As your local waterfront property specialist, I’m pleased to provide our year-over-year market analysis for November 2023 to November 2024. The data reveals fascinating trends in both our waterfront and non-waterfront segments.
In the prestigious waterfront market, we’ve seen a modest adjustment of 1.11%, with median prices moving from $859,500 to $850,000. This slight decrease of $9,500 reflects a market that’s finding its equilibrium while maintaining strong fundamental values. What’s particularly noteworthy is the significant uptick in transaction volume – waterfront properties saw a robust 23.43% increase in sales activity, with transactions rising from 239 to 295 properties year-over-year.
Our non-waterfront sector demonstrates remarkable resilience, posting a slight increase of 0.23% in median sale prices, moving from $538,750 to $540,000. Even more impressive is the surge in market activity, with a substantial 43.17% increase in sales volume, jumping from 278 to 398 transactions.
These numbers tell a compelling story of a healthy, active market. While waterfront prices have slightly adjusted, the dramatic increase in sales volume across both segments suggests strong buyer confidence and market liquidity. For sellers, this heightened activity level indicates an engaged buyer pool, while buyers are finding more opportunities to enter the market with prices stabilizing.
Looking ahead, these metrics suggest a well-balanced market that continues to attract both buyers and sellers, maintaining our region’s reputation as a desirable real estate destination.
The primary debate centers around whether the Age/Condition adjustment should be applied only to the value of the improvements (i.e., the building and its features) or to the entire property value, which includes land.
Theoretically, adjusting only the improvements makes logical sense because the Age/Condition adjustment is directly related to the physical building itself, not to the land.
However, this creates a logistical challenge: every comparable would require an explicit breakdown of land versus improvement value. This can be time-consuming and may lead to variability or inaccuracies, especially if land valuations are not explicitly available or are inconsistent across comparables.
Instead, many appraisers apply the adjustment to the entire sale price, often using a percentage that approximately captures the value difference attributed to improvements based on condition or effective age.
In this example, the adjustment for the Comparable is 30% of the adjusted sale price, which includes time adjustments.
Here’s the calculation for the Comparable:
Sale Price + Time Adjustment: $1,495,000 (original sale price) + $1,166,100 (time adjustment) = $2,661,100
Age/Condition Adjustment: $2,661,100 × 30% = $798,330 (this is the adjustment that’s being applied)
By using this method, the adjustment amount represents the impact of effective age and condition on the overall market value, without requiring a specific breakdown of land versus improvements for each comparable.
Using 30% of the total sale price plus time adjustments for the Age/Condition adjustment is a practical shortcut that allows an appraiser to account for effective age and condition without separating land and improvement values.
Applying the adjustment only to the improvements is more theoretically correct but less practical because it necessitates estimating the land value for each comparable sale, which adds complexity, inconsistency, and potential inaccuracies and also appraisal standards requires support for each land value applied.
Different percentage adjustments can produce the same dollar amount of adjustment where the land value varies.
The same $798,330 adjustment could technically be achieved by subtracting different land values and adjusting the percentage to be applied. However, this adds another layer of adjustments that complicates the process without significantly increasing accuracy in most appraisal scenarios.
In practice, appraisers need to balance theoretical correctness with the feasibility and reliability of available data, making the simpler approach of applying the percentage to the total sale price a more efficient solution.
In the context of the appraisal process, especially when it comes to supporting adjustments like Age/Condition, determining where land values need support is crucial to ensure the accuracy and defensibility of the overall valuation. Here’s a detailed look at how and where land values need additional support, particularly in relation to adjustments in the direct comparison approach:
Land Allocation in Comparable Sales:
When applying adjustments like Age/Condition specifically to the improvement value (buildings and structures), the land component must be isolated from the total sale price. This requires understanding the underlying land value of each comparable.
Support is needed when:
The land values in the comparables are not explicitly known.
The market does not have a consistent basis for land value estimation, leading to variability.
Differences in site characteristics (e.g., size, location, topography, access) create value differences that aren’t clearly documented or understood.
To support land values, using a paired sales analysis of vacant land, extracting land values from properties in similar locations, or relying on site value allocation methods can help in isolating the land value more accurately.
