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Market Analysis, November 2018, Salt Spring Island

November 2018, Salt Spring

The Fall Real Estate Sales Season

November 2018, Market Analysis

The Fall real estate sales season separates into two parts: late summer/early Fall (end of August to mid-October) and late Fall (mid-October to early December).

Salt Spring is really a “seasonless” market…buyers turn up throughout the year, and sales from later in a calendar year can take place right into very early January of the following year.

Although tourism is most evident in late Spring/Summer months, and a successful visitor experience usually leads to a real estate purchase in our discretionary marketplace, the two don’t always occur at the same time.

It often takes two visits, if not three, for an interested potential buyer to decide to make an offer. There can be substantial time lags between visits…it can take one to two years to have a successful sales transaction, even in a buoyant real estate trend.

Where Do the Buyers Come From?

Buyers are not local. They look in other areas, too. It’s perhaps about “being sure” about the “where”.

Whether they live a ferry trip away or are a substantial flight distant, the buyer usually leaves some time between visits (a few weeks to several months). Their own lives come first and it just takes the time it takes to have a result in any secondary home/discretionary marketplace.

That said, we enter November 2018 with a continuing “thin” inventory of available listings.

Prices stabilized in Fall, 2017.

The provincial government’s February 20, 2018 budget included taxation measures to cool the Vancouver market.

These measures were also expanded to include Victoria, Nanaimo, and Kelowna.

Since mid-2016, Salt Spring has been chiefly dependent on Vancouver buyers. As a recipient marketplace, Salt Spring is affected by events in the areas where the buyers come from.

Anecdotally, it seems that people take around five months to get over anger at something and then to just get on with things. The lack of solid action between February 20 and September 15 has now been replaced with some increased activity. Hmmm….

The last two months of a year and the first two of the following year can be seen as a cohesive timeline.

A Market Trend for properties below 900,000

The market trend right now is showing most action in properties below 900,000. Over half the current listings are over one million. Will we see substantial price reductions at the point of an offer, in order for a transaction to proceed to completion? Will prices begin to suppress, to reflect those marked reductions now evident in Vancouver? Are we starting back into buyer’s market territory? Hmmm….

November 2018, Salt Spring Real Estate Market

Although there is a lovely sense of apartness to the Salt Spring lifestyle, no location is exempt from global issues. Currency concerns, tariff wars, prohibitive tax measures, etc…outcomes in countries around the world also end by impacting SSI. There’s that butterfly concept again.

Uncertainty is not good for any market. We began 2018 with a strong seller’s market underway. We are ending 2018 with the impacts of the coalition provincial government measures to suppress that Vancouver “hot market”. These measures, short term, have been successful.

At the same time, there does seem to be renewed interest out of Ontario (other provinces like to retire to coastal communities). Toronto does not have the tax suppression measures seen in Vancouver. That may augur well, going forward into 2019.

Albertans & US Buyers?

We are still not seeing Albertans or U.S. buyers. Before the economic meltdowns of late 2008, these two buyer profiles were 50% of our buyers. They were also seasonal. The Vancouver buyers want to live on Salt Spring. This may be why they take longer to choose the “where”. Salt Spring has competition from nearby Vancouver Island communities…why choose here? Why not there? Hmmm….

Late Fall-into-Winter season, a softer time for tourism, is also an opportunity. The fallow field moment allows for some creative thinking, to keep that Salt Spring allure in play. The outcomes of the “real” 21st Century are around us all…Salt Spring is not exempt from the profound technological changes that are now the surround sound of our lives. Yes…block chain technology is our present.

Initially, the Islands Trust, created by the provincial government in 1974, had the purpose of preserving the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents…the Trust capped growth and effectively created a park-like ambiance. Now, in our always-on, always-connected world, perhaps the real value of visiting and of living on Salt Spring Island is the ability to enjoy an experiential lifestyle…and not a mere searchable environment.

The Gift of Reality

The gift of reality…real reality, not virtual, not augmented…perhaps that’s the point of 1974 meeting up with 2018?

Markets are always a wave of up and down. Over time, an investment in real estate, in an area where growth is strongly controlled, where a community blueprint pays homage to 1974 concerns about over-growth, will become an enclave area…it will rise in value. Important, then, to always be thinking five years out.

