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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, 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, July 2016, Salt Spring Island

‘Tis The Season!

July is the mid-point in our year and is also the beginning of our “real season” in real estate showings and subsequent sales. Salt Spring and the Gulf Islands, and many of the Vancouver Island communities, are secondary home markets. They are busiest between July and October.

salt

Secondary home/recreational areas do not follow the sales rhythms of primary residence/city regions. Thus, although eventually propelling activity in discretionary areas, Vancouver and Victoria real estate outcomes are quite different from those on Salt Spring or Mayne or Gabriola or in Parksville.

The huge sales volume in Vancouver, with resulting price increases, appears to now be mirrored in some parts of Victoria. That kind of sales frenzy is never the outcome on a Gulf Island or on Vancouver Island…the Islands are “by choice”/discretionary areas. By choice, I will buy on Salt Spring…by choice, I’m moving to Pender…by choice, I’m considering Qualicum…and so on.

What does this mean for a seller in these secondary home regions?

It’s become essential to have maintained one’s property.

It may be that all those popular HGTV style home shows have created a buyer who expects things to be “done”. Buyers do not want to call in a contractor…they are not looking for a fixer upper or a handyman special. If one has that kind of deferred maintenance property to sell, it may be necessary to come to market with a severely below market price tag. It’s interesting, this lack of buyer desire for a property needing “work”.

A new roof, a new deck, a septic system in good order, a well with water treatment system in place…these are now considered essentials. Interior items? Kitchens and bathrooms remain the two key components that will attract a buyer’s interest. Next would be flooring choices. Home ownership does bring with it consistent maintenance care. Renovations to update an older more dated home are often required.

Stiff Competition Remains

In our global post-Internet world, all secondary home areas are in competition with each other. It’s not just about a Salt Spring property being in competition with another Salt Spring home. A Salt Spring property is now competing for a buyer’s attention with a home on Galiano or on Thetis or in South Cowichan or in Parksville or in Courtenay/Comox…and also in Sidney or in Victoria. That means that a buyer also has to choose for the community itself, and not just a house in that location.

One thing that is of interest for any purchase on any Gulf Island: the form of governance has “capped” growth via strict zoning/density controls. The Islands Trust’s mandate (in place since 1974) is to preserve and protect the Gulf Islands. There is no opportunity then to see an explosion of growth on any Gulf Island.

On Salt Spring, as one drives about the Island, one is pretty well looking at “what is”. This retained beauty is important, but a cap on growth also leads to an escalation of prices, over time. Buyer interest coupled with low inventory of properties does lead to price stability and price rises.

The past downturn in all secondary home markets, and globally so, has eased or ended. It was a long eight year downturn. That lack of buyer interest did lead to lots of inventory and to lower prices. This is apparently now over.

Sales volume has dramatically increased on Salt Spring and inventory has returned to low levels.

The same dynamic is in play on other Gulf Islands and on Vancouver Island.

The difference from previous times? That competition factor. A house in Qualicum is competing with one on Salt Spring which is competing with a property in Sidney…the playing field between locations has broadened.

This means that one has to sell Salt Spring itself, not just the property located there. Hmmm….another reason to shop local and so to ensure the continuing allure of Salt Spring Island? Interested in how to help to do this? Connect with the Chamber of Commerce and become a supporter of the entire community.

At this mid-point moment: between $300,000 and $750,000 price range, there are very few residential options left. Spring sales volume doubled and little new inventory came onstream. Low inventory plus renewed buyer interest leads to price increases.

Now, we are seeing interest in undeveloped land…with a view to putting up a modular or packaged home…or building a cottage and then the house. This scenario might allow one to remain at budget.

Slowly, we are seeing the upper tier priced residential offerings capturing interest. Inventory is also thin in that price point. There is renewed interest in commercial options.

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.

April 2015, Market Analysis

April 2015, Market Analysis – Salt Spring Island

Salt Spring Back to The Seller Side

Yes, it’s true…the real estate market is turning back to the seller side of the sales equation in the secondary home marketplaces…good news indeed for Salt Spring Island & Gulf Islands & Vancouver Island owners.

