Market Analysis

Salt Spring Island real estate in depth monthly analysis by Sea to Sky Properties’ broker, Li Read

Market Analysis, February 2017, Salt Spring Island

February 2017

The real estate market shows its tone by mid-February, in our secondary home marketplace. It seems that the first six to seven weeks of a New Year continue the tenor of November and December of the previous year.

February 2017

A resurgence in sales, resulting in a very thin inventory and a stabilizing of prices….these are continuing signs of a market uptick. An increase in tax assessments that reflect the strong sales in the previous year…such assessments are mailed out to property owners in early January…is another marker. Multiple bids and higher selling price over list price: that has happened, if a property is unique, and is another sign of an authentic turn into seller’s market conditions.

It is wise to allow January and early February to unfold. The secondary home markets see their busiest moments between mid-March and end of October. Best, perhaps, to let the first weeks of a new year bring forward the clues to the rest of the year. By mid-February, the first whispers of the main trend start to be heard.

So, meantime, attend conferences that offer arrows of information about the future. Pay attention. Be aware of shifts and changes.

It’s the fallow field moment: the roots are busy, but very little shows above ground.

Salt Spring and the Gulf Islands remain extraordinary places to visit, to enjoy, to choose as special places to live. They are “seasonless” experiences. There is always something to discover and to be inspired by.

More information? Call me! Your best interests are my motivation…I will make sure that you see all property opportunities available in your preferred categories.

Pop by my office for free maps, weekly driveby lists for all listed properties, regardless of realtor or company or board affiliation. All current listings, totally up-to-date, to help you in your search. Welcome!

Market Analysis, January 2017, Salt Spring Island

January 2017

The real estate market shows its tone by mid-February, in our secondary home marketplace. It seems that the first six weeks of a New
Year continue the tenor of November and December of the previous year.

A resurgence in sales, a thin inventory, a stabilizing of prices….these are continuing signs of a market uptick. An increase in tax assessments that reflect strong sales in the previous year…such assessments are mailed out to property owners in early January…is another marker.

It is wise to allow January and early February to unfold. The secondary home markets see their busiest moments between mid-March and end of October. Best, perhaps, to let the first weeks bring forward the clues to the rest of the year.

So, attend conferences that offer arrows of information about the future. Pay attention. Be aware of shifts and changes.

It’s the fallow field moment: the roots are busy, but nothing yet shows above ground.

Salt Spring and the Gulf Islands remain extraordinary places to visit, to enjoy, to choose as special places to live. They are “seasonless” experiences.

Market Analysis, December 2016, Salt Spring Island

A small geographic space with a world-sized heart…that’s a good description of Salt Spring Island and the Southern Gulf Islands.

Hastings House

Hastings House

The Islands Trust, created by the Provincial Government in 1974, with a mandate “to preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents, has effectively controlled growth on all the Islands via strict zoning/density bylaws.

Salt Spring Fire Department

Salt Spring Fire Department

If you go up in a floatplane, en route from Ganges Village on Salt Spring to Vancouver, you will see the large swathes of green on the Gulf Islands…a mix of provincial and federal park reserves, CRD park reserves, Conservancy protected lands, owner gifted or covenanted land…an amazing natural gift to visitors and residents alike. The Gulf Islands have all been preserved from unbridled development.

Important, though, in this non-municipal form of governance, that 1974 is paying attention to 2016. The big problem in cities and towns seems to revolve around affordable housing. This is a problem on Salt Spring, too.

There is a range of age-groups and affluence on Salt Spring…a broad spectrum of people desiring to live here. There are no work-rentals, no affordable buy-in living options, and very few choices for the aging boomers to move to, when downsizing. So…few starter homes, no rental apartments, few downsizing choices. Hmmm….

Salt Springers are being asked if they would like to become incorporated in a Gulf Islands Municipality structure. The two elected Trust people (two per island) & the Trust documents would remain in place. The day to day running of the island would be via an elected Council (one of whom would act as Mayor). Keep informed!

