If you are interested in selling, buying or you’ve been tracking the luxury property real estate market in the Southern Georgian Bay area, you’ll find that the landscape has been evolving, especially over the past 5 years. Let’s break down what’s been happening and what to expect:
Market Dynamics: During 2020 and 2021, luxury homes and condominiums priced over $1 million were driving the market with strong sales. However, since the latter half of 2022, we’ve experienced a softening in sales that continued through 2023 and into 1st Quarter 2024. It’s far too early to say whether this shift is a result of changing consumer wants/needs or are inflationary pressures and higher mortgage borrowing rates the cause? Personally my bets are on the latter two issues as they are having a profound impact on the market in general. The more significant question to ponder is, how long will the downtown in the current real estate market overall last including its impact on luxury homes and condominium sales?
Recent Trends: 1st Quarter 2024 MLS® dollar volume of $116.8 million is up $16.2 million (16%) from $100.6 million last year but as with units sold, dollar volume in 1st Quarter 2024 is down a hefty $218.9 million (65%) from 1st Quarter 2022.
In the 1st Quarter of 2024, there were 77 luxury property sales reported in the MLS® System of the Lakeland’s Association of REALTORS®. This marks a 26% increase from 61 sales in the first quarter of 2023. Most of this increase came from the sale of properties priced between $1 to $2 million, while sales of properties over $2 million saw a significant decrease.
The charts below compares MLS® luxury property sales in both units and dollars in 2023 versus 2024 with sales in the $1 to $2 million range in 1st Quarter 2024 up significantly from the same time last year.
Market Recovery Signs?: Interestingly (see charts below) from February to March 2024, there was a modest spike in sales. It’s too early to predict if this trend will hold throughout the year, but it provides a glimmer of hope for potential Sellers looking to sell their property and for the best possible price. On the flip side, increased demand and pricing can have a negative impact on Buyers perhaps causing them to remain on the sidelines hoping for things to cool down.
Inventory Levels: As of this report the inventory of luxury properties listed for sale has significantly increased. The chart below reflects MLS® listing activity in 2023 versus 2024 and it clearly shows a steep increase in listing activity during the 1st three months of this year.
There are currently 343 properties listed for sale on the local MLS® System over $1 million, up 55% from 222 listings in April 2023. This shift has moved the market more in favor of Buyers than Sellers especially if overall demand and sales continue to remain weak.
Days on Market and Inventory Duration: The days on market (DOM) and the duration of inventory vary greatly depending on the price segment: Based on both the current rate of sales for 2024 as well as the number of properties listed on the MLS® System, the following is a summary of (DOM) that Sellers need to be aware of, relative to how long it may take to get a “firm” sale of their property with no conditions for things like Buyer financing or the sale of the Buyer’s current home both of which are common conditions that appear in most Agreements of Purchase and Sale.
Price Range Days-On-Market (DOM)
$1.0 to $1.499 million 301 days
$1.5 to $1.999 million 340 days
$2.0 to $2.499 million 925 days
$2.5 to $2.999 million 1,200 days
Over $3 million 1,650 days
Price Trends: The MLS® median sale price for luxury properties in the 1st Quarter of 2024 is $1.343 million, a slight decrease from the previous year. This reduction is largely due to decreased sales of properties over the $2 million threshold.
Price Adjustments: Back in the peak years of 2020 and 2021, price reductions were rare, multiple offers were common and homes often sold for more than their asking price. Now, that the market has cooled down, price reductions have become more commonplace. Sellers need to adjust their sale price expectations to attract Buyers and in particular those Buyers who require financing to compete their purchase. What a Buyer may be prepared to pay for your home versus what a mortgage lender is prepared lend are often quite different.
Local Insights: The following charts reflect luxury property sales in the 6 municipalities covered in this report. The luxury property market is dominated by the Blue Mountains and Town of Collingwood with these two municipalities combined having a 70% share of the total market. These two areas contain the bulk of the higher end homes available with many Buyers often preferring to be located near many of the area’s ski and golf clubs and other amenities.
During the1st Quarter of 2024, the Municipality of Meaford posted the highest MLS® median sale price for luxury homes at $2.258 million, primarily due to the fact that most sales in the municipality during the 1st Quarter were waterfront properties that command higher prices. This was followed by Clearview Township and Grey Highlands with significant but much lower median sale prices.
Outlook: The sales of homes priced below $800,000 remain strong in 2024, and based on recent sales activity luxury homes priced between $1 to $2 million are likewise selling well. Homes priced over $2 million however are struggling to attract Buyers and this is unlikely to change until the second half of 2024 when interest rates might come down and Buyer confidence improves.
Understanding the current market conditions and preparing for future trends is crucial, whether you’re Buying or Selling not just in the luxury segment but across the market in general. As both a Broker and Market Value Appraiser for residential properties I have learned that pricing can vary significantly for a luxury property from one area to another. For tailored advice and more in-depth insights on your particular situation you can reach out to me directly for a no-obligation consultation to see how today’s market conditions and other variables impact you.
For those interested in the Southern Georgian Bay luxury real estate market, staying informed and working with a knowledgeable local expert will help navigate these fluctuating conditions effectively. If you have any questions or need specific insights about purchasing or selling luxury properties or other real estate in this region, feel free to get in touch with me at: rcrouch@sothebysrealty.ca or via my direct number at 705-443-1037.