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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, 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.

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.

Market Analysis, May 2016, Salt Spring Island

Market Analysis, May 2016, Salt Spring Island

Market Recovery - Salt Spring Island

Salt Spring Island

Signs of a Seller’s Market Recovery

Yes, it’s really true…after an 8 year market downturn, we are finally seeing a resurgence of authentic activity in our secondary home/discretionary real estate market.

Many listings had followed the market down. Fine properties and well-marketed…but few buyers around. In a downmarket, buyers are scarce. In past five weeks, many of these long listed properties have now sold. Very few new listings are coming onstream to replace these steady “solds“…this is the sign of a seller’s market.

At the moment, it appears that sales volume has doubled over the same period as last year and that prices have stabilized (meaning that the buyers are having to offer close to or at list price to secure a property). Price rises and back-up offers may be next.

Salt Spring Island Ganges Harbour - Market Recovery

Salt Spring Island Ganges Harbour

Vancouver Origin

This authentic recovery is very new…began from one-day-to-the-next, approximately 5 weeks ago. Most buyers are from Vancouver. They have sold properties in Vancouver’s hot market, and are now seeking alternative places.

In late Fall of 2015, these property seekers were first looking on Sunshine Coast & in Okanagan communities.

Finally, it’s now the turn of Salt Spring, Gulf Islands, and Vancouver Island, to be considered as the new lifestyle choices.

The desire for a unique hard asset investment is strong again. The “safe haven” seeking may also be a part of sales in our beautiful coastal region. The natural rhythm of a market recovery…every 10 years there is an uptick?…is also a part of this return to a strong sales pattern. There is never just one reason for a market recovery.

Recoveries are never even-handed, especially when they first begin. There remain very pleasing properties at approachable prices. There are still opportunities for a buyer.

As residential offerings continue to thin out, it may be that an undeveloped land purchase will be in a buyer’s favour. Build a cottage, or barge on a home being saved from a city’s destruction, or consider a package home.

A renovation project on great land should always be considered.

Call me for ideas that work.

Creative financing can be a buyer’s friend in an upmarket trend.

September 2015, Market Analysis

September 2015, Market Analysis

Salt Spring Island, 2015

Salt Spring Island, 2015

Real estate is always a sure-fire conversation starter. “What’s the market doing?” is a classic opener.

For those who have been holding secondary homes/recreational properties, during an almost eight year downturn, it’s welcome news indeed that the answer is now “Definitely improving!”.

All markets are cyclical in nature

All markets are cyclical in nature. Sellers would prefer to sell on a high, and buyers would love to buy on a low. Recognizing pivotal market trends is a tough call. It’s usual to understand things when they have already passed by…easier to enjoy that 20/20 vision of the past.

The recreational markets are particularly difficult to call. Unlike a primary residence/city marketplace, where one lives year-round, works there, sends children to school there, the secondary home/rural marketplaces are by choice areas.

Old Scott Road

Old Scott Road

No one “has to” buy a property on a Gulf Island or in a rural community on Vancouver Island. Such a decision is totally discretionary, and does require consumer confidence in economic outcomes.

The post-Internet world we all now inhabit has changed the fabric of recreational ownership. It’s probable that 100% of such purchases start with an Internet search, and possibly that start occurs a good two years before a purchase is even seriously entertained.

That internet search puts all recreational regions on the same level. The buyer is no longer specifically targeted to one area… all such regions are now in competition with each other. Choice is huge.

The difficulty with several evenly weighted choices is that the viewer of same may put off acting. A buyer wants to “be sure”, before choosing. Why this place? What about that one? How to decide? Too many choices may mean no decision is taken.

I often think that a happy visitor experience in a recreational area can lead to a real estate purchase there. Successful tourism outcomes seem to drive all secondary home economies.

So…tourist discoveries are apparently showing their best patterns since 2007. Real estate sales volume in rural/recreational regions has improved dramatically. We may be just at the beginning of a market trending upward, in such discretionary areas. This might be the brief equilibrium moment between a buyers and a sellers market.

The allure factor that encourages a discretionary property decision might be the opportunity to live, even part-time, in a kinder gentler place. To be self-sufficient. To remember our essential selves.

November 2013, Market Analysis

November, 2013.

Drummond Park

Drummond Park, Salt Spring Island, BC

Change is the mantra of our times…doesn’t matter what is under discussion.

The Internet & its very broad brush, erasing past scripts so new responses can emerge, just continues its message of shift.

Nothing escapes it.

All business models are affected & real estate is no exception. A consumer in charge, & a search rhythm that channels information gathering, are just two aspects of change.

Big picture societal shifts are also well underway.

Is the age of jobs over? If it’s a technology time, then disappearing traditional jobs may never reappear. Is the education system set up to train the engineers & programmers now needed?

One reads think-tank pieces about the hollowing out of the middle class, with fewer people doing well financially & more sliding into lower levels. Is retraining the answer?

Perhaps our time has more in common with the beginning days of the Industrial Revolution…the older Agrarian world was erasing. For a time, the old & the new co-existed…then the wealth tied to land was replaced by wealth from trade & the globalization of Empire.

It must have been a painful shift for those on the Agrarian/land side, & very exciting for those inventing what we now call the Industrial Age. It was a revolution, as it changed a way of thinking about life & one’s place in a social fabric. Dissolution and opportunity, all at the same time. Sound familiar?

Styles of living, with an aging population, are also something to be considering.

A couple of years ago, I wondered, on my radio show, if the boomers would reinvent aging the way they reconfigured childhood & early adulthood…thinking that those who once loved the group/commune life might also enjoy a personal pod space with a community cooking/meeting area.

Just read in a recent Time article that this concept of the tiny home, in a “village” layout, with a communal lodge nearby, is being successfully developed in Texas & in Oregon. One future option for that last third of a life span? Is this a concept that would suit a Gulf Island retirement concept? As Aristotle reminds us, we are a social animal. Isolation is not good for us.

Hmmm…a global village (thank you, Marshall McLuhan, for your imagineering in the 1970s), with a flattening of boundaries due to the multinational culture. A method of communication, the Internet, that furthers a no geographical boundaries world…at the same time that it’s erasing the concept of individual privacy and the idea that the personal & the corporate are separate entities.

Wow…a lot for the remaining hybrid beings (with memory of a pre-Internet world & a knowledge of the post-Internet one) to cope with? Doesn’t matter…the post-Internet beings treat it all like wallpaper…which it is, of course. Important to be in the “now”, always.

So: real estate markets follow cycles, like any market & consumer-driven item. This may be a natural recovery underway, then…year 9 of a 10 year cycle. Plus, societal shifts may be creating a safe-haven seeking…to preserve capital & to seek a level of self-sufficiency. Fear as a motivator! Certainly, for the first time in a 5 to 6 year downturn, in all secondary home/discretionary/recreational regions, there is evidence of a slow uptick.

The ways of connecting a buyer with a seller, however, have dramatically changed…especially in a discretionary region. What does this mean for you? Call me.

On these Gulf Islands/on Salt Spring Island and on Vancouver Island the activity, since early 2012, has been mainly in the entry-level residential segment…up to $700,000, say. Perhaps investor-buyers, seeking tenants/passive income stream? Maybe end-users, seeing the huge value in a recreational purchase after an almost 6 year flat time? Sellers are highly motivated & prices have reduced around 35% since 2007…it might be the last stages of a buyers market, & finally the secondary home regions are seeing this buoyancy, too.