On Salt Spring, December brings craft fairs (WinterCraft at Mahon Hall, plus Fulford and Beaver Point Craft Fairs), seasonal theatre & choral events at ArtSpring, gallery openings, studio tours, light-up in Ganges Village, Christmas on Salt Spring events, pop up markets in the park…special menus in our superb restaurants. Seasonal delights await the visitor!

What about that real estate market?

And, what about that real estate market? As we close out 2016, one can look back and see an upticking market. After an 8 year downturn in the secondary home coastal markets (Sunshine Coast, Victoria, Vancouver Island, Gulf Islands), Salt Spring finally saw a shift into a dramatic sales volume increase between mid-March and the end of July. Buyers were mainly from Vancouver.

The unexpected and sudden government 15% tax for purchases by off-shore buyers, in metro-Vancouver, at the beginning of August, created a “pause” in all the secondary home coastal marketplaces…those sellers in Vancouver’s “hot market” had been the buyers in all the “by choice” regions. On Salt Spring, we “lost” August/September/early October. Then, around mid-October, things began to become busy once again.

The bulk of sales remain to a Vancouver buyer. Slowly, we are seeing renewed interest from Ontario. We may start to see sales from U.S. buyers…our low Canadian $ against the U.S. currency makes a real estate purchase here an interesting investment.

So many unknowables in the world: currency instability? Inflation/deflation? Equities or hard asset investment? Shifts in government? The impact of the post-Internet world just rolling on….

Change is the mantra of our immediate time.

Part of that: Boomers and Millennials. Different strokes for different folks. Important to understand the remarkably different ideas between these two significant demographics.

Stay tuned as well for the continuing changes to the real estate industry. Post-Internet dynamics change established models.

Salt Spring Island and the Gulf Islands are “by choice”/discretionary regions. The buyer has to first choose the specific Island…and then decide for the actual property on that particular Island. Time is a component of sales in all such secondary home/recreational areas…regardless of market trend in play.

Although it’s recent that sales volume increased (mid-March after 8 years of “flat”), prices have not yet increased. Stabilized, yes…and some properties have been selling for list price. Inventory is “thin”.

The 2017 real estate market kicks in here by mid-February. That’s just around the corner. At this time of year, some transactions will complete in January…perhaps for tax reasons. The process will have begun in this calendar year, though.

So…as we close 2016: strongest sales rhythm since 2006…very low inventory…price stability & sales at list price…all auguring for further improvement in the secondary home markets in 2017. The temperate climate and that slightly “apart” security of the Gulf Islands is also of appeal.

Market Analysis, November 2016, Salt Spring Island

Here we are, segueing into the last two months of 2016.

Although not as buoyant as in “the season” (May to October), the months of November and December still offer both important visitor experiences (tourism) and significant real estate sales.

For the first time in several years, Salt Spring appears to have returned to its former “seasonless” nature.

aubrey

People do visit throughout the year. The Gulf Islands are located in a micro-climate that is very temperate. Salt Spring offers a year round pleasing visitor experience and real estate transactions occur throughout the year.

For most of 2016 the buyer for Salt Spring properties came from Vancouver. These buyers had sold in Vancouver’s hot market. They were interested in buying down (in size & in price), putting money in the bank, and exploring a new location lifestyle.

This buyer profile plans to be a year round resident…which augurs well for year round community endeavours (such as the “shop local” movement). It is different from buyers in previous years (with Alberta & the U.S. delivering most purchasers), who may have been more seasonal.

The 15% tax for offshore buyers in Vancouver, law in early August, did immediately cool Vancouver’s marketplace. The impact on all coastal secondary home markets, including on Salt Spring, was also immediate. Vancouver’s sellers had been the buyers in all our coastal secondary home marketplaces.

