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Local housing market presents supply issues and potential rise in prices

This time of the year, things are always quiet in Cottage Country.

Cold temperatures and lower inventory levels of homes & cottages keep buyer activity to a minimum during the winter months according to Jim Marshall, broker with RE/MAX Parry Sound-Muskoka Realty.

Marshall has some predictions on the local market in the coming months. He says inventories will remain at low levels which will have a direct effect on the number of sales in the area.  The number of sales for residential units in the West Parry Sound area last year was down over 33 per cent from the previous year.

Furthermore, inventory levels were down a similar degree from year to year.  Strong demand and low supply have had an inflationary effect on prices, with some areas and types of property up about 10 per cent from the previous year.

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Marshall projects that demand will remain high.  The local economy is doing quite well, which will spur more and more buyers (especially first-time buyers) into the market.  The provincial economy is also doing well, and although money is more expensive to borrow and credit is tighter than in previous years, this should not take or dissuade buyers from entering the market, especially for cottage properties.

“Interest rates will remain at current levels until at least mid-year.  Instability in the global economy, weak commodity prices and lower inflation will keep the Bank of Canada from raising rates unless they fear that inflation is an issue.  Although not as cheap as they have been, interest rates are still very low,” he says.

Marshall adds that vacancy rates for residential dwelling units in Parry Sound and the immediate area are close to 0%, which could push more renters into the residential market.  And as municipalities look to regulate or otherwise control short-term cottage rentals, we could see fewer cottage rentals on the market going forward.

“Vacant waterfront lots are almost a thing of the past. Nearly all available waterfront is developed, and it is increasingly difficult to create new waterfront lots, mostly because of availability and municipal/provincial restrictions.  Buyers looking for choice lots are increasingly looking at older cottages that were built 50 plus years ago on prime lots, tearing them down and rebuilding.  The larger the lot, the better, as smaller lots are getting tougher to build on, mostly because of changes to municipal bylaw requirements,” he said.

“Choice, well-priced properties will remain in high-demand, and multiple offers on cottages and homes will be normal.”

Marshall says once the market breaks in the springtime, it should remain busy right through to Thanksgiving.

With the Cottage Life Show happening a week earlier than usual, Marshall says don’t be surprised to see more waterfront properties coming onto the market earlier than average.

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