Market Analysis, April 2018, Salt Spring Island

April 2018, Salt Spring

Welcome to my world!

I am lucky to be able to live and to work on Salt Spring Island. I hope you enjoyed this video by a Vancouver based travel writer…who hopes to one day also live on Salt Spring. I thought he caught the essence of this magical place.

April is perhaps the true beginning of our real estate market “season”. Whispers of the year’s tone can appear around March Break, but the main action becomes evident by April.

We entered Spring with a very thin inventory of listings, in both residential and undeveloped land options. A lack of inventory, coupled with renewed buyer desire, does result in price escalation…the economic dynamic of supply and demand.

The “Speculation Tax” in the BC Real Estate Market

There can be interruptions to a market flow…the suggested speculation tax mentioned in the provincial government’s February budget appeared to be about to become such a non-market interruption. However, in late March, the government agreed to exempt the Gulf Islands from this tax. Initially, the capital regional district boundaries had put the speculation (vacancy tax) onto the Southern Gulf Islands, too.

The Islands Trust (the form of governance since 1974, on the Gulf Islands) created a secondary home/recreational/discretionary region.

Lack of affordable housing and work-rental choices are issues everywhere…Salt Spring’s approved affordable housing projects are not able to proceed because of a CRD water moratorium. The CRD needs to address this. More info? Call me.

April is an interesting month…it starts with the cool of March and ends with the largesse of almost-May. Every day is longer, softer temperatures encourage “real Spring” to energize us, and the exterior world welcomes us back.

Inventory

Whether inventory grows again and stabilizes prices or whether inventory remains thin and prices start to rise, Salt Spring and the Southern Gulf Islands remain their serenely beautiful selves…and with some creative thinking, it is always possible to seek ownership. Some ideas? Call me! There is always opportunity.

We live in a time of shift. Salt Spring and the Southern Gulf Islands enjoy proximity to major centres…they are apart but are not isolated.

Artificial Intelligence brings new technological benefits to our lives. The Gulf Islands, including Salt Spring Island, are time tunnels to previous times. Frozen by the 1974 Islands Trust mandate (“to preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents), the islands are all about direct experience of the natural world.

Salt Spring welcomes you to enjoy its parks, hiking/walking trails, farmgate organic produce, farmers markets, winery tastings, cheesemaker farm, art galleries, studio tours, live music venues, theatre experiences, marine discoveries…spas, alternative health opportunities, yoga retreats…great restaurants to tempt the palate…feed the body, the mind, the soul on these tranquil Gulf Islands.

Market Analysis, March 2018, Salt Spring Island

March 2018, Salt Spring

Salt Spring Island

Salt Spring Island

March…it brings with it “real Spring” (the one marked on the calendar), plus is the beginning of our main grid of sales activity.

Beginning of the Canadian Market Season

March Break to the Canadian Thanksgiving Weekend (mid-October) signals our “season” in our secondary home/discretionary/recreational region.

The busiest months are July, August, September, of course, and these months also encompass high tourist season, but holiday weekends in earlier months, and school holidays (March Break), begin the rhythms.

March is beginning with very little inventory for sale. High buyer demand (in the entry level residential segment) continued throughout January/February, in spite of weather hesitations. There may be some few new listings yet to come onstream, but there is much less choice for a buyer.

The definition of a buyer’s market: lots of listings and very few buyers. A seller’s market? Few listings and many buyers. This scenario often leads to higher list and sale prices.

Sellers and listing agents do not set markets. Buyers do that. Strong buyer demand and few purchase choices create rising values. The economic maxim of supply and demand is a real one.

There are always opportunities for a buyer in a seller’s market. If interested in a property, though, one must be prepared to act. Bidding wars are rare on a Gulf Island…but back-up offers do come into play.

How will new tax affect real estate market?

The new coalition provincial government raised the offshore purchase tax to 20%, at their February budget. It still applies to metro-Vancouver, but now will also apply to Victoria, to Nanaimo, and to Kelowna. For Salt Spring, many buyers are from Vancouver and the Lower Mainland. Will the tax create a hesitation in sales there, as the initial tax did in August, 2016? Those sellers in Vancouver have become many of our Island buyers.