A post-tax pause in activity took place here, on Salt Spring, in August & September. By mid-October, sales once again began to take place, although not with the same fervour seen in that mid-March to end of July period.

That said, inventory is low in all property categories. Prices have remained stable. Sales are often now occurring at list price. The bulk of sales still remain in step-in ready residential options.

Although essentially seasonless, it is busier between early May and mid-October, with tourism. I do think there is a connection, in secondary home/recreational regions, between a successful visitor experience and a real estate sale. Oddly, though, someone who views in July might wait till November to offer.

Secondary home/discretionary areas have their own rhythm, and it’s completely different from the patterns of a primary residence/city environment.

One chooses “for” a secondary home location…no one “has to” purchase on Salt Spring or on another Gulf Island. It often takes two & sometimes three visits for a buyer to decide on the location of a recreational purchase. Patience is always a requirement in real estate sales, regardless of market trend in play, in all discretionary regions.

At the end of October, the sales stats on Salt Spring were:

  • 28 sales up to 200,000
  • 32 sales between 200,000 & 300,000
  • 50 sales between 300 & 400,000
  • 56 sales between 400 & 500,000
  • 50 sales between 500 & 600,000
  • 31 sales between 600 & 700,000
  • 14 sales between 700 & 800,000
  • 13 sales between 800 & 900,000
  • 8 sales between 900,000 & one million
  • 20 sales between one and two million
  • 4 sales between two and three million
  • 2 sales between three and four million
  • 1 sale at four million even

(Most sales between one & four million were waterfronts).

The good news for Salt Spring: a return to busy days in tourism, with accommodations providers, restaurants, car & scooter rentals, kayak and whale-watching providers, retail shops, all saying it was their best season ever. That kind of buoyancy does have an impact on a real estate market.

Lots of events happening on Salt Spring in November and December: craft fairs, studio tours remain open, special events at ArtSpring, evening classes (always wanted to learn Japanese?), Salt Spring Folk Club monthly showcases, special harvest and celebratory menus at our great restaurants, WinterCraft at Mahon Hall, special Christmas/New Year events, and always the beauty of the Island, welcoming us all to simply enjoy.

It’s true that all world economies are a part of the globalization movement unleashed by the Internet shift in communication. The Internet changes concepts of boundaries. Initially, it may have appeared that “large population venues” were most important.

It’s also possible, though, that we are now seeing a move to localization, at the same time as continuing globalization. This may be the arrow all smaller communities have been seeking. Ganges Village on the same level as Toronto? Or New York? Or Beijing? Hmmm…. The personal and local becomes the global? Content really is king?

Many entrepreneurs are gathering on Salt Spring…ideas created here, coupled with a digital platform for presentation everywhere…that sounds like opportunity. And your thoughts are? Always welcome!

Market Analysis, October 2016, Salt Spring Island

A Market Surge & A Different Buyer

Markets, markets…never at equilibrium…driven by unforeseen events. The Black Swan image.

After an 8 year downturn in our secondary home market coastal region, a resurgence in sales volume finally took place in entry level residential options, between early March and late July.

Salt Spring Island

Salt Spring Island

The buyers, however, were not the traditional purchasers for Gulf Islands properties.

For some substantial time, Alberta and the U.S. had been the main buyers on Salt Spring and the Gulf Islands. In the heart of some of the best protected boating waters in the world, and with a temperate climate, these Islands did appeal to boaters.

The driver of the activity between March and July was very different…almost all sales were to people from Vancouver who had sold to offshore buyers and were thus seeking new places & new lifestyles.

In late June, & into July, a very few upper tier priced residential properties began to sell…some had been listed an appreciable time & had reduced in price point over that time.

A buyer’s market simply means lots of inventory and no buyers. A seller’s market means lots of buyers and little inventory. Again, most of these new higher end residential purchasers were from Vancouver.

Affordable housing, whether rental or purchase opportunities, is a serious issue everywhere. Vancouver’s affordability lack is not just a Vancouver issue. This is also a problem on Salt Spring Island.