Market Data to Support Land Value Estimates:
Land values can vary significantly based on location, zoning, waterfront access, view, and other unique attributes. These variations require additional support if:
Market data is limited: If vacant land sales or recent land transactions are sparse, the basis for land value allocation becomes unclear.
Adjustments are being made to land attributes: Features like waterfront size, access road type, or location may differ between the subject and comparables. Accurate land valuation is needed to apply meaningful adjustments.
The ideal approach is to use recent sales of vacant parcels that have similar characteristics to the comparables and subject property. Where such sales are not available, a land residual technique or allocation based on typical ratios (land to building value) might be necessary.
If the land value is not adequately supported, the risk of over- or under-adjusting for factors like Age/Condition or Site Improvements increases.
Specifically: Without accurate land values, adjustments may inadvertently reflect a combined land and improvement value, instead of accurately isolating changes that affect only the building (like age and condition).
For instance, applying a 30% adjustment to the total property without accurately accounting for the value of the land versus improvements may misrepresent the effect of effective age on the market value of improvements alone.
To support these values, documented land value estimates should be validated through multiple approaches, such as comparative sales, tax assessments, and professional appraiser opinions.
Consistency Across Comparables:
Consistency is critical to ensure comparability between the subject and each comparable sale. Land values need additional support when:
Comparables exhibit significant differences in land characteristics (e.g., a 4-acre property versus a 1-acre property, or properties with different topography).
Adjustments for location or other site characteristics are being made: The land component needs to be supported by verifiable data so that adjustments are justified.
An inconsistent or unsupported allocation of land values across comparables can lead to a skewed valuation outcome that fails to reflect market behavior. Hence, it’s important to demonstrate that each land value estimate is supported by reliable data.
Adjustment for Improvement-Only Attributes:
Consider the Comparable, where a $798,330 adjustment was applied for Age/Condition. If you intend to apply this adjustment only to improvements, you need to subtract the land value. To do so, each comparable sale must have a supported land value estimate.
If the Comparable has a sale price of $1,495,000 and an assumed land value of $300,000, then the improvement value would be $1,195,000. This means any Age/Condition adjustment must be based solely on the improvement value ($1,195,000), which requires that the land value of $300,000 is well-supported and accurately estimated.
Non-Uniform Land Characteristics:
Suppose the subject property is on 300 feet of waterfront, and other Comparable has 400 feet. If the sale price of other Comparable reflects a higher value due to the additional waterfront footage, then the appraiser must adjust for the land value difference.
To do this accurately, the land value of the additional 100 feet must be supported through market data or other reliable valuation techniques. Unsupported land value adjustments could lead to either overcompensating or undercompensating for this difference.
Sales Comparison Analysis for Vacant Land:
Use recent sales of vacant or nearly vacant parcels to establish an approximate market rate for land, based on location and characteristics like lot size or waterfront access.
Extract land values by subtracting improvement replacement cost (less depreciation) from recent sales of improved properties. This is a land residual approach that provides a rough estimate but may require additional supporting evidence to confirm.
Where reliable, use the land assessments from municipal property assessments as a baseline. While assessments can sometimes lag behind the market, they often provide a reasonable starting point for establishing land value in the absence of direct sales.
For unique features such as waterfront access, conduct a paired sales analysis to determine the specific market reaction to those features and isolate the value contribution of the land component.
Accurate land value support is critical when adjustments are being made that primarily affect improvements, such as Age/Condition adjustments. Without adequately supported land value estimates, the adjustments may inaccurately reflect market behavior, leading to misleading conclusions. A thorough analysis involving vacant land sales, assessor values, paired comparisons, and extraction methods can help appraisers provide the necessary support to validate land values across different comparables. This ensures the adjustments applied to reflect effective age, condition, and other attributes are both defensible and market-driven
As an AACI-designated appraiser with extensive experience in the Muskoka region, I provide reliable valuations that help facilitate fair settlements. Contact my office to discuss your appraisal needs or to schedule a consultation.