The provincial government is stating that they are bringing in empty home taxes, in an effort to stop speculation…in their words: to stop people treating the housing market as a stock market. They tie this to the affordable housing crunch, which is a feature of all communities, but this also involves the B.C. Tenancy Act (many people choose not to rent their homes).

I write these market updates at the beginning of each month, and do updates via my blog, as the month proceeds. Check out my blog for March 1st. It gives the Vancouver Real Estate Board’s recap of the February Budget. There is some confusion right now, but the offshore purchase tax (at the moment) only applies to Vancouver, Victoria, Nanaimo, Kelowna.

Changes to the Real Estate Services Act of B.C.

Changes to the Real Estate Services Act of B.C. were meant to take place by March 15th. The government wasn’t ready with courses for realtors, or with new contract forms paperwork, for the proposed substantive changes. The date has now been set for June 15th. Until then, it’s business as usual.

2018 seems to be a time of change. For Salt Spring and the Southern Gulf Islands, locked into a form of governance from 1974 (Islands Trust), we might appear to be a time tunnel, but these beautiful islands are on the doorstep of major centres (Vancouver, Victoria, Seattle), and being slightly “apart” does not mean isolation.

It is now stated that all knowledge we possess right this minute will be replaced within 18 months. Hmmm…. The creative response of the artist may be needed more than ever.

Meantime, technological shifts are streaking right along, in our post-Internet world: crypto currencies, block chain investing, 3-D printers, robotics, artificial intelligence (will those machines out-think us?), driverless cars, smart homes, smart phones, online lives, meshed reality…. Hmmm….

1974 is beginning to sound pretty good? It still exists on the Gulf Islands…thanks to the Islands Trust. One can always go out to visit and sample the “always on” world and then come back home to your chosen island.

Are you seeking a Salt Spring Island or Gulf Islands property? Call me. Your best interests are my motivation. Benefit from my knowledge, expertise, and negotiation skills.

Salt Spring offers an authentic artists community, a temperate climate that sustains vineyards, olive groves, small holding farming, plus encourages appreciation of the preserved natural beauty. “Discover Yourself Here” is the tag line of the local Chamber…and it’s true.

Market Analysis, February 2018, Salt Spring Island

Year of The Dog

Year of The Dog

February 2018, Salt Spring

February holds early Spring. Longer days, with many sun days between storms, remind us that we are facing forward to the promises of summer.

Real estate patterns in January/February are often a continuation of November/December of the previous year. It may take until later in March to catch the real tone of 2018.

What we can see: a continuing attrition in inventory. Offers are often at full list price. Back-up offers are made, in hopes that a first offer will collapse. Very few new listings are expected to come onstream, and those that do are setting new price levels. Will the summer/fall market achieve sales at these new levels?

Seller’s Market

It has become a seller’s market. Low inventory plus higher buyer demand does evolve into an uptick in prices.

New parameters as to how real estate will be done in B.C. are being worked out…new rules, new contract forms will be law by March 15th. Please call me re these very significant upcoming changes. At the moment, it remains business as usual.

Two different groups have formed after the “no to incorporation” vote on September 9, 2017. None of the many inadequacies facing Salt Spring can be addressed by the current 1974 form of governance.

It’s perhaps unfortunate that the “yes” side did not make it clear that the Trust would always remain (it applies to all Gulf Islands) and that two trustees would still continue to be elected at civic election time.

If the vote were a “YES”

What would have happened with a “yes” vote: appointed planners, many not local, appointed from Victoria, would have been replaced by elected (and thus accountable) local council members. They would have dealt with specifically Salt Spring concerns: water moratorium that prohibits construction of approved affordable housing projects is only one such item. It may not be possible to make changes within the current system. Keep informed.

Year of the Dog

2018 is the Year of the Dog in the interesting Chinese astrological system…which starts with their Lunar New Year this month. Dogs are loyal, but also protective. Hmmm….

It may be that 2018 is also the beginning of the “real 21st Century”. Often, the first 15 to 20 years of a new century have a mix of previous and new societal trends.

