than April last year.”.

On the waterfront in Muskoka and Lake of Bays, 43 properties changed hands in April to mark a 43-per-cent drop from April of 2017.

The median price for those areas spiked 30 per cent to $770,000 from $590,000.

Mr. Crammond says listings have been shrinking for the past four years. The Ontario economy is strong so people are less likely to need to sell because of financial hardship, he points out. Also, more neighbours are buying out neighbours without the cottage ever coming to market. And a large inter-generational transfer of wealth from older parents to their baby boomer kids has taken place.

Real estate firm Royal LePage is forecasting that prices for recreational properties in Ontario will rise 10.4 per cent in 2018 to an average of $535,885. Royal LePage, which surveyed agents across the country, looked at all types of vacation homes – with mountaintop chalets and forest cabins mixed in with waterfront cottages.

Real estate markets in the city and the country have been delayed by a long, cool, damp, spring, agents say.

Anita Latner of Anita Latner Realty Inc. says everything in cottage country is behind by about six weeks, including the painting, repairing docks and putting boats into the water. “The weather took its toll on everything. I was chopping ice here in April – thick ice.”

Ms. Latner believes that stock market gyrations caused by geopolitical tensions also add to the air of anxiety.

U.S. President Donald Trump’s Twitter tirades against Prime Minister Justin Trudeau following the meeting of Group of Seven leaders in Quebec and his outbursts against the North American free-trade agreement will not dissuade serious cottage buyers, in her opinion, but the stock market volatility may slow down some sales.

“They’ll find a way – it might just take a little longer,” Ms. Latner says of potential buyers who might be planning to sell stock in order to invest in a cottage.

She says sunny skies and warm temperatures are a bigger factor than politics and financial markets. “The weather trumps Trump at the end of the day.”

Mr. Crammond says people in the city don’t even think of venturing north when it’s cold and wet. “We need good weather for people to get revved up about cottaging. April was a disaster and parts of May we’re not much better.”

Mr. Crammond, who is selling a place of his own on Lake Rosseau this year as he moves to another cottage around the bay, says more listings have appeared with the warmer weather in the past 10 days or so.

Some real estate agents in Muskoka are setting offer dates when they think they might be able to entice multiple bids, he says. The practice is most common on the “Big Three” lakes of Joseph, Rosseau and Muskoka. “Before this shortage of property, we never did that.”

In areas outside of the Big Three, multiple offers are not common but a buyer might find less room to negotiate down from the asking price.

In another echo of the city market, there’s a divergence of trends. The most coveted properties sell quickly and even draw rival bids while others languish.

Mr. Crammond thinks that buyers have been slow off the mark because of the uncertainty surrounding the Ontario election. He has a sense that some potential buyers – especially at the upper end – we’re hesitating to make any big financial bets.

“People have been looking at properties but maybe haven’t been acting on them as much as they normally would.”

Now that a new provincial government has been elected, buyers may be willing to move.

He explains that cottage buyers are more sensitive to price hikes than city house hunters. While the Toronto market saw double-digit house price increases for several years leading up to 2017, cottage prices since 2009 have been creeping up at, or slightly above, the level of inflation.

“There’s a limit to what people can afford and will do. A cottage is a discretionary purchase,” he says.

“You can’t take buyers for granted that they’re going to pay any amount for your property.”

Prices in some segments have risen 25 per cent over the past four years. But some sellers try to aim for 15 to 20 per cent about that level when they list a property.

“Guaranteed it will sit there,” Mr. Crammond says. Buyers are very educated about market values. “They will knowingly overpay for a place in the city because they need a place to live. That’s not going to happen here.”

February Sales Numbers

Sales numbers throughout Muskoka were down in February. This was by no means an indicator that the market is slowing. It is a direct result of a lack of inventory. Sales would be up if there was more out there to buy!
February average selling price across Muskoka for residential non-waterfront homes was $358,245.
Bracebridge – $411,643
Gravenhurst – $250,167
Huntsville – $382,439
Lake of Bays – $265,000
Muskoka Lakes – $293,375
February average selling price for waterfront properties across Muskoka was $850,056.
Bracebridge – $420,000
Gravenhurst – $335,000
Huntsville – $764,281
Lake of Bays – $429,000
Muskoka Lakes – $1,258,333

Toronto packing up and moving to Muskoka

We expect the introduction of tighter mortgage rules in effect in January 2018 to cool the housing market slightly, more urban buyers will look to Muskoka for a four-season cottage to live in year-round as they are priced out of GTA.

