2022 Year-End Market Review
We are pleased to release our Annual Lake Simcoe Waterfront Report. We include the areas of Georgina, Beaverton, Orillia, Oro-Medonte, Innisfil (includes Barrie) and Ramara. Our analysis includes only sales of direct and indirect detached lakefront property on Lake Simcoe & Lake Couchiching. Canal and riverfront properties are excluded. Our data is collected exclusively from The Toronto Regional Real Estate Board.
Why Invest in Waterfront Real Estate?
Owning a lakefront property can be a good investment, as these types of properties can be in high demand and may appreciate over time. Waterfront properties can be a desirable choice for vacation homes, rental properties, and primary residences, and can generate income through rentals or resale. For years now, Lake Simcoe has consistently been a sought-after location due to its recreational features, proximity to Toronto and the popularity of the amenities available in the various communities that surround the 240 km of shoreline.
2022 can be described as a down market, due to the decrease in the number of sales compared to the previous two years. It’s important to note however, that a lower volume of real estate sales can skew the average price of homes. When there are fewer homes being sold, the prices of the remaining properties on the market tend to remain high, creating an upward rise in the average price. This can happen for a few reasons.
The limited supply of homes for sale makes it easier for sellers to hold out for higher prices.
Buyers who are still active in the market may be more willing to pay a premium for the limited number of available homes.
The average price of homes appears higher than it would be if there were more homes on the market, even though many of the homes are selling at a discount.
The smaller number of transactions can also mean less opportunity to find relevant sales to derive the true market value of the property.
Our findings show that four out of the six areas we track experienced an increase to the average price which, may be due to the lack of inventory on the market. Waterfront listings declined by 44% in 2022. There were 229 sales in 2020, 188 sales in 2021 and 105 sales in 2022.
This factor is important to consider when interpreting the average price of homes, particularly the areas where inventory is very limited.
Average Sale Price in 2022
Lake Simcoe waterfront increased marginally by .3%. The average selling price in 2022 was $1,810,108 compared to $1,804,623 however, the average price rose by 48% over the past 24-months.
Georgina reported a 15.2% increase with an average selling price of $1,699,723.
Beaverton’s lakefront is mostly comprised of mostly direct waterfront lots. The water quality is superior to some areas further to south and the size of the lots tend to be larger than those available in Innisfil and Georgina. Beaverton’s average price of $1,733,639 rose by 29.5%.
Orillia reported a slight increase of 2.4%, with an average selling price of $1,596,250.
Oro-Medonte has always reported the highest average price, which is due to the size of the lots and homes located in this luxury community. In 2022, Oro-Medonte reported an average price of $2,725,062, a decrease of 16% year-over-year. There was large sale of $7,775,000, which skewed the average. Since the volume of sales dropped by 48% in 2022, the average price may not be an accurate representation of the market value of the area. The median price decreased by 9.8%.
Innisfil’s average selling price (excluding condo sales in Friday Harbour) dropped by 16% to $1,668,907.
Friday Harbour’s resale activity of condominium units decreased by 74% decrease. The average price however, increased by 9.1% to $1,996,600.
Ramara was the most active trading area in 2022 with 34 sales reported. The average price increased 18% to $1,437,072. Sales of canal front properties in Lagoon City are excluded. We only include direct or indirect detached lakefront properties in our analysis.
Georgina experienced a 26% decrease in sales with only 26 properties sold compared to 35 sales in 2021.
Beaverton is a small niche waterfront community with very few lakefront properties available for sale in any given year. In 2022 there were 7 sales, a decrease of 4 sales from the previous year.
Orillia experienced a 60% decrease in sales with only 9 sales reported.
Oro-Medonte reported 12 sales, a 48% reduction since 2021.
Innisfil experienced a 68% reduction in sales volume, the largest decrease compared to the other five areas.
Ramara’s sales activity dropped by 19%, however, there were several sales of canal properties in Lagoon City that are not included in our analysis.
The Secondary Market
Prior to the pandemic, most buyers purchased waterfront properties for recreational use or as a secondary home.There were exceptions, particularly in exclusive luxury lakefront enclaves of newly built homes. This appears to have changed since more and more people are able to work from home. Many buyers have opted to live north of the city, which has affected many secondary markets, including the waterfront communities that dot the 240 km of Lake Simcoe shoreline.
We see this trend to continue particularly within the retirement demographic. The combining of home and cottage under “one-roof” is alive and well on Lake Simcoe. Lake Simcoe’s proximity to Toronto offers many options, even if commuting is still required for business purposes.
Financing a Waterfront Property
Financing the purchase of a waterfront property creates its own set of challenges.
Darlene Hanley, Mortgage Agent of Hanley Mortgage Group commented that “cottages are a financing challenge with many variables that effect the quantum of the mortgage.” She outlined a number of key factors to take into consideration which are as follows:
- The maximum Loan to Value on a refinance is 80% subject to sliding scale & qualification (e.g., the stress test). The minimum down payment on the first $500,000 is 5% and 10% on the difference up to $999,999.
- For a purchase over $1 million, the minimum is 20% down.
- Depending on the lender and if there is an existing mortgage, a penalty to refinance may apply.
- Lenders will allow a gifted down payment; however, they also want to see 5-15% of the funds from the buyer.
- Cottage are not exempt from the mortgage stress test.
- Most lenders will only include the main building and exclude other buildings such as Boathouses and Bunkies when deriving an appraised value for mortgage financing.
- If the funds are directed to another property, housing costs would be added to the client’s liability which may affect debt ratios. e.g., taxes, maintenance fees
Forecast for 2023
We anticipate that rising prices will continue in to 2023, especially if we continue to experience a sheer lack of inventory. We forecast further pressure on Lake Simcoe’s waterfront market from foreign/international buyers. The Federal Government’s implementation of the Foreign Home Buyer Ban, Bill C-19, which took effect on January 1, 2023, restricts foreign buyers from purchasing most types of real estate across Canada for a 24-month period. There are some exemptions which includes buying “recreational” real estate.
It appears that international buyers recognize the value of our precious lakeshore and the benefits of Lake Simcoe’s proximity to Toronto. Over the next two-years they may target waterfront ownership as their best option if they want to invest in Canada.
These combined factors will undoubtedly create a very competitive market that buyers will need to consider if they plan on buying a waterfront property this year.
If you would like to obtain a copy of our full report, please email us at Roxanne@ChestnutPark.com or call 289-338-0767.
Please go to www.CityHouseCountryHome.com for additional real estate-related articles and featured properties currently for sale.
All data used in this report was obtained from The Toronto Real Estate Board.
This publication is not to be copied or duplicated without the express written permission of Roxanne Finn.
This publication is not intended to solicit buyers or sellers currently under contract with a brokerage.