Now, with a post-Internet world in place, we are seeing outcomes and acceptance of artificial intelligence, robotics, smart homes, smart appliances, 3-D printers, sharing economies, online consumerism, connectivity between devices, crypto-currencies, accepted knowledge being replaced within 18 months…these are societal altering issues…and McLuhan’s “global village”, described in the 1970s, is with us. Hmmm…

Perhaps the chaos of continual change is what makes Salt Spring and the Gulf Islands so appealing? Perhaps being encased in 1974 is a good idea?

With proximity and ease of travel to major centres, so one is not isolated, coupled with a no-growth governance policy that is imposed on the Islands, date-stamped 1974, this allows for a suggestion of a yesteryear experience?

Salt Spring does offer an authentic artists community. It does offer an experience of the natural world and does encourage small sustainable farming and also alternative health opportunities.

Does this sound a bit like a retro-70s moment? Perhaps Salt Spring needs to run with “what is”…and deliver to visitors that organic feel of how life used to be? Hmmm….

Meantime, always limited inventory (due to the Trust’s mandate, created in 1974, to preserve and protect the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents), plus renewed buyer desire for Salt Spring, and a lack of available inventory to satisfy that demand…yes, we begin February with a seller’s market. Price escalation may follow.

There is always opportunity, no matter the market trend in play….

Market Analysis, January 2018, Salt Spring Island

January 2018, Salt Spring

Discover Yourself Here

January takes its name from the ancient Roman god Janus…he is depicted with two faces…one looking back and one looking forward. It’s a good image for this very beginning time of a New Year.

I often think that Salt Spring’s real estate market rhythm falls into thirds…and that November to February is one such third. The latter part of a year does seem to be continued into the early part of the next year…that Janus motif, perhaps.

2017 ended with an exceptionally low listing inventory, in both residential and in undeveloped land opportunities. Thin inventory does usually forecast price rises, and two new listings in the final weeks of last year did seem to point the way to higher price points.

New Mortgage Rules

New mortgage rules in Canada may make it more difficult for first time buyers to become home owners. For a buyer, it may make sense to connect with a mortgage broker…they can access many lenders and may be able to deliver concepts not readily available at the “big 5” banks.

One concern…these new mortgage stress test rules may mean fewer starter buyers overall, across Canada, but this may also have the effect of causing another secondary home market “pause”…first time buyers in a city might be buying from retirees…who then might retire to Salt Spring or Vancouver Island communities…is this a potential 2018 version of the August 2016 metro-Vancouver offshore purchase tax, which did affect the discretionary markets? In the main, those Vancouver sellers have become our buyers.

The Year of The Dog

In Chinese astrology, 2018 is known as the Year of the Dog…it begins the Chinese New Year, at their lunar festival. The dog is recognized as a faithful and protective character. Perhaps this loyal and protective aspect will make 2018 a more peaceful year?

Completed sales in January are often based on action in the late Fall, and so do not necessarily show a new market trend. The Spring Market usually begins by March Break, and it can take till April to truly see a market pattern in this secondary home/discretionary marketplace.

October 2018 is also a civic election year. On Salt Spring, two trustees (Islands Trust) and one CRD (Capital Regional District) director will be elected.

The September 9, 2017 incorporation vote on Salt Spring, voting 63% in favour of retaining the governance status quo, which has been in place since 1974, means that some key issues (affordable housing, lack of work rental, water moratorium, unfinished Boardwalk) remain unaddressed. As 2018 unfolds, those running for the three elected positions will be heard from. It would be good to introduce 1974 to 2018.

Another change in 2018 will involve the Real Estate Services Act of B.C. By March 15th, there will be substantial changes to how real estate is done in B.C. Ask me for details.

The Internet and its continuing evolution will also have impacts on the real estate industry. How is social media changing realtor/client interactions? What will be the role of a realtor, going forward?

So…industry changes and Internet game-changers and market uptick…marking 2018 as a very 21st century year (all about change).

I do these market reports at the beginning of each month, and updates as a month progresses are done on my weekly blogs.

There is always opportunity, no matter the market trend in play, at any given moment.

Salt Spring and the Southern Gulf Islands offer a pleasing lifestyle in a scenically beautiful area, with proximity to major centres.

That Trust “preserve and protect” mandate has brought forth a community that encourages creativity…Salt Spring is an authentic artists community.

