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.
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.
Spring! Blossom Festival begins the dance of Salt Spring’s season.
We who live here are lucky to celebrate a lifestyle in the midst of beauty. Our wonderful weather “season” is from now until the Canadian Thanksgiving Weekend in early October…this is a treasured location.
Is the government mandated Islands Trust control of growth the reason for the preservation of the environmental beauties of the Gulf Islands? I think so.
The Trust’s mandate was to preserve and protect, for the benefit of all B.C. residents, the park-like allure of these islands, and it was put in place in 1974.
I think most residents & visitors would agree that this was a worthy goal, and that zoning restrictions were there to safe-guard the beauty.
When, though, does a loose body of regulations solidify into intransigence?
Isn’t the point of elected representatives to interpret a regulatory framework, for the good of the overall community? In that interpretive role, isn’t it essential to allow for individual responses without being afraid of the dreaded word precedent? Did the Trust forget the people?
A community’s self-sufficiency is based on the ability of its population to maintain itself, to foster and encourage sustainable growth, to respond to changing times for the benefit of the entire community. Entropy is the result of an unchanging response. Entropy leads to the death of an organism.
Salt Spring has been blessed in past years to be what I call a stand-alone community. One did not have to leave the island for services/amenities unless one wished to…the island was not a bedroom community of towns on nearby Vancouver Island. Can we say this is still the case?
In recent years, did the elected trustees overstep their mandate and stray into lifestyle decisions of the residents? Businesses that gave work to local residents have closed and moved off-island. More may be considering this.
The big box stores in Duncan are only a 20 minute ferry trip away: Home Depot, Walmart, Rona, Staples, London Drugs, plus the satellites that go along with plaza life (Starbucks, Tim Hortons, KFC, et al).
The Chamber of Commerce also has a mandate: to support local/community businesses and to create an atmosphere of opportunity for them. It is a volunteer body.
Salt Spring, as part of the Islands Trust governance model, is not a municipality. There are two elected trustees per Gulf Island. There is also a CRD director…CRD stands for Capital Regional District. This is also an elected position. As an unincorporated area, Salt Spring is under Victoria’s CRD re building permits, septic installations, etc.
One can see, though, as population slowly grew, since 1974, that there was a void there. The Trust is about land use bylaws. The CRD is about granting septic and building permits, so that construction is to current code requirements. There is no local elected mayor/council to aid the community’s progress.
What about an overall plan to ensure that residents lifestyles are also encouraged and preserved?
There is no funding from the provincial government to the local Chamber, as the Island is not a municipality. Thus, Chamber activities to benefit local businesses are all volunteer driven…with monetary support for tourism related events raised from the same local businesses.
The economic meltdowns between late 2008 and late 2012 caused tourism to halt in all secondary home/discretionary areas. On Salt Spring, tourism in 2010 & 2011 was apparently down by 40%. This affected accomodations, restaurants, studios, galleries, real estate…which in turn affected lawyers, contractors, architects, etc. It’s a wheel that rolls or else falters and collapses.
There is, at the moment, a sense that no one has been looking after the preservation of the Island’s lifestyle…no one helping the residents.
When I arrived in 1989, it seemed that “everyone” was here: affluent, old hippies, artists, farmers, retirees, young families, teachers, nurses, ferry employees, retail owners, summer people, spec builders, etc. Just the normal mix in any small rural community.
Is it just the law of unintended consequences at work? Is it that those initial regulations to address uncontrolled growth have spawned into more regulations, narrowing interpretations of original bylaws, simply to fill a void?
The community did seem, in the 80s and early 90s, to work together…it still comes together to help when someone is afflicted with an accident or loss by outside circumstances. There now, though, also seems to be a very divisive attitude in evidence…fixed positions…no conversation of negotiation.
I sense that Salt Spring is well on its way to being a safe haven for an affluent buyer. It may be that those who service such an area will be coming from off island. The Trust’s point in 1974 was to preserve the park. This was accomplished.
A decision to control growth in a beautiful area does have the effect of making it a place one has to be able to afford. The Trust created, on all the Gulf Islands, an eventual outcome of being expensive places to live. The old adage of supply and demand in play.
It is what it is.
The Trust could have created thoughtful affordable housing zonings, industrial land groupings, & thus have preserved small family businesses, that hire locals, that support other local businesses. They did not.
Currently, there is a governance study underway on Salt Spring. There will be an eventual referendum to decide whether or not to have a Gulf Islands Municipality. This is the second such study/referendum process.
If a yes vote? The Trust would remain, with two elected trustees, and the bylaws in place. The CRD role would be taken over by an elected council, on Salt Spring, and so there would be local people in place to look after lifestyle options for the residents. The encroachment of the Trust into this realm, to fill a void, would end. The Trust, its elected local trustees, and its land use controls would remain.
