As Ontario real estate prices skyrocketed during the pandemic, it seemed like there wasn't any market that could escape it, with everything from small downtown condos to recreational properties in the Muskoka market becoming a battleground for motivated buyers looking to win out on a bidding war. But now, that northern market is starting to see a shift.

The change, says Maryrose Coleman, senior vice president of sales for Sotheby's International Realty Canada, is summed up by noticeably less demand in the Muskoka area. As far back as January, Coleman says she began picking up on a shift in the way sales were happening within the municipality that went beyond the typical slowdown during winter months.

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"I couldn't put my finger on what was going on, but I just felt like things were shifting a little bit and it was something we started tracking," Coleman said. "And I realized it was partly that there were offer dates coming and going. You'd see a listing come up, they'd be holding an offer night, and it would come and go and there'd be no offers. And they either would readjust the price or it would just come back on as 'available for offers at any time.'"

Prior to the pandemic, offer nights weren't something that you'd typically see in Ontario's cottage country. But once markets across the province started heating up and buyers were snapping up any and all real estate that became available, Muskoka realtors began employing the marketing tactic too.

Although multi-offer scenarios are still very much a reality in Muskoka, with Coleman pointing to one property that recently received 19 offers, she says that what she and other professionals in the area have observed has been enough to advise their agents not to use an offer holdback strategy.

A recent report from the Canadian Real Estate Association on sales in the Lakelands may hint at Coleman's observations. According to the report, sales in the Lakelands region, which encompasses several areas including Muskoka, Haliburton, and Kawartha Lakes, totalled 593 properties in March. This is down 26.9% from the same period in 2021. Prices, however, are still very much on the upswing, with the average selling price sitting at $738,600 in March -- a 26.1% jump compared to last year.

With inflation on the rise, hikes to the Bank of Canada interest rate announced, and an overall shift in the economy happening, Coleman notes that cottage country -- where many buyers are purchasing secondary, recreational properties -- is likely where a slow down would be seen first. But it isn't necessarily alone, with agents in larger markets who have also seen slowdowns in recent weeks reconsidering the offer night strategy as well.

"At last week's [Sotheby's] meeting, one of the top Toronto teams was talking about the fact that they're now having a conversation with their team about whether they should even be doing offer hold back dates," Coleman said. "It sets an expectation both of the seller, who then is disappointed when the offer day comes and goes and they don't get a an offer, but also with the buyers who are getting fatigued."

From the sellers' perspective, there hasn't as of yet been any sense of urgency to get their Muskoka properties to market before any further slowdowns occur.

"We're certainly talking to our sellers, those that are actively on the market and those that are thinking about coming to market, about what we're seeing to make sure that they're fully apprised, but we haven't seen anybody coming out and saying 'oh my god, I've got to get off this quickly,'" Coleman said. "But that kind of thing is more often driven reactively to the changes in the economy, and there's not enough anxiety."

What all of this ultimately means for the Muskoka market is too early to say definitively, Coleman notes, but it may suggest a move to a more balanced market, one in which the seller may no longer hold all the power.