“Discover Yourself Here” is the promotion tag line used by the Salt Spring Chamber of Commerce and it does speak to the opportunities offered on these Gulf Islands.

For a glimpse into some aspects of Salt Spring’s world, check out the Food Network’s Chuck and Danny’s Road Trip (find it on YouTube)…it highlights the foodie paradise of this Island’s microclimate, and catches the charm of Salt Spring. Another glimpse of Salt Spring is currently on Knowledge Network (Island Diaries)…done by the group behind Waterfront Cities of the World, they chose Salt Spring as one of the global islands to be highlighted. Interesting….

I look forward to meeting with you and to helping you to accomplish your Salt Spring Island and Gulf Islands real estate goals. Your best interests are always my motivation.

A New Year is a time for new beginnings and new ideas. Let’s put our faces looking forward.

Wishing you the best in this New Year!

Market Analysis, December 2017, Salt Spring Island

December 2017, Salt Spring

So…here we are at the end of a very haphazard / fits and starts year. Many pauses along the way…..and not all of them market related.

Offshore purchase tax in Metro-Vancouver in early August 2016 did stop Salt Spring’s spring/early summer (mid-March to end of July 2016) long awaited market recovery…Vancouver sellers had become our buyers. It took time for the effects of that tax to be digested (possibly until May, 2017). The tax did affect outcomes well into 2017.

The once-every-twenty-years La NiƱa weather pattern, that delivers a taste of “real winter” to the Pacific Northwest Coast, created cold/snow/cool/rain between December 3, 2016 and May 15, 2017…effectively erasing any 2017 Spring Market. Both tourism and real estate activity were affected.

Salt Spring Island Real Estate

Salt Spring Island Real Estate

The Summer Market did not begin in late June, as usual…it took until July 15 to kick in. A six weeks later scenario for both real estate and for the farming community was in evidence this 2017 year.

During late July and early August, there were further pauses in visitor arrivals and in real estate viewings…due to the significant smoke from Interior and Washington State forest fires that affected many coastal regions.

On Salt Spring, there may have been a further hesitation in August, as people awaited the outcome of the September 9 referendum on incorporation.

Underneath this fits and starts rhythm, sales slowly continued, especially in that entry level residential category, and inventory thinned out dramatically. Undeveloped land, water access only island properties, upper tier priced residential estate style holdings, and commercial options remained quiet.

Very low inventory, coupled with renewed buyer interest in the secondary home/discretionary regions, usually precedes a serious uptick in prices. There have been sales at list price, and also many back-up offer situations, and even small bidding wars, mostly in that entry level priced residential segment, particularly in the latter half of 2017.

Projections

Projections for 2018 are for continuing low inventory and subsequent strengthening of prices.

It’s still the case, though, that one has to first discover the beauties of Salt Spring Island and the Gulf Islands…to then choose “for” a particular island…and then to seriously look at available properties. It often takes two (if not three) visits before a sale takes place. When a property sells quickly, it often means that a buyer has already visited the island and has made that key decision to buy there.

Seasonality seems to have been erased, and perhaps that’s another feature of the Internet. Property seekers now turn up year-round. If one is interested in selling, it’s important to be displayed and then to await the buyer arrival. In the main, our buyers are not local. Apparently, property seekers are on the Internet doing their searches for about two years before they will act. Patience is definitely a part of all sales transactions, for a seller, in any discretionary marketplace.

The Real Estate Services Act in B.C. will be significantly changed by March 15, 2018. Ask me about this. The cancellation of Limited Dual Agency (in place since 1995) is only one such change. These many changes are coming into place as a result of one realty company’s “shadow flipping” transgression, in 2015, in Vancouver. A new Superintendent of Real Estate, and a newly structured Real Estate Council, will be implementing the changes. Be informed.

There is always opportunity in real estate, no matter the market trend in play at any given time. Creative responses to lower inventory can be helpful to a buyer seeking that special property. Find out what will work for you.

Market Analysis, November 2017, Salt Spring Island

November 2017, Salt Spring

Salt Spring Island, November, 2017, Salt Spring

Salt Spring Island

There’s a total of 170 listed properties (November 2017, Salt Spring) at this moment (counting only residential of all types & undeveloped residentially zoned land of all types…not including commercial or industrial zoned listings).