On the Pacific Northwest Coast, which includes all Gulf Islands, including Salt Spring Island, plus Vancouver Island, plus Sunshine Coast, the secondary home/recreational/discretionary marketplaces are all definitely on the improve.

li-read-group-all

Inventory has “thinned” dramatically in the entry level priced residential segment. Slow sales in this price category, over the past 2 years, have quietly erased inventory backlog. Affordably priced undeveloped land is now beginning to sell as a result…buying land & building a cottage or choosing a manufactured home allows one to keep the budget at that entry level price point.

As inventory “thins”, prices stabilize. In some cases there are already small bidding wars.

Buyers who are able to increase their budget are starting to look at higher priced residential offerings, for more choice & potentially more motivated sellers.

For The Luxury Buyer In Salt Spring

For those able to consider a purchase in the luxury/upper tier priced property segment, there are still deals to happen, for a buyer. It may take until the Fall Market to see stability in pricings in the over one million category. Right now, this property segment is experiencing the uptick in interest & resulting lower offers that the entry level category experienced during the past two years.

I think when we arrive at late September/mid-October timeframe, we will see an even-handed recovery firmly underway.

I believe we are in the very last stages of a transition period, here, in our coastal region, between buyer & seller markets.

My definition of a buyers market: lots of listings & no buyers. And a sellers market? No inventory & lots of buyers. I think we are moving to that sellers market description.

It has been a long 7 years in all the secondary home/discretionary markets, & globally so. Some areas may even have experienced the “pause” 10 years ago. Within our overall coastal grid, places are never evenly busy.

British Columbia, An Undiscovered Coast

On this still relatively undiscovered Coast, we are always the tail of the dog. Now, however, we are seeing dramatic improvement…sales volume to date, for Salt Spring, has improved by close to 30% over previous year. Price stability has just begun…price increases may be on the horizon, but not just yet. This upward sales volume pattern is in evidence on the entire coastal rim.

Our discretionary area sales window runs from March Break through to Canadian Thanksgiving Weekend (mid-October). It remains a weekend business until mid-May, perhaps. Late June to late September remain the busiest sales months.

A seasonal marketplace once more on the move…plus, a lower Canadian Dollar against the U.S. currency…plus a general safe haven seeking in this turbulent global political & economic time of change…& the ability to live anywhere while working in the digital universe…it all adds to the general rhythm of uptick.

Salt Spring – The Allure of A “Caring Community”

The allure of a caring community is another attraction of the secondary home regions. An aging in place demographic, a strong community service volunteer group, a caring underpinning to the Island…this certainly describes exceptional Salt Spring Island.

Yes, it’s different than the flat conditions of the past 7 + years. However, there is always opportunity. The key? Recognizing it when it appears before you, and then acting on it.

An outcome of the global search is that it throws up a lot of surface information…& a lot of choice usually means slowness in action. The “have I seen it all yet?” syndrome. So important to listen for the “ping”. If a property lights up for you, then that’s the one to act on. It’s about listening to our inner voice.

I sometimes think searching property sites has become an entertainment feature…kind of like a 90s sitcom…look but not act. For an investment uptick, though (always better to buy on a rising market), now is the time for buyer involvement.

Continuing low interest rates are in favour of the buyer, for the time being.

Although inventory is thinning out in the affordable price segment, there are still creative ways to remain on budget.

Salt Spring Island Real Estate – An Appreciating Asset

An investment on a Gulf Island, including on Salt Spring Island, the largest & best serviced of this “southern” grouping, remains a good investment. Over time, a property purchase on Salt Spring Island & the Gulf Islands will build in value.

The Islands Trust put a cap on growth back in 1974…through strict zoning/density bylaws controls. Supply & demand is a factor in a Gulf Islands market, due to the Trust’s non-growth policies.

Enjoyment of a property is also a valid marker of value for a discretionary region. That enjoyment may include the ability to be self-sustaining. The benign micro-climate in our coastal environment makes this possible.

Yes, all markets are like a wave…up, down, up, down…never static. In real estate, it seems that the down never falls as low as the previous down. Thus, over time, a steady increase is consistently shown. On the rise, the fix & flippers start to reappear. Savvy ones are acting now.

Between 2000 & 2001, sales volume rose 50%. Between 2002 & 2005, prices rose 60%. A slowing trend took place between 2006 & 2007. Then the economic collapses of late 2008…now, at the beginning of April, 2015, we seem to be emerging back into 2002 times. Possibly we will look back & decide that 2010/2011 were the true flat bottom years in our discretionary area.

In change lies opportunity.