At this moment in time, listings remain low, buyer interest is very present, and the allure of Salt Spring as a destination is high. Projections for early 2019, in areas that deliver buyers to Salt Spring, are about a bounce back in real estate dynamics. Hmmm….

Meantime, November unrolls before us: craft fairs (WinterCraft), Village galleries showcasing their artists, studio tours, continuing Farmers markets, theatre and dance and choral presentations at ArtSpring, hiking/walking trails beckon, and kayaking adventures and sailing races delight year-round.

There’s always lots to see and to do, on special Salt Spring Island.

Enjoy the softer season!

Market Analysis, October 2018, Salt Spring Island

October 2018, Salt Spring

Ganges Harbour

Ganges Harbour

We are now well into Fall…all the Harvest events, Farmers Markets, farmgate stands are busy inviting us to enjoy this fruition time.

Early Fall is a mix of rainy days, sunny days with almost summer warmth in afternoons, darker mornings and evenings as the days shorten…plus crisp evenings perfect for star watching. And yes, that is Orion, the Hunter constellation, creeping up the sky…the herald of Winter.

The Fall Market in real estate on Salt Spring and the Southern Gulf Islands can be busy. Buyers may have come in late Spring/Summer to “look”, but they often wait till Fall to offer.

People looking at properties on Salt Spring, right now, are seeking permanent homes…they are not, in the main, looking for recreational options.

That’s actually a change. In previous years (up to the economic meltdowns of late 2008), we saw many Albertans & U.S. buyers on Salt Spring and the Southern Gulf Islands. These were recreational buyers…this was not their primary residence.

Post-recovery (mid 2016), the main buyer profile became a Vancouver buyer…who had sold in their venue for large dollars. They were seeking a destination to move to…they were not recreational buyers.

So….in seeking that “forever” destination, Salt Spring garnered competition: Sooke/Metchosin, South Cowichan, Courtenay/Comox…hmm…why your area? Why not theirs? Good question!

Islands Trust

On Salt Spring, which is a part of the provincial government mandated Islands Trust (in place since 1974), one understands that development is “capped”. What you buy is what you get. There will not be myriad new subdivisions opening up. A cap on growth also delivers (over time) an increase in valuations: low supply & generally high buyer demand does, in the end, result in price escalation.

Salt Spring offers a hospital, great ferry connections (three ferries with year-round schedules: one to Vancouver, one to Victoria, & one to mid-Vancouver Island), year-round regular sked floatplane services (to Vancouver Airport, to downtown Vancouver, to Seattle, to Maple Bay on Vancouver Island), 3 elementary, a Middle School, a state of the art Senior School, plus indoor pool, plus Arts Centre (ArtSpring), plus alternative health opportunities, plus a strong artistic/cultural base, and…the list goes on. Salt Spring is an eclectic and vibrant Island, with a year round lifestyle.

The real estate market on a Gulf Island, including on Salt Spring Island, is always dependent on outcomes in the areas that generate the buyers. Since mid-2016, that has been a Vancouver buyer.

The current provincial government has purposefully been making taxation decisions that will suppress a real estate market. Their intention was to cool the market in Vancouver, and also in Victoria, Nanaimo, Kelowna. Their measures have worked…sales have softened in Vancouver. As a recipient market, dependent on non-local buyers, Salt Spring may feel the effect of this suppression. It may take longer to achieve a sale and prices may reduce.

Kinder, Gentler Lifestyle

That said, there is a huge desire for Vancouver residents to leave the city and Salt Spring is one of the locations they consider. Perhaps the Vancouver potentials will simply end up accepting the prohibitive tax measures in their area, and decide to just get on with things. That strong desire to live a kinder, gentler lifestyle may continue to uphold the Salt Spring and Gulf Islands markets.

At this moment in time, early October, listing inventory remains thin and buyer desire remains high. Over half of the Salt Spring listings are priced over one million. A very thin residential inventory available below 900,000. Hmmm…. To remain in the entry level pricing category, a buyer might be best served by purchasing undeveloped land and building a cottage or studio. It is a struggle to find a residential property, below 750,000, that does not need serious renovation work.