In a “slow/downturn” market, there can be between 380 to 420 listings (residential and undeveloped lots/acreages).

The listing inventory, since mid-March 2016 to current date, has thinned out. Mid-March 2016 was the very first sign of a small recovery on Salt Spring, after the long 8 year downturn.

It was a very slow sales volume increase, however, between then & now, with several non-market driven “pauses”.

The 15% offshore tax in early August, 2016, for metro-Vancouver, for example, also completely stopped the secondary home regions recovery…those Vancouver sellers had become the buyers on Sunshine Coast, on Vancouver Island, and on Salt Spring Island. On Salt Spring, Aug/Sept/Oct, of 2016, were “lost”.

Then: “real winter” (between Dec 3 & May 15) struck: all over the Coast. Both tourism & real estate viewings on Salt Spring were dramatically slowed.

Almost a 9 month pause, then, between August 2016 & May 2017.

The Summer Market was 6 weeks late…it usually starts in last week of June, & did not kick in until July 15, 2017. There were pauses within the summer season, as well…due to smoke from both Interior & Washington State fires…again, affected the whole Coast, but also caused significant delays in Salt Spring activity.

That 6 weeks later scenario seemed to carry into the Fall Market, too. Perhaps October was really September!

August 2017 may also have seen a hesitation in activity due to the incorporation vote on Sept 9th…several people, on either side of the question, were waiting for the vote outcome. There was a lot of off island media coverage leading up to the vote. It may have caused a bit of a “digestion” pause throughout September. Difficult to track these kinds of hesitations.

All these fits and starts sales rhythms aside, the main sales on Salt Spring Island remain below 850,000.

November 2017, Salt Spring

To date, the sales are as follows, from January 1, 2017 to October 31, 2017:

  • 21 sales between 95,000 & 199,500.
  • 25 sales between 200,000 & 299,000.
  • 31 sales between 305,000 & 396,000.
  • 43 sales between 400,000 & 489,000.
  • 30 sales between 500,000 & 599,000.
  • 20 sales between 605,000 & 690,000.
  • 16 sales between 700,000 & 795,000.
  • 12 sales between 800,000 & 899,000.
  • 6 sales between 900,000 & 950,000.
  • 25 sales between Private Island Estate.
  • 4 sales between 2.2 and 2.5.

The sales between one & two million were either waterfronts (both ocean & lake) houses, or very large farms (20 to 104 acres), or large ocean view acreages/houses. The majority of them were waterfronts.

The sales over two million were waterfronts (3 ocean & one lake), with houses.

These sale price ranges in November 2017, Salt Spring, do not include price reductions…they are the completed sale price points. In some cases, in the over a million category, there were substantial reductions at the point of a sale.

What is the main buyer profile around Salt Spring Island?

The main buyer profile is still out of Vancouver/Lower Mainland. Alberta & U.S. (used to be 50% of our buyers) are still not in evidence. A smattering appear from Ontario, U.K., Europe…but they do not always focus on Salt Spring as a final destination choice. Most Vancouver buyers are seeking to buy down, if they have achieved a good sale price at their end.

It takes time to sell any property in all the secondary home markets, and this is true of Salt Spring, too. The first step is to choose “for” the Island…and then to choose for a property. It usually takes 2 visits (often 3), before a buyer acts on a specific property.

A showings pattern is about the buyer…not about sellers, or properties, or realtors. It just takes the time it takes. Time is a very significant element in every secondary home market transaction.

Properties still remain on the market here for lengthy timeframes, before capturing a sale. Price can sometimes be an allure factor…though not always.

So…here we are…in the closing weeks of a calendar year. Low inventory in all property types and prices. Sellers often achieving list price or close to it. Back up offers in place, if not small bidding wars. A sense that 2018 will see the beginning of serious price escalation, based on that thin inventory/buyer demand scenario.

Hmmm…it does appear that in November 2017, Salt Spring and the Southern Gulf Islands have returned to the buoyant times between 2002 and 2005. A nine year downturn now being followed by a nine year uptick? Stay tuned.