Tag Archives: Fall Market

Market Analysis, March 2017, Salt Spring Island

March 2017

So…the season begins….traditionally, March Break to Canadian Thanksgiving Weekend (mid-March to mid-October) offers the traditional grid of real estate sales action in the coastal secondary home (recreational) markets…which includes Salt Spring.

Salt Spring is basically a seasonless market, though, and people visit year round…real estate sales can occur at any time.

If one is seriously for sale, then one needs to “be exposed to the market”. The digital world, which is now where most buyers first encounter a listing, does not recognize weather or time of year. If wanting to sell, it’s important to be found on a buyer search, at any time.

For a buyer, statistics show that they look for property almost 2 years before buying, via Internet sites. Yes, they are “interested”, but not yet “ready”.

About 6 weeks before they are in that “ready” state, they connect with a realtor and make appointments to view what has caught their attention. Once they physically arrive and view, they will see other options, too. Thus, the buyer may or may not purchase the property that first caught their attention.

Hmmm…in secondary home markets, where most buyers are from elsewhere, it often takes two (and sometimes three) visits before a purchase. Since these buyers are often from afar, there can be substantial timelines between visits…sometimes 3 to 4 months, or longer.

Time lags are a part of real estate sales in secondary home/discretionary markets. Days on market are not significant in recreational/by choice regions. Sellers know how long they’ve been listed, but to a buyer who has just started a search, everything is “new”. If a newly listed property sells quickly, it often means that a buyer has turned up for that second or third visit, right at the time the listing came onstream.

So many changes to the real estate industry, all of them driven by technological shifts, but some things remain the same…especially in the recreational/discretionary regions.

Customer service, knowledge of the area (both inventory and market trends), negotiating skills, an authentic interest in a consumer’s concerns, knowledge of zoning/bylaw issues (very important on a Gulf Island, which is governed by the Islands Trust), a good short-list of qualified professionals to aid the consumer (property inspectors, legal advisors, septic installers, water test labs, architects, contractors, mortgage advisors, etc)…a local realtor understands the area and can interpret the many local issues.

An Internet search is helpful, but some items in a recreational region are best discussed with a knowledgable & experienced local realtor. That interpreter function is an essential addition to any internet based information.

Market trends: like any market, real estate also experiences that wave-like model…up and down and somewhere in between. Markets are never static.

The global downturn of late 2008 lasted for almost 8 years in our local region…some areas saw recovery much earlier. For Salt Spring and the Southern Gulf Islands, the recovery began in mid-March, 2016. There were earlier whispers of action in late 2015, but a marked upsurge in residential sales volume began in early Spring, 2016. By year’s end, inventory had thinned out and prices had stabilized.

A seller’s market is characterized as low inventory coupled with high buyer demand. This scenario can lead to price escalation.

This early in the season, it’s too soon to speculate on price points. All that can be said is that there might only be two or three property options currently on the market that will suit a buyer. Thus, the seller may benefit by achieving list price or close to it. If this lack of inventory trend continues, then price escalation may be a factor by the Fall Market.

There is always opportunity for a buyer, regardless of market trend in play. Creative ways to buy that special property, in a recreational area, can always be found…even in a seller’s market.

November 2012, Market Analysis

Here we are, easing from Fall Market into Winter.

This has been a continuing slow year in real estate sales, but it has been busier when compared to past three years.

There has been a definite rise in sales volume in the entry level priced residential segment, but only marginal action in the upper tier priced residential category.

Very substantial price reductions continue to come in, from all companies, in all property types. These reductions do not necessarily bring increased showings or offers. They do encourage other sellers to follow suit, in order to remain competitive in pricings. At the point of an offer, the buyer often delivers a further serious price reduction, in spite of consistent price drops en route.

So, sluggish conditions & further price instability, in entry level residential options. Lack of interest in undeveloped land choices. Little interest in commercial/business opportunities. Sporadic interest in upper tier priced residential offerings, & very significant reductions at the offer point, in most cases. It remains a very uncertain market, then, with periods of inaction across the board.

It is marginally improving in that lower end priced segment, but there is no certainty that this means consistent stronger conditions on the horizon. Media reports, which share information from the recent past, are still highlighting gloom re economic statistics. In Canada, they talk about potential real estate bubbles.

So, Year 8 of an 8 to 10 year cycle now coming up?

Implying a resurgence in sales, though not in pricings? Perhaps…. Early Spring will tell the tale. It appears that the last two months of a year ease into first two months of the following year. Takes until March, then, to see any shifts.

A seller needs to be patient…in our kind of discretionary marketplace, the buyer is always in control of the where & the when of any purchase.

In this kind of uncertain economic time, price reductions don’t necessarily create a desire to act, on the part of a buyer.

No one has to buy a second home or retire in any particular timeframe or purchase a recreational or a holding property. It’s always by choice, in a secondary home market.

Confidence in the overall economy will generate buyer action in a discretionary region.

 

If price does propel action, it will be driven by such a steep price drop, so much lower than assessed or intrinsic value, that it cannot be ignored by a potentially interested buyer.

Even then, the buyer will have to be targeted towards this island, with some knowledge of the deep cuts over the past 3 to 4 years. It can take significant time from a discovery on the Internet to physicality on island, to view.

General inquiries are where a process may begin, but it can take a good two to three years for an outcome, regardless of market trend in play. Buyers do not have to hurry to a decision…there is no immediacy to action in a secondary home region.

What to do then, as a seller?

It’s important to remain visible on the digital options…targeted print, with an auxiliary Internet presence, perhaps…

…the Internet, though, is truly the driver to eventual outcomes, in our 21st Century business model. The Internet never sleeps. It has erased time & geography. If you’re for sale, you need to be visible there.