Meantime, in this era of consistent and constant change, it is a gift to visit Salt Spring and the Gulf Islands…to experience a lifestyle rooted in 1974 (the year the Islands Trust was created, by the provincial government). If one can also consider living here, one immediately understands that all the necessities of a 21st Century experience are available…though wrapped in the charm of 1974. Fall is a superb season to discover the Gulf Islands.

Market Analysis, September 2018, Salt Spring Island

September 2018, Salt Spring

The beginning of September…still technically summer, yet somehow accepted as early Fall. All those back to school memories, perhaps, signalling a season change?

The Fall Market in Gulf Islands real estate can be busy…September/October/November do see a lot of sales going through. Perhaps buyers looked earlier, but they often wait till early and late Fall to “act”.

Some Statistics …

As we start into September, on Salt Spring there are approximately:

126 residential offerings CURRENTLY LISTED:

  • 60 below 1 million (309,900 to 995,000)
  • 66 over 1 million (1,020,000 to 4.8 million)

There are approximately 90 lots/acreages CURRENTLY LISTED:

  • 79 of them between 159,000 and 995,000
  • 11 of them between 1,020,000 and 2,495,000

There have been approximately 145 SALES TO DATE

  • 124 of these sales ranged between 155,000 and 999,000 (with most of such sales coming in below 800,000)
  • There were approximately 21 sales between 1,005,000 and 2.85 (with most between 1,005,000 and 1.95.
  • Only two sales over two million (2.15 and 2.85)

Most sales above one million were waterfront properties. (The “solds to date” include residential and undeveloped land options).

Over half of Salt Spring’s residential zoned listings are priced over one million, while (to date) most sales are below 900,000.

Time to sell or buy? Are we in a balanced market?

The current coalition provincial government’s February 20th budget brought in several tax measures that were meant to cool “hot” real estate markets. Vancouver, Victoria, Nanaimo, Kelowna were specifically targeted by these measures.

For many Vancouver Island communities and Gulf Islands, including on Salt Spring, the main buyer profile for past 18 or so months has been a seller who had previously sold in Vancouver and was then seeking a new home location. The measures to halt Vancouver’s market have worked…and abruptly so. That primary residence market has softened markedly and Salt Spring’s recipient market has also softened in response.

Government intrusion, then, mainly targeting Vancouver, has also affected our local Salt Spring and Gulf Islands market.

Real estate boards like to call this kind of a slow down in action a “balanced market”.

A buyer’s market is characterized by many listings and few buyers. A seller’s market is about few listings and many buyers. This often leads to price stability, and then can lead to price escalation.

Is a balanced market somewhere in between, or is this just “realtor speak” to put a positive spin on a changing market? Too soon to say.

The late summer/fall market can be a busy sales window on the Gulf Islands. It has been this way for several years. If new listings don’t pop onto the market, and buyers consistently want to be here, then we will see many more sales as we go through to year end…low inventory, coupled with buyer desire, maintain a seller’s market.

I do this market report at the beginning of each month, and do updates via my regular blogs.

At this exact moment in time, the very beginning of September, it seems that there is a hesitancy afoot. It may be a momentary reaction to the B.C. government’s move to soften real estate markets…by late October, we will see if there have been further repercussions.

Sellers and buyers are disturbed, in Vancouver, about the measures to halt that market’s rhythm. Non-local buyers are reluctant to encounter the speculation (vacancy) tax, the offshore purchase tax (now 20%), and the extra schools tax for properties assessed over 3 million. The vacancy tax and schools tax apply to local owners, too. (Luckily, Salt Spring and all Gulf Islands were exempted from the speculation (vacancy) tax, on March 26th).

That pausing in the Vancouver primary residence marketplace has outcomes on Vancouver Island and on the Gulf Islands. Salt Spring is not immune to market forces in other areas.

Alberta and the U.S. buyers (once 50% of Salt Spring’s buyer profile, before the economic meltdown of 2008) have not reappeared. Vancouver remains the principal engine of activity in all coastal communities.

