Tag Archives: Luxury Real Estate

Market Analysis, April 2017, Salt Spring Island

Salt Spring Island

Salt Spring Island

April 2017

We experienced the yin and yang of a La Niña weather pattern on the Pacific Northwest Coast…from early December to mid-March.

Salt Spring fell into “real winter” on December 3, 2016 and experienced yet another serious snowfall on March 5, 2017. In between: snow, cold, with ice build-up remaining on roads between the frequent snow storms, only main roads to ferries cleared (side roads and driveways on their own). There was skating on the lakes…that was a fun item. The last time the Coast experienced the La Niña effect was in 1996.

The entire Coast was affected, including Vancouver. The weather did affect real estate viewings…potential buyers couldn’t get out of where they were, never mind not being able to easily get around on Salt Spring!

December, January, February, and first half of March (higher elevation properties only saw the “melt” begin around March 12th) caused a slowdown in new action. Many of the reported sales of early 2017 had their beginnings in late Fall of 2016.

Although we often describe Salt Spring and the Gulf Islands main sales window as falling between March Break and the Canadian Thanksgiving Weekend, the reality is that the busiest months are May, July, August, September.

The Islands are secondary home/discretionary/recreational markets…I call them recipient markets. Sellers have to wait for a buyer to first visit, then decide if a particular island works for them, and then to really start their search for a specific property. Time is always an element of sales in all secondary home/recreational regions.

That said, it’s clear that 2016 was a sales volume increase year…a cleaning out of inventory that had built up during the eight year economic downturn. Prices stabilized, but did not increase.

In a “by choice” area, such as Salt Spring (and the Gulf Islands), there is always a time lag component in sales outcomes.

Salt Spring Island

Salt Spring Island

Often, a tourist with a successful visitor experience becomes a buyer in our region. Usually two, if not three, visits take place before a purchase decision. The non-local buyer wants to “be sure”, before committing to a purchase. When a property sells quickly, it often means that a property is listed exactly when a buyer has returned for that second or third decision-making visit.

With less inventory to choose from, however, we may now start to experience some bidding wars, IF a property is unique.

2017 has had a slow start, solely due to the unusual weather vagaries, but all signs are there for further inventory clean-out (especially in the upper tier priced residential properties and in the undeveloped land segment). After that? No crystal ball, but the signs are definitely in place for price increases in any new (and potentially few) new listings.

The tone of 2017 may be fully in place by late May. It may be that buyers who acted in the first three months of this year will turn out to have been the last buyers able to catch a seller’s interest with a lower than list price offer. In other coastal regions, which often catch the wave of change before it’s seen on Salt Spring and the Gulf Islands, the price escalation due to lack of inventory is in evidence.

Between 2000 and 2002, sales volume increased by around 50%. Between 2003 and 2005, prices rose by around 60%. Our dollar was low against the U.S. currency. International buyers were in evidence. Hmmmm…… Similar soundtrack?

Stay tuned.

To date, there have been 55 sales between January 1 and March 31. The first several (below 200,000) were undeveloped lots. The higher end residential did see price reductions at the point of an offer, but residential below 500,000 often sold at (or close to) list pricings.

  • 6 sales between $160,000 and $199,500.
  • 4 sales between $234,000 and $280,000.
  • 8 sales between $305,000 and $396,000.
  • 8 sales between $400,000 and $485,000.
  • 9 sales between $506,200 and $599,000.
  • 5 sales between $625,000 and $690,000.
  • 3 sales between $729,000 and $769,000.
  • 3 sales between $800,000 and $878,000.
  • 2 sales between $900,000 and $945,250.
  • 4 sales between $1,075,000 and $1,750,000.
  • 3 sales between $2,200,000 and $2,500,000.

I do this market analysis at the beginning of each month…updates may appear in my blog entries.

Along with the transition from a buyer’s market (few buyers and many listings) to a seller’s market (few listings and many buyers), there is the Islands Trust (government body in place since 1974, which capped growth on the Gulf Islands via strict zoning/land use bylaws)…the inventory will always be less on a Gulf Island, thus, beyond market trends).

Salt Spring will be asked on September 9th whether or not to retain the status quo (2 elected trustees and one elected CRD director…the actual decisions, however, are currently made from a central Trust office in Victoria…and these government appointees do not reside on Salt Spring), or whether to incorporate as a Gulf Islands municipality (two trustees elected, per usual, plus councillors & a mayor…the Trust documents remain in place, but decisions re governance would be made on Island & not in Victoria). Keep in the loop of the conversation on both sides of this important issue.

Meantime…the beauty of the Island calls to us. Check out the Food Network’s one hour showcase of Salt Spring…the travelling chefs came last summer and I think they caught the essence of this magical island.

Looking for your special property on Salt Spring Island or on a Gulf Island? Call me. There is always opportunity for a buyer, regardless of market trend in play.

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, 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, 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, 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.