There is already a sizable market segment living here which works remotely, and with companies more open to flexible working solutions, it will continue to pave the way to a steadier migration from Toronto to Muskoka.

Buyers today are becoming savvier and understand the value of potentially saving tens of thousands of dollars by purchasing here and not being hit with a double land transfer tax in Toronto. Why not? Especially when our region is viewed as a great investment because of the associated lifestyle. Dollar for dollar the value of people’s hard-earned money simply goes further here, the dream of detached home ownership is more attainable. Our members are very excited about The Muskoka Airport feasibility proposal, adding daily flights to and from Toronto would open a potential new residential market.

In 2018, many homeowners that once favoured super-low-rate variable mortgages, will likely return to the five-year closed mortgage in response to the rising interest rates of 1 per cent.

We are seeing more winter activity and earlier spring buying to snap up cottages for the first long weekend in May. Our market is expected to continue to be strong with brisk sales early in the season, adjusting to steady sales throughout the summer and fall. Multiple offers can be expected on properties that are in good condition and properly priced.

Buyers’ want lists are becoming more nuanced, with less expectation of the typical western exposure with gentle slope to water, and large frontage.

Parry Sound Muskoka Haliburton Orillia — The Lakelands Association of REALTORS® is a not-for-profit professional association representing over 770 local REALTOR® members. Our members serve both residential and commercial real estate in the heart of Ontario’s cottage country. The region, known worldwide for its lakes and forests, is home to both larger cities and smaller vibrant communities. It’s home to a thriving tourism industry and a growing telecommuter base for the Greater Toronto Area.

“Many clients are getting referrals from their favourite realtor in the city to a Muskoka realtor, and are understanding the value of using a local realtor who know cottage country firsthand,” said Mike Stahls president of The Lakelands Association of REALTORS®.

Cottage country shows early immunity to GTA real estate cooling

Sales data from Royal LePage show Ontario recreational-property prices have climbed to an average of $413,000 in May this year, while prices for lakefront properties in Muskoka grew 20 per cent year over year to $1.5-million from $1.25-million in May, 2016. (Because it has implemented a new methodology for compiling data, Royal LePage does not have a comparable average provincial price for recreational properties in 2016.)

Kevin Somers, chief operating officer of Royal LePage Real Estate Services Ltd., said the vacation-property market around Toronto is “very different” from the market for homes in the city, and he predicts a strong summer of sales in vacation centres even as the Toronto region experiences a slowdown.

“Based on the underlying supply and demand factors, coupled with very lucrative financing, I think we’re going to see a very strong sustained summer market,” he said.

Most cottage-country buyers are typically wealthier and are buying second homes using financing that comes from the strong equity position in their principal homes, so are not spooked by the province’s recent measures to cool the Toronto market, Mr. Somers said.

“They are less impacted, frankly, by the pause or the reprieve that is going on in the GTA market proper right now,” he said.

While most buyers are still seeking vacation homes, he said there is also a growing number of people approaching retirement who are opting to sell valuable city homes and move permanently to a relatively less-expensive vacation market.

Some vacation markets in Muskoka and around the Collingwood area have even started seeing bidding wars, which have been a rare sight in communities hours from the GTA.

“Historically, the process to purchase recreational properties tends to be a more relaxed and extended pace, so it’s a bit of a new anomaly in cottage country,” Mr. Somers said.

Price gains have varied within hot regions, depending on the type and location of the properties.

In the Collingwood region north of Toronto on Georgian Bay, for example, prices for lakefront homes rose 5 per cent in May compared with a year earlier to an average of $801,500, Royal LePage reported. But prices for resort and condominium units remained red-hot over the same period, climbing by 27 per cent to an average of $342,200 as buyers continue to seek more affordable, year-round units that can be used during ski season.