The 15% purchase tax in Metro Vancouver, for offshore buyers, may have been brought in by the provincial government to address affordability concerns/criticisms, but there were unexpected consequences to the immediate faltering of Vancouver’s “hot market”.

Salt Spring, A Recipient Marketplace & the Vancouver Tax

Salt Spring, like all secondary home/recreational regions, is a recipient marketplace. Buyers often start as visitors…they fall in love with the Island, call a realtor, and then everyone else gets busy (trades, restaurants, shops, etc).

If real estate purchases falter, then the community as a whole suffers attrition. Shop Local is a serious community item.

The Vancouver buyers planned to live in the areas they were choosing for relocation…including on Salt Spring.

In creating a tax, from outside a market pattern, with little warning, the government created trickle down outcomes for all recipient / by choice markets…it resulted in a pause in activity.

On Salt Spring, most sales had been below 750,000, with latterly a smattering between one & four million. The Vancouver buyers wanted step-in ready residential, were mainly buying down and putting money in the bank…they were seeking new lifestyles. The Vancouver tax immediately halted new activity in other regions.

Change does often momentarily stop action. It has to be digested. The Vancouver buyer profile has stopped for the moment, and that has created a pause in Salt Spring Island and Gulf Islands real estate outcomes. Will the rhythm return?

People do digest change. The unknown? The speed of digestion.

Where is Inventory going in to the Fall 2016?

What we do know, entering October: inventory remains very thin. Prices stabilized between March and July. In a few cases, post-tax and possibly reacting to the sudden pause in action, some realtors locally have reduced prices (by as much as 100,000). Is this too fast a response to the tax pause? Although the hot market in Vancouver has cooled, prices there have not come down.

As we enter October, we also know that Salt Spring has recovered its tourist/visitor experience vibe. A successful visitor encounter often leads to a real estate outcome. Will we start to see the return of our more traditional and often seasonal buyers?

A recovery in a secondary home/recreational market is never quick. A choice to purchase on a Gulf Island is not a fast decision either.

Buyers are from elsewhere, they respond to promotional marketing, they turn up, they view, they decide to buy…but not usually on the same trip. Very often, it takes two to three visits for that purchase connection to take place. A buyer also has to choose “for” Salt Spring or another Gulf Island…then they will choose a property. It’s always a two-step dance, regardless of market trend in play.

At the end of September, the sales stats are as follows:

  • 26 sales up to 200,000.
  • 32 sales between 200,000 & 300,000.
  • 49 sales between 300,000 and 400,000.
  • 51 sales between 400 and 500,000.
  • 46 sales between 500,000 & 600,000.
  • 29 sales between 600 and 700,000.
  • 12 sales between 700 and 800,000.
  • 10 sales between 800,000 and 900,000.
  • 7 sales between 900,000 & one million.
  • 17 sales between one and two million.
  • 3 sales between 2 and 3 million.
  • 2 sales between 3 and 4 million.
  • 1 sale at 4 million even.

The sales over one million were mainly waterfronts.

I do this “market thoughts” report at the beginning of a month. As things progress/change throughout that month, I update via my blog.

In change, lies opportunity. There are always good options out there for a buyer, regardless of market trend in play. I look forward to helping buyers to connect with sellers on Salt Spring Island and the Gulf Islands.

Market Analysis, September 2016, Salt Spring Island

Salt Spring Island

Salt Spring Island

Beginning of the Fall Market

So…we begin the Fall Market…here it is, the beginning of September. The calendar says summer goes on till the 20th, but most of us see Labour Day Weekend as the “end”.

Sales volume in the Spring/early Summer market has gone up markedly on Salt Spring Island, in residential properties below $750,000. Over that price point, it remains softer.

In that entry-level residential segment, though, it could be described as sellers market conditions.