It’s all seasonless now, & when a buyer sees you, it’s all new to them. Time lags, from a seller’s perspective, are not part of the buyer’s perception. So, more patience on the part of any seller, in any discretionary area.

For several years on Salt Spring, a printed monthly real estate supplement, put out by our weekly newspaper, was the sole vehicle for advertising property listings. This all changed with the Internet search engine. This supplement has now gone from 12 issues to 7…it is always woefully out of date, as info is given to them, to print, a good two weeks before it appears. This old style print supplement is not seen until the buyer comes to the island…it does not “bring them”.

 

choice of a particular island

Marketing to the potential buyer now requires the ability to focus on & to encourage a choice of a particular island.┬áThe Internet certainly erased time & geography. It opened an area to a much wider audience. In doing so, it also opened up a broader choice…suddenly, “some place” was in competition with “every place”. Ah…more reasons for time lags. Can’t choose yet, because we haven’t seen it all yet! Too much choice creates reluctance to act? Perpetual looking is an outcome? Hmmmm….

Time…& yet not time…busy and yet not busy…rumours of improving trends in real estate at the same time as media reports from banks and government sources that further downturns are ahead…in a transition moment, all things are on the table, all at the same time. This kind of confusion often forecasts a significant shift. The question: up or down?

Not biz as usual is about all that one can say, firmly.

No matter the market trend, Salt Spring & the Gulf Islands offer spectacular lifestyle opportunities. It’s always a good time to be a buyer, if the time is right for you. It’s always a personal choice in a discretionary area.

October 2012, Salt Spring Market Analysis

October 2012, Salt Spring Market Analysis

Here we are…half way through our Fall Market. The Fall Market encompasses late August to late November, in our region.

Traditionally, around 60% of transactions used to take place between late August and late November.

During the past 3 to 4 years, however, nothing has been “traditional”.

The economic meltdowns of late 2008 unleashed a real estate collapse in the U.S. which, within a year, had afflicted all regions, globally.

Secondary home/discretionary regions were the most sorely afflicted…no one has to buy a second or third home, or retire in any particular timeframe, or buy a recreational/retreat property…it’s all by choice. Globally, secondary home markets saw little to no action, between 2009 & late 2011…appraisers noted that prices reduced around 35%, in our island region, between mid-2007 & late 2011.

At the same time, the local Chamber’s gathering of tourist information noted that tourism on the island was down by around 40%, in past two years (2010 & 2011).

Tourism

Since tourism is the usual first entry pointer to the islands, it’s easy to understand that a real estate purchase is usually generated by a tourist visitor falling in love with the area and then deciding to buy a property to enjoy.

No visitor…so no follow-up real estate buy…& then no hiring of an architect or designer, no work for a contractor, an electrician, a plumber, an excavator to create a driveway/prep a site, a back hoe to prep for a septic system or a landscape plan…then there are the painters, interior designers, furnishing providers, appliance providers, flooring installers…etc. etc. etc.

What about restaurants, galleries, banks, insurance agencies, gas stations, car maintenance, schools, grocery stores, accomodation providers, clothing outlets…basically, a community’s lifestyle! All were affected, in the end, by the faltering of tourism between 2009 & 2011, and thus the corresponding lack of sales in real estate offerings.

Realtors truly do start the train of a community’s business health!

2012 has seen a resurgence in sales volume in the entry level residential category, with some few sales in upper tier priced properties also lately beginning to sell.

In spite of dramatic price reductions en route, most sales still see a further reduction at the point of the offer. The buyer, at this moment in time, is still in control of the sales process. As inventory thins, prices will solidify…even multiple offers will be possible.

Markets are not static

Markets are not static items…they flow between the extremes of a sellers and a buyers market. We may be going into year 8 of an 8 to 10 year cycle, which promises stronger sales & more stable pricing…the downturn of late 2008 to early 2012 should have erased, perhaps by this time next year. No crystal balls, so only best guesstimates in play!

Secondary home markets, unlike city/primary residence areas, are driven by buyer activity. Buyers are back this year, even if it’s mainly only been active in the entry level residential segment. Good news, indeed. Sales in upper tier residential options are beginning to emerge. To date, undeveloped land sales remain inactive. No interest in commercial options yet, either.

The media is reporting downturns in real estate sales/prices in both Victoria and in Vancouver. These are primary residence/city markets. The pattern in the Gulf Islands/on Vancouver Island is a secondary home rhythm. Nevertheless, no area or market trend is untouched by another…an outcome of the Internet is the blurring of such divisions.

Uncertainty remains, and this may continue to impede strong action in all secondary home areas…purchases there, remember, are by choice.

Worry about societal outcomes, though, can also encourage action…safe haven investing is a real thing. That may result in much stronger sales.

Beginning of October

So, we arrive at the beginning of October with mixed messages. Price reductions continue to flow in from all local realty companies, in an effort to jumpstart action. Sellers of upper tier priced properties, many needing updating, who have been listed for 3+ years, take very low offers when they are presented, & yet step-in ready, almost new homes, up to 2 million, find buyers, & often sell close to their list price. Undeveloped land remains quiet.

So…sounds like everything is on the table, & price points of what is selling continue to slowly increase. A market slowly upticking? I think so. It appears that 2013 may be the year of renewal in real estate markets.

Meantime, this still evident buyers market, plus low interest rates, do encourage a thoughtful purchaser to consider buying a Gulf Islands/Salt Spring Island property opportunity “now”.

Soft temperate micro-climate, scenic beauty, rich cultural opportunities, good schools, easy access to major centres, hospital & health services on Salt Spring…it’s a plum!

How may I help you to buy your special Salt Spring Island or Gulf Islands property?