As an AACI-designated appraiser with extensive experience in the Muskoka region, I provide reliable valuations that help facilitate fair settlements. Contact my office to discuss your appraisal needs or to schedule a consultation.
Once upon a time in a little town called Realtyville, the housing market was like a roller coaster—up, down, and all over the place. It was a game, and if you didn’t know the rules, you could end up paying a lot more than your neighbor—and nobody likes that!
In Realtyville, sometimes it’s what they call a buyer’s market. What does that mean? Well, it’s like there are more houses than people who want to buy them. Houses are just sitting there like sad puppies waiting for a new owner. Sellers are desperate, and they might even throw in extra goodies—like a grill or a few lawn chairs—just to get you to buy.
In a buyer’s market, buyers have the power. They can take their time and make low offers. Sellers are nervous and willing to cut prices. It’s a good time for buyers to get a deal.
But then things change, and we get a seller’s market! Now, there aren’t enough houses to go around. Buyers are fighting over every house, making multiple offers, and paying over the asking price. It’s like a crazy sale day, and everyone wants the same thing.
In a seller’s market, sellers are the kings and queens. They set high prices, and buyers have to jump at whatever they can get. Houses sell fast, and there are often bidding wars. Buyers hate it, but sellers love it.
So why does it matter if it’s a buyer’s or a seller’s market? Well, if you’re buying, you want to know if you’ll have lots of choices and good deals (like in a buyer’s market), or if you need to be fast and ready to pay extra (like in a seller’s market). For sellers, it’s the opposite. If it’s a seller’s market, you can ask for more money and be picky about offers. In a buyer’s market, you might have to offer discounts or throw in some extras.
The folks in Realtyville figured out a few ways to tell if it’s a buyer’s or seller’s market:
Supply and Demand: Are there lots of houses for sale or just a few? If there are lots, it’s a buyer’s market. If there are only a few, it’s a seller’s market.
Price Trends: Are prices going up or down? Rising prices mean a seller’s market, while falling prices mean a buyer’s market.
Days on Market (DOM): Are houses selling fast or sitting for a long time? Fast sales mean a seller’s market.
Price Reductions: Are sellers cutting prices often? That’s a sign of a buyer’s market.
Local Economy: If people have good jobs and money to spend, it’s usually a seller’s market. If times are tough, it’s a buyer’s market.
Interest rates are like the hidden boss of the market. When rates are low, people can afford bigger homes, and it’s easier for sellers. When rates are high, people can’t borrow as much money, and it’s harder to sell.
Low Rates for Buyers: You get lower monthly payments and can afford more house.
High Rates for Sellers: Fewer buyers are interested, and you may have to lower your price.
Realtyville’s market changes all the time. Sometimes it’s great for buyers, and other times it’s great for sellers. The key is knowing what kind of market it is and playing the game right.
Whether you’re buying or selling, pay attention to what’s going on. Look at how many houses are for sale, watch the prices, and keep an eye on those interest rates. Because in Realtyville, timing is everything—and if you get it right, you’ll come out on top.
And that, my friends, is how the real estate market works—told in a way that’s easy, fun, and hopefully made you smile!
After 35 years in our big two-story house, we knew it was time for a change. Going up and down stairs was getting harder, and cleaning all those rooms was becoming too much work. We wanted a smaller, one-level home that would be easier to take care of.
“Start with the kitchen,” our daughter Sarah said. She thought it would be the easiest room, but every drawer was full of memories! I found myself crying over simple things like measuring spoons and cookie cutters that reminded me of Christmas baking with the kids.
We were lucky to find three helpful people:
The best part? Our grandchildren got involved! Jack, our grandson, was so happy to get Grandpa’s tools. He promised to visit and learn woodworking. Our granddaughter Rachel recorded us telling stories about the house.
A young family with small children bought our home. They even wanted to keep the marks on the kitchen door where we measured our kids’ height over the years. This made us feel good about leaving.
Now we live in a sunny, one-level house closer to our grandchildren. It’s smaller, but it’s just right for us. As Tom says, “We’re not just downsizing our home – we’re right-sizing our life!”
Remember: Your memories aren’t in the walls or the things – they’re in your heart, and they move with you!