Very recently, the CRD has struck a committee known as the EDC (Economic Development Committee). This committee has pulled people from local groups such as: accomodations, tourism, chamber volunteer groups…is it a think tank? Is it working to fill that local presence void, in case the governance study outcome is a nay vote? Are your concerns being met? Ask questions!
Is incorporation a good idea for Salt Spring? Attend the meetings, listen with an open mind. It’s an important issue with a serious outcome, on either side of the question.
My hope is that Salt Spring Island will remain that vibrant stand-alone community structure, with opportunity for all population segments. How best to ensure this?
Be a part of the decision making…it’s your island, after all. Be informed.
Tourism engenders real estate outcomes and thus ensuing good business outcomes for all other enterprises. Another reason to support the Chamber of Commerce.
The real estate market on Salt Spring Island, the Gulf Islands, and on Vancouver Island is still slow in sales. There is an increase in interest…inquiries are stronger…there is no marked trend, yet. In 2012, most sales were in entry level residential. In the final months of the year, some upper tier priced residential options found their buyer…at reduced price points from list pricings. Undeveloped land and commercial options remained “flat” throughout 2010, 2011, and 2012.
It may be that 2013 will be a year of authentic recovery in real estate in our secondary home/discretionary area. It may take until July to see this build in. The main sales now take place, in our seasonal marketplace, between mid-July and November. With the impact of the Internet, it’s important to be listed and “present”…otherwise, how will the searcher discover a specific property? Perhaps by early May, the trend-line for 2013 will be sufficiently in place to see a pattern.
The driver to action this year may be the seeking of a safe haven. Preservation of capital and the ability to be self-sustaining are powerful motivators to action. The cash on the sidelines may be flowing back into secondary home markets, and globally so. The issues in Cyprus, towards the end of March, may have hastened this shift out of cash, held in savings, in financial institutions.
Many insecurities abound, globally, and the Gulf Islands are not exempt.
What can we appreciate? A micro-climate that enjoys a year round opportunity, farms and the 10K diet are alive & well. The best protected boating waters in the world, at our doorstep. Ecological beauties to enjoy. Creative & thoughtful people to bring forward solutions to 21st Century issues. Lucky us, we who now call this region “home”.
May I help you to discover your special property on Salt Spring Island, on the Gulf Islands, and on Vancouver Island? Your best interests are my motivation. Please call…look forward to meeting you, and to helping you become an Islander, too!
It seems, in our secondary home/discretionary area, that January & February are often a continuation of the rhythm of November & December, of the previous year.
March, then, usually begins the pattern of the current year, and the number of March Break arrivals to view property, and possibly to make offers, forecasts the summer season…busy at March-Break-into-Easter usually means brisk sales time from mid-May to mid-September (our traditional “season”).
We may be in year seven of a seven to ten year cycle, which means a slow upticking in sales volume may already have begun. To date, there have been fourteen firm sales, since beginning of January. Ten have been under 620,000…most below 500,000.
This steady sales pattern mainly in the entry level residential category has been a feature of the Salt Spring sales picture for about two years…this busier first two months is perhaps a sign of consistency to the marketplace…a good feature, indeed.
Sales in undeveloped land options have not yet improved. In a downmarket, buyers are not seeking a holding property nor do they want a building project. The slow roll-back of the HST tax may help in the new home category
, particularly in city or large town environments, with developments & spec housing…in discretionary/secondary home areas, where building projects are custom & personal options, the HST repeal may or may not create activity.
The upper tier priced luxury residential segment also remains quiet. In some few cases on Salt Spring & the Gulf Islands, extraordinarily motivated sellers have accepted very low prices, well below intrinsic or replacement values & also below tax assessments. Personal need is not noted by appraisers; they look at the sale price, only. These lower prices will affect stats.
In many cases, in the luxury segment, local realtors have encouraged very broad price reductions, in an effort to jump start action from a buyer. These reductions do not appear to create buyer interest. In a secondary home marketplace, a purchase is about choice…and that choosing can be deferred until the buyer sees a definite sign of a hard asset recovery. Buying is an action propelled by confidence.
Price reductions do affect all sellers, however, as it is essential to be seen to be competitive in pricing, when a buyer might be looking at equivalent properties, also for sale.
Thinning inventories may lead to price stability and then to slowly increasing prices.
Nothing ever stays down (or up)…that equilibrium moment, when the teeter-totter of a market cycle appears to be evenly balanced, is of very short duration.
Low mortgage rates are not the motivator to action that one might think. It is buyer confidence that creates a market response. Sellers and realtors do not create a market…buyers do.
In a city market, there are usually more entry level options available, overall, and correspondingly fewer luxury choices. In a secondary home/discretionary and resort-based area, the opposite is true. Such areas attract buyers lucky enough to own more than one property, or purchasers who, because of the Internet, can choose to live anywhere in the world and thus could work from a Gulf Island, or perhaps the buyer is someone who has done well elsewhere & can now choose a Gulf Island to retreat/”retire” to…it’s a specialized buyer profile who is in a position to create their personal dream.