What does a seller’s market mean? Limited inventory plus strong buyer demand creates a seller’s market. Price escalation occurs with lack of product.

In a Gulf Island region, there is always a limited inventory

In a Gulf Island region, there is always a limited inventory. The Islands Trust, a provincial government body created in 1974, with the mandate to “preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents, also effectively “capped” growth.

On Salt Spring Island

On Salt Spring Island

Growth in the Gulf Islands is controlled by strict zoning/density bylaws. On Salt Spring, commercial zoning is focused in both upper and seaside Ganges Villages, and they can’t expand beyond their boundaries. The small commercially zoned options at Vesuvius, Fulford, and Fernwood cannot expand. Home occupations are encouraged, but there are rules around these usages, too.

As soon as growth is limited, values do appreciate over time. Between 2002 and 2005, prices escalated by around 60% on Salt Spring. Then a pause developed in 2006 and 2007. Late 2008 delivered the global economic downturn, and secondary home/recreational areas (globally) saw a sharp fall-off in activity. Between early 2009 and early 2015, prices locally had reduced by around 45%.

Buyers who acted between 2013 (the “worst” year?) and late 2015, have benefitted by that dramatic levelling off of prices, in the secondary home markets. It’s difficult for people to act before clear signals of a market shift are in place…those who do act seem to have that “wolf’s sniff the wind” directional arrow.

Important always, though, to be looking down the highway and not in the rear view mirror…opportunity is ahead.

By late 2015, one could see an improving trend coming into play in the secondary home markets. The Sunshine Coast and the Okanagan saw renewed activity in the Fall of 2015. Early Spring brought action to Victoria and to some Vancouver Island communities. Mid-Spring delivered activity to the Gulf Islands. Salt Spring (perhaps because of its year-round lifestyle opportunities) usually shows market improvement first, among the Gulf Islands choices.

The interesting thing is the change in the buyer profile for Salt Spring and the Gulf Islands: almost 100% from Vancouver.

Traditionally, a Gulf Island buyer has come from Alberta (perhaps 20% of coastal buyers?) or from the U.S. (perhaps 30% of coastal purchasers?). This time, it’s buyers from Vancouver, who have sold during the extremely “hot” market there. They are seeking new areas to reside…not just recreational/seasonal buyers, thus.

These previously Vancouver based buyers will live here year round, and that has all sorts of good outcomes for the day to day business life on the Island. Shop Local becomes a viable item when there is a year round resident, and not just a seasonal impact.

Within the past 11 weeks, sales volume dramatically rose (perhaps tripled?) in the entry-level residential segment. On Salt Spring, that would be between 300,000 and 750,000. Low inventory with high buyer demand leads to price escalation. Couple that with an area with a no-growth policy (Islands Trust) and you can see that we may be returning to that 2002 to 2005 model.

Opportunity continues to exist in upper tier priced residential, in undeveloped lots and acreages, in recreational cottages/cabins, and in commercial options. These market segments have not yet seen the quick sales of the entry level priced residential properties. As these property categories start to sell (and they are slowly becoming more and more active), and inventory begins to thin out, price points will also stabilize/rise.

The sales stats to date break out as follows.

January 1 to August 28 “solds to date”:

  • 26 sales between 1 and 200,000.
  • 29 sales between 2 and 300,000.
  • 47 sales between 3 and 400,000.
  • 45 sales between 4 and 500,000.
  • 44 sales between 5 and 600,000.
  • 26 sales between 6 and 700,000.
  • 10 sales between 7 and 800,000.
  • 9 sales between 8 and 900,000
  • 5 sales. between 9 and 1 million.
  • 16 sales between 1 and 2 million.
  • 3 sales between 2 and 3 million.
  • 2 sales between 3 and 4 million.

There is always opportunity in any market trend. Creativity wins the day in a discretionary region. A buyer’s market means lots of inventory and few buyers. A seller’s market means little inventory and lots of buyers seeking.