Chestnut Park's Market Report - January to April 2006

The pattern that began in 2003 has once again manifested itself during the first third of 2006. Each year for the last three, the number of recreational sales reported by the Muskoka & Haliburton Association of Realtors has declined. In 2004 there were 187 recreational properties reported sold, 160 in 2005 and this year, 123 - a 34 percent decline. This pattern does not square with the numerous reports prepared by financial institutions which conclude that there are many more buyers in the marketplace than the number of available listings.

The Association wide pattern is not clearly reflected in the Muskoka Lakes and Lake of Bays marketplaces. Sales on the Muskoka Lakes (these figures do not include exclusive listing which are not reported to the Muskoka & Haliburton Association of Realtors) are down as compared to 2004, but stronger than the results achieved in 2005. In 2004, 41 recreational properties were reported sold, 22 in 2005 and year-to-date in 2006 the number increased to 26, an increase of 18 percent. In Lake of Bays the pattern is reversed. There were 23 reported sales in 2004, 26 in 2005, and that number has declined to 12 in the first third of this year, a decrease of more than 50 percent.

These numbers are even more perplexing when the listings appearing on the Muskoka & Haliburton Association of Realtors for the same period are examined. During the first third of each year since 2003 listings have increased. In 2004 there were 563 recreational listings, 583 in 2005, and in 2006, 648, an increase of 15 percent. The Lake of Bays marketplace is consistent with the overall market, the Muskoka Lakes are not. In 2004, there were 91 active listings at the end of April, 97 in 2005, and 112 in 2006. On the Muskoka Lakes there were 163 in 2004, 164 in 2005, and a decline to 153 this year.

Based on the statistical information available from Chestnut Park sales over the last three years, an explanation appears to be emerging. Year-to-date sales at Chestnut Park sales are slightly lower than sales for the same period in 2005, however, dollar volume based on our sales is up by approximately 35 percent. If you combine this statistic with what emerged last year - weak first half, exceptionally strong second half, after asking prices were reduced by Sellers - the conclusion that emerges is that notwithstanding the number of Buyers, sales are very much a reflection of price, no matter how great the desire to own a second country property. Sale prices in Lake of Bays and on the Muskoka Lakes have risen so dramatically since 2003, that most sales reflect values that far exceed either the expectations and/or the financial capabilities of most Buyers. It will be interesting to observe sale results in the last two thirds of the year. Will the sales increase as Sellers reduce listing prices as has happened in the last few years? Stay tuned.

Prepared by: Chris Kapches, Vice President and Legal Counsel
Chestnut Park Real Estate Limited, Brokerage

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