In the Haliburton Highlands area northeast of Toronto, lakefront-home prices climbed 13 per cent in May compared with a year earlier to an average of $425,000, while riverside-home prices were up 20 per cent to an average of $300,000 and island properties climbed 17 per cent to $350,000.

Non-waterfront woodland cabins remain the most affordable option in most centres, averaging $200,000 in Haliburton and $300,000 in the Muskoka region.

Prices for riverside properties in the Muskoka area were also well below prices for lakefront properties, averaging $800,000, while island-based properties averaged $650,000, up 18 per cent over 2016.

Cottage Country Feels The Heat

Cottage country feels the heat from
Toronto’s real estate fire

Even before the snows melted, equity-rich boomers were chasing scarce resort-area getaways.

The May long weekend is the traditional kickoff to cottage season. But long before the snow melted this spring, equity-rich baby boomers from the city had been turning up the heat on resort-area real estate.

Agents in Muskoka and Haliburton say most of the action is down to a new breed of older buyer: 50-somethings, cashing out and driving north to retire or telecommute. Many maintain a condo in the GTA or they go south in the winter.

Toronto’s runaway real estate market, which has only recently started to cool, is still radiating heat into cottage country, according to Mike Taylor, an agent with Port Carling Chestnut Park and president of the Lakelands Association of Realtors, which represents 680 realtors in Muskoka, Haliburton and Orillia.

Its latest statistics show waterfront property sales up 5.1 per cent this year to date, compared with 2016. The value of that property, however, surged 51.4 per cent year over year in April, to $118.1 million. The median price of $485,000 was up 30.4 per cent from last April.

“We haven’t seen a slowdown like the Toronto market has over the last month as yet, but it may be filtering our way. As the end of May comes and we are getting more listings put on the market for waterfront, it will be interesting to see how that all plays out,” Taylor said.

But many cottages never hit the Multiple Listing Service (MLS) that provides real estate association data. A lot of agents find a buyer and seller before the property even goes on the market, said Bob Clarke, a Port Carling-based broker.

He said the inventory of listings is at historic lows — down about 30 per cent from 2015 levels. Prices, however, are up about 26 per cent on the small lakes and about 41 per cent on the big three lakes: Muskoka, Joseph and Rosseau.

Typically, Muskoka doesn’t see a lot of bidding wars and vacation homes can sometimes take up to two years to sell. But Clarke said competitive offers have been popping up since the fall, with many properties selling in a day, and it isn’t even high season.

“We’re putting places out there and getting 30 showings in a day and a half,” said Clarke, who is president of Royal LePage Lakes of Muskoka–Clarke Muskoka Realty.

The trouble is, he said, this is supposed to be the slow season. Usually only 12 per cent of the company’s transactions occur in the first four months of the year.

In Bracebridge and Gravenhurst, entry-level homes in the $229,000 to $279,000 bracket are selling for $30,000 or $40,000 over asking, he said.

“Torontonians have hit the Lotto Max jackpot and they come up here and say, ‘Who cares? What’s $299,000 instead of $279,000?’” Clarke said.

Ninety minutes east, Troy Austen, with Team Haliburton Highlands Re/Max, says one of his clients put it best.

He said he felt like he’d won the lottery, Austen said. “I just sold my house for $1 million. I can make the same money with what I do in Haliburton and I bought a 50-acre farm — no mortgage — and money in the bank.”

Austen usually spends his winters travelling. He’s been all over the world because once the snow flies, the cottage market typically shuts down.

Not this year.

This year it never stopped. Real estate left over after the summer continued to sell and buyers were on the prowl even after the lakes froze.

“It’s my 22nd year (in the business) and I’ve never seen it this busy in the winter,” he said.

It’s not just housing trends and demographics. Austen said the Internet has finally put Haliburton on the map for its relative affordability and proximity to the city.

“The taxes are way less, the prices are way less and, coming out of the GTA, we’re anywhere from two hours to two hours and 45 minutes from downtown,” he said.

Although less expensive cottages always sell faster, “every price range right now is hot and active up to $1.5 million in Haliburton County,” Austen said.