A purchase in an area like Salt Spring Island and the Gulf Islands is about choice…and choice in timing is also a part of this. The buyer sets the pace in a discretionary marketplace.
The Gulf Islands are not municipalities…they are governed by the government body known as the Islands Trust. The Trust has been in place since 1974, & development on all the Islands is firmly controlled by strict zoning/density bylaws.
Bowen Island voted to become a Gulf Islands Municipality some years ago…the Trust & its bylaws remain in place, however. Salt Spring might consider this outcome, too.
There is an impression that the international market is moving out of cash right now and back into hard assets/commodities, including real estate. The continuing unraveling of the global economic picture has an impact on every region. We are in the post-Internet world, vitally interconnected, and the Global Village is with us. In difficult times, hard asset investment is understood as a way to protect capital.
An interesting sidebar to the post-Internet world is that it has not only erased time & geography, but has also made “someplace” in competition with “everyplace”. It’s a big world, after all! Choice, again….
Salt Spring Island and the Gulf Islands enjoy scenic beauty and environmental protection. They enjoy all of the amenities necessary to partake of life in the “real” 21st Century, and yet experience the allure of “yesteryear”. They have easy access to major centres, yet offer a village lifestyle. A temperate climate creates opportunity to be self-sustaining…the 10K diet is alive & well, here. A strong arts community, a dynamic cultural life, an oceanfront pleasure…these islands are in the heart of the best protected boating waters in the world. One is gifted to be able to live in this still very undiscovered area.
January 2012, Salt Spring Island Market Analyses
Happy New Year!
I think many people will be glad to see the back of 2011…we may look back a few years from now and decide that 2011 was the key year in the societal shift that has been underway since 2000. Key in the sense that change erupted in all spheres & all at once…political, economic, societal, and personal…you name it, it will have changed, shifted, evolved, erased…and what about the newly created? 2011 seemed to be the year all elements conspired.
The economic downturn of October, 2008, global in its impact, broadened from the housing bubble to the banks and to Wall Street. Now it has further expanded to the geopolitical level. Nothing is exempt…the Arab Spring, the Eurozone meltdowns, the economy continuing to wallow in the doldrums, the power of the consumer of services restlessly angry…think about the now global Occupy Movement & the new Russian dissatisfaction with potentially rigged elections…plus wars & rumours of wars & unrest in Syria, Iran, Afghanistan, Pakistan, DR Congo…shift everywhere!
In change lies opportunity…well, yes, but the speed of change is the unknown. The internet’s binary rhythm (on/off, act/react) can occur in an eyelid’s blink. In the past, change was a much slower animal…in some cases, it was possible to think through a shift and to reposition.
Today, our technology has erased time, and instant responses are demanded. Flexibility has become an essential. Twitter’s immediacy gets data out there asap, and the reaction to it is just as immediate.
What about our editing function? Important to turn all that undifferentiated data into worthwhile information…what’s important/what not?
I like to save my projections till later in the month…so many trajectories underway: the uncertain outcome of the bid to save the euro world, the worry about the U.S. ability to restructure & move forward, the concern over outcomes in North Korea, the potential for unrest in China, the continuing dilemmas of terrorism & sectarian violence in Africa & in the Islamic world, and the potential for unrest in Russia. Important, I think, to digest the effects of the last quarter of 2011, and to see what the winds of change are blowing our way in the first quarter of 2012. Perhaps the real beginning to a new year is in early March?
Hmmm…the Chinese lunar new year is earlier this year, arriving at the close of this month, and heralding the Year of the Dragon. Sounding fiery?
Important at such moments of flux to remember what is important…to be thoughtful with our nearest & dearest, to be inclusive & remember those on their own or needing a helping hand, to take time to eat healthily, to walk that 15 minutes a day, to admire a beautiful day, to breathe deeply and to calm that rapid fear-based breath. Read more, less t.v. Move away from the virtual world and take five in the reality check zone. Learn something new…how about a foreign language? A humbling experience & a way to keep the mind active!
It’s the start of a New Year, with everything before us, second chances & new discoveries…let’s take five and accept the challenge.
Oh, yes…the real estate market…well, I think it’s hard asset investment time again, and that those who can will seek safe havens…both as a way to preserve capital and for personal safety/sustainability. Regions such as the Gulf Islands/Salt Spring Island and Vancouver Island will be on the shopping list. Inventory is medium, interest rates remain historically low, prices have reduced around 30 to 35 % between 2007 and now…sellers are highly motivated, allowing for further reductions at the point of an offer. An ideal time to be a buyer…. It may be that we are entering year seven of a seven to ten year cycle, and thus are already slowly on the way up…. Hmmm. Wish I could find where I put that crystal ball!
More information? Call me!