Another whirlwind year for Island real estate market

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Sellers market likely to continue through 2022

MANITOULIN – Last year was another whirlwind year for the real estate market on Manitoulin Island. While the number of residential property sales remained on par with 2020, the average sale price increased more than 40 percent over last year. 

“It’s definitely been a crazy year,” said Leanne Lewis, sales representative with Royal LePage North Heritage Realty. Last summer was her fifth in real estate and it was by far her busiest, not slowing down like it normally does. 

“I’m just speaking for myself here, but usually when the boat stops running and winter comes on, it slows down but now there are still people traveling and looking at properties,” she said. 

“Interest rates were attractive this summer,” said Jordan Chandler, owner of RE/MAX The Island Real Estate Brokerage. “Another thing is people in the city are able to sell for so much money and have so much purchasing power when they come here. There’s a lot of cash offers. That’s a big factor, for sure.”

An increase in market activity on the Island started in 2019, said Chris Bousquet, owner of Bousquet Realty. Mr. Bousquet has been in real estate on Manitoulin Island for more than 25 years. “There was still a good supply (in 2019), but sales were increasing and the low interest rates were key at that point.” 

During summer 2020, after COVID hit, there was an influx of tourist activity on the Island, Mr. Bousquet pointed out. “People coming to the Island were looking for a place to escape from the city. We saw in increase in sales later in 2019 and not much new inventory came on the market by spring 2020, so demand and low inventory certainly drove the prices up. We’ve seen that continue through the pandemic up to this point.”

While real estate prices have shot up on the Island, Steve Rolston notes the trend across North America is similar, with some areas quite a bit higher than other areas. Mr. Rolston knows trends. He is broker of record for J.A. Rolston Ltd. and has worked in real estate for 35 years. 

“One number that may surprise a lot of people is the value of a vacant lakefront lot on Manitoulin has gone up about 300 percent. That’s since 2017, when the average price of a North Channel lakefront lot was about $80,000.”

In early 2017, a vacant 100-acre agricultural property was trading at about $800 to $1,000 an acre. That’s increased to over $2,000 an acre, but the increase actually took place over 2017 and 2018, so the first real estate to take off in Manitoulin was agricultural land. Lakefront lots became slightly more valuable in 2019, but it was when the pandemic kicked in that the tripling of value for vacant lakefront land occurred, as well as a doubling of value for vacant bush lots and hunting land, Mr. Rolston said. Those increases are based on 100 acre lots. Five- and 10-acre lot values have increased even more. 

During historical peak markets, it was the land that doubled in value. What Mr. Rolston is seeing now is different. “Your $150,000 home is worth $300,000 today, or even more. What’s really extreme, in my perspective on this, is seeing homes and cottages double in value through this trend. That’s a very odd trend. We don’t normally see that in a peak market. It’s commonplace for land to double in value every peak in the market, but buildings don’t typically appreciate in value. They tend to depreciate so you don’t normally see a house double in value through such a short period. We’ve never seen that on Manitoulin, I don’t think. It’s been extraordinary. I’ve never seen anything like it.” 

Low interest rates and Manitoulin becoming more well known may be factors in the current market but it’s also likely that Manitoulin is playing catch up to other markets after many years of lagging behind. Toronto real estate started going up in value and continued to do so for almost 20 years with a nice, fairly steady upward trend, explained Mr. Rolston. “Manitoulin stayed almost flat for 20 years value-wise and then took this huge jump up. We’ve caught up to what Toronto’s done over the last 20 years (percentage-wise) but it just happened all at once, so it looks incredibly extreme.”

It’s not uncommon for the Manitoulin Island real estate market to play catch up: in 1990, over the course of a year a lakefront lot selling for $25,000 increased to $60,000. “It’s not the first time we’ve seen this trend,” Mr. Rolston said. “It just exceeds any historical trend we’ve seen, I think ever, in this area.”

As much as prices have risen on Manitoulin, Island properties are still more affordable than other tourist areas such as Muskoka, the Bruce Peninsula and the French River, said Ms. Lewis. “In all honesty, you can go and sell a waterfront place on Manitoulin but you’re never going to get waterfront property anywhere else in Ontario for the price that you can get it here, except maybe further north. In reality, we’re pretty lucky.”

In the past, the buyers he worked with were more likely to be locals, Mr. Chandler noted. “I’d say that 90 percent of the people I’ve worked with this year are from southwestern Ontario. They’ve found us and they seem to want to invest here. Some move here because they have options for work (such as working remotely from home) and some aren’t selling their homes in the city but their homes are worth more, so they use the equity and buy a cottage with cash up here.”

“Retirees that are living here while their family and grandchildren are living somewhere else in Ontario or even Canada aren’t getting to see their grandkids,” Ms. Lewis noted. “Quite a few people on the Island are selling and retiring and just downsizing. They see the market and see that their places would probably sell so they’re taking advantage of that.”

The continuing record low inventory and record high demand are definitely factors in driving prices up on the Island. “It’s really a trend happening nationwide but certainly not the norm for the market on Manitoulin that we’re used to,” Mr. Bousquet said. 

In mid-January, there were 29 residential properties listed for sale on Manitoulin, including residential building lots and seasonal properties. Prices ranged from $1.5 million to $129,000. In 2021, there were 75 properties listed for sale in January, a considerable drop over previous years. In January 2020, there were 176 listings. In January 2019, there were 255. In 2018 there were 281 and in 2017, there were 323. 

When she started out in real estate, it was nothing to see something on the market for a year or more, Ms. Lewis noted. “Now if it’s on the market for 30 days, there’s something wrong. It’s priced wrong or there’s no road access or there’s something wrong with the building, because everything is selling quick. Personally, I can’t see the Island screeching to a halt where there’s going to be a whole bunch of listings with no buyers. I think we’re going to continue to see a good market on the Island and that’s really dependent on what COVID does. I don’t know what’s going to happen.”

“We’ll just see what spring brings,” Mr. Chandler said. “Normally you have an influx of listings in the spring. We’ll see if we get that or not. Normally December through February is very, very quiet. It’s still busy right now.”

Mr. Bousquet thinks the seller’s market will continue through 2022. Increasing interest rates may ease the market a little but the demand from southern Ontario people looking for a place to escape is still high, he said.  “For all intents and purposes Manitoulin is still an affordable place compared to areas south of us. I think we’re probably going to continue to see that push of people coming north.”

While he agrees the trend is likely to continue for now, Mr. Rolston doesn’t think this can carry on forever. “We certainly can’t continue to see upward trends in value like this,” he said. “It’s very likely that the higher prices that we’re seeing today will encourage more people to sell their property, more developers to develop land, leading to more opportunities for buyers into the future which should normalize pricing somewhat. Should. It’s really a guess here. If you look at historical trends then we can read into that a little bit and say, well this can only go on so long before it turns around. Maybe in five years we’ll be in a buyer’s market again. I don’t see that again anytime soon and I don’t see too many areas like Manitoulin Island that have so many opportunities and so much going for it compared to most other areas in Ontario.”