Harvest Time

This September/October will tell the tale of the 2018 market. We begin this new month, at this lovely harvest time of year, with thin inventory in all property categories/price points. Buyers are still around, but mainly seeking residential properties below 900,000. Will we see continuing clear out of inventory, perhaps at a slower pace, or will activity plateau due to the government intervention to suppress “hot” markets?

Hmmm…stay tuned.

Meantime, here we are, folding into the poet John Keat’s evocative description of Fall…“season of mists and mellow fruitfulness”. Many things are there to delight us on Salt Spring Island: Fall Fair, Farmers Markets, studio tours and gallery openings, Sip & Savour, harvest dinners in our great restaurants, craft fairs, Apple Fest, Canadian Thanksgiving…and there is much to be thankful for on this special Island. More info? Call me!

Market Analysis, May 2018, Salt Spring Island

Salt Spring Island

Salt Spring Island

May 2018, Salt Spring

It may be that the Islands Trust (created and put in place, in 1974, by the provincial government) will have done more than “preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents.

It may be that the Trust will also have preserved a way of life that is disappearing, globally.

The outcome of the technology era, with artificial intelligence, with robotics and virtual, meshed, augmented realities, is rapidly changing our culture.

These technological outcomes make all knowledge, as we understand it right now, outmoded within 18 months. Speed of change continues to ramp up.

It really is like Alice Through the Looking Glass: we have to run very fast just to stay still. It’s interesting that this supposed children’s book, from the early days of the last century, was written by a mathematician. Hmmm…..

All of our cultures, globally, are undergoing massive change. Marshall McLuhan, back in the 1960s/70s, noted that “the medium is the message”.

Meanwhile, there sit the Gulf Islands, firmly anchored in 1974. Hmmm…..

Preserve & Protect?

In severely curtailing growth, through strong zoning/bylaws, since 1974, the Trust maintained the “preserve and protect” mandate. On September 9, 2017, Salt Springers voted 63%, in a referendum, to retain the 1974 form of governance, without change.

Will the Islands rise in value, so that only the very wealthy will be able to afford the properties? Will they be seen as places to recharge, to experience “real reality” in its authentic form? Will they be seen as Shangri-La opportunities…restorative withdrawal niches? Hmmm…

Change is with us. In change lies opportunity.

How do you envision these time tunnels known as the Gulf Islands, in two years? Five years? Ten?

Demographics, globalization, technology impacts, population movements, cultural shifts, economic changes…we are all in a moment of substantial shift, similar to what was unleashed onto the Middle Ages by Gutenberg’s life altering printing press in the 14th Century…similar to the impact on the agrarian world with the advent of the Industrial Revolution in the late 18th Century. These are big picture shifts. Ways of living vanished and were replaced with new options, in these earlier eras.

Will Salt Spring and the Gulf Islands remain as they are? Hmmmm…..

Meantime, several local groups are meeting and creating information bases, to address the outstanding issues still facing Salt Spring, after the vote to remain “as is”. In October, at the civic election time, two trustees and a CRD director will be elected, for a four year term. Stay tuned.

The Real Estate Market?

And, what about the real estate market as we enter May? Thin inventory below 900,000, plus strong buyer demand in entry level, keeps a strong sales picture in place. Many buyers are from Vancouver and plan to live on Salt Spring. The market, up to a certain price point, could be described as a seller’s market. Perhaps half of the listings currently available, in residential offerings, are above one million Canadian dollars.

Please pop into my office for my weekly “driveby” lists…they show all available listings, regardless of realtor, company, or board affiliation.

The realtor.ca site is geographic and also shows all current listings.

The Southern Gulf Islands are a “gray area”…meaning that 3 boards are represented on them (Vancouver, Victoria, & Vancouver Island). Boards are a portal for a realtor to get their listing onto the geographic MLS.

In a “gray area”, if you go onto a realtor’s private client service, you will only see the listings on that realtor’s board…you would miss, perhaps, 50% of the actual listings. Very important, then, to take the time to view realtor.ca (for full information on “what is”).

So, low inventory, the lowest I’ve seen since 2003, few new listings, price stability, some small price increases as the few new listings do come onstream, and we are just now entering our main grid of activity (May to September)…we may see dramatic price rises by August.

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!