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The median price in areas around Ramara Township fell for five months in a row to $680,000 in July from $875,000 in February, according to Information Technology Systems Ontario.Giordano Ciampini/The Canadian Press

Alexis Victor, real estate agent with Royal LePage Signature Realty, says investors are aggressively pitching lowball offers for cottage properties in areas around Orillia, Ont., Ramara Township and the Kawartha Lakes northeast of Toronto.

Sales and prices have already fallen steeply, she says.

“It’s such a jaw-dropper,” Ms. Victor says of the rapid decline. “You have to go back almost a full year to price a property now.”

The median price in areas around Ramara fell for five months in a row to $680,000 in July from $875,000 in February, according to Information Technology Systems Ontario.

“Initially, there was a lot of panic,” she says, as homeowners who were contemplating a sale heard about declining prices. “Some properties were getting no showings.”

But many owners are resolute about not selling below a fixed price.

“Sellers are aggressively hanging on,” she says. “The buyers say, ‘We’ll just wait until they come around.’”

At the high end, Paul Crammond of Chestnut Park Real Estate Ltd., says the market in Muskoka has shifted quickly in the past two months with rising interest rates and increasing concerns about the economy.

On the small lakes, Mr. Crammond is seeing fewer bidding wars and buyers taking their time before making decisions.

Sales on the lakes of Muskoka, Rosseau and Joseph have held up better, he says, despite properties on the largest lakes – dubbed the “big three” – commanding the richest prices.

“We have lost some groups of buyers even on the ‘big three’ but demand still exceeds supply.”

Mr. Crammond says cottagers on the prime lakes tend to hold onto properties. He points to a historic 1920s cottage on Lake of Bays with an asking price of $10.5-million. The vintage cottage at 1023 Scotts Boathouse Rd. is on the market for the first time since 1949, he says.

The property provides 600 feet of shoreline, a two-storey boathouse and a steamer dock.

Mr. Crammond says showings increased after he recently reduced the price to $9.359-million.

Stephen Brown, senior Canada economist at Capital Economics, sees little relief in sight for the country’s housing market. He estimates the average price in Canada will slide 20 per cent from peak to trough.

The one bright spot, he says, is that new listings also seem to have dipped. And while five-year bond yields have dropped from their June peak, mortgage lenders have not passed on the decrease to borrowers.

“This seems to reflect increased concerns about real estate lending,” he says.

Paul Maranger and Christian Vermast of Sotheby’s International Realty Canada say cottage and country home listings are likely to swell if the economy worsens because owners are more likely to sell an ancillary property if they are stretched financially.

Mr. Maranger, who has a background in banking, says lenders are more conservative in providing mortgages for vacation homes – especially in uncertain times.

“They first will tighten their policies on cottages,” he says, and that could lead to more inventory in those areas.

As for the buyers in the current market, Ms. Victor says investors are keenly watching for deals on cottages and waterfront homes.

“I don’t have any cottage buyers – not one. They are all investors.”

She points to one renovated home she listed with an asking price of $1.345-million in May. When the property didn’t sell, she made a “harsh correction” to the price and reduced it to $1.16-million.

Even then, showings were few. Finally, Ms. Victor began receiving lowball offers in the mid-$900,000s. The property sold conditionally in early August.

Ms. Victor says many investors are offering $100,000 to $150,000 below the asking price of a property.

“They offend the sellers. The sellers are not interested in working with them,” she says.

Meanwhile, Ms. Victor has some clients who pull their listings if they do not receive the sale price they were hoping to achieve.

The rental market remains extremely hot, she says, and some cottage owners can pull in $600 a night on short-term rental platforms.

She adds that many of the prospective buyers currently searching for property are aiming to do the same.

Ms. Victor has one property on Fawn Bay Road in Orillia for sale with an asking price of $965,000. The owners are patient because the renovated three-bedroom cottage overlooking Lake Couchiching is in high demand on the rental market.

“Ideally they would like to sell it, but they’re not going to sell it unless they get a reasonable price,” she says.

Owners who rent through a property management company in the area can transfer the licence to a new owner, she adds, but regulations prohibit transferring the licence for a short-term rental.

She advises buyers who want the option of renting out the property to concentrate their search in Muskoka and the Kawartha Lakes because they promote tourism and their local bylaws are more amenable to short-term rentals.

Oro-Medonte, Rama and Severn townships have stricter rules, she says.

Lenders, meanwhile, have become much tougher in their vetting of borrowers and their properties.

She has seen deals fall through because the value of a property has fallen in the time since the buyers signed an agreement. When the appraisal comes in below the amount they agreed to pay, the lender requires the buyer to close the gap.

In other cases, buyers aren’t able to obtain a mortgage because a property is too small or too seasonal. Some sit on piers instead of a foundation.

“Until you can make it winterized, you can’t get a mortgage,” she says.

In recent days, Ms. Victor has noticed a slight increase in buyer activity as September approaches. The change is subtle, however, and she’s not sure if the market will regain momentum any time soon.

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