Buyers, he said, are looking for a dream home.

“Everybody’s looking for a 400-foot frontage lot or teardown,” Austen said. “All of the contractors are booked a year and two years out. It’s good for the economy.”

The same quest is taking a toll on the traditional fabric of Muskoka, says Hugh Nichols, a Re/Max North Country agent in Gravenhurst. Cottaging has become more sophisticated, he says.

“I don’t think it’s so much an escape where you went up to the cabin and your mom didn’t yell at you when you left your wet bathing suit on the floor. Now they’ve got them finished with granite countertops and drywall, and carpeting or hardwood floors throughout. Your mom would die if you left your bathing suit on the floor now,” he said.

“The demand is for three-season (cottages) where 10 years ago people were happy with a seasonal cottage. We have investors and contractors who are buying them to improve them or rebuild to flip, or we’ve got investors who are buying to rent,” said Nichols, who admits entry-level cottages for young families are limited.

“It is possible, but that’s not our major market. I’d like to see that again. I don’t see a lot of 40-and-unders buying,” he said.

Last week, Nichols said, there were only seven waterfront properties listed under $500,000. The lowest was a cabin for $179,000 on a narrow bend of river. It might suit a kayaker but you couldn’t water-ski there.

On the big three lakes, there were 51 properties listed with an average price of $3 million.

“Privacy is still the key factor when it comes to price. Up here, the definition of privacy is when you can stand on your front deck naked and nobody can see you. You need 200 feet of waterfront to do that … the younger people know they’ll have to pay to get a smaller waterfront where you can see the neighbour,” he said.

A boathouse requires similar water frontage.

There’s not much call for the rustic cottages of a generation or two back, says Clarke, who is also a builder.

“Places I’m building now have 20-seat theatres; we have walls of glass that open to the outside; gas and wood fire pits; butler’s pantries. And those are the ones that are $10 million-plus and they’re often the least used,” he said.

Custom builds are so popular, Clarke said. “We are very quickly reaching the point where we do not have vacant lots on Rosseau, Muskoka and Joseph. They’re basically (as scarce as) hen’s teeth.”

The Dangers of Over Pricing Your Muskoka Home

If your Muskoka home gets no showings or very few showings, it is probably overpriced by 10%. If your Muskoka home gets a lot of showings (2-3 per week) but no offers, then your it is probably overpriced by about 5%. If your Muskoka home gets an offer within the first 30 days, then your home was priced correctly from the beginning.

Your top priority is not to sit on the market for longer than 30 days. If you sit for that long, people will believe that something is wrong with your property and they will not offer top dollar on your home.

Sometimes agents will be desperate for a listing and they will promise you an unrealistic sale price. As a real estate professional, this is highly frowned upon and it is a major disservice to the consumer. I would rather pass on a listing than promise a client something that I know I cannot give them.

If you’re looking for an honest answer about what your home might sell for on the market, please don’t hesitate to contact me. I would be very happy to help you!

Which Renovations Add Value to Your Muskoka Home?

People often ask, “What type of renovations should I invest in before listing my Muskoka property?” Fortunately, I have advice about the most valuable renovations to invest in.

First, add a fresh coat of paint. Painting is the cheapest way to add value to your home. A crisp, clean property appeals to the buyer and makes a huge difference.

Second, replace the carpets. You may get away with a simple wash. However, if your carpet is worn out, consider the fairly small investment to replace it entirely.

Third, declutter the property. This isn’t a costly investment, but it requires time. Ultimately, it will help make your home more appealing to buyers.

Finally, create curb appeal. You have only one chance to make a first impression! Clean up the yard. Plant flowers. Ensure the entryway looks nice. Make your property shine.

Buyers should fall in love with your home. Buying a home is an emotional experience. Give buyers the ultimate experience. If you have any questions, give me a call or send me an email.

National Real Estate Report First Quarter 2017

What’s the current state of the Canadian housing market? Twice a year, we produce Brian Buffini’s Real Estate Report, a guide that provides important facts and information about the national real estate market to help you understand what’s going on in the market and help you decide whether now is a good time to buy or sell.


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