April 2010 | Salt Spring Island

April 2010 | Salt Spring Island

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Market Analysis | March 2010

The first quarter of 2010 is now behind us.

For our secondary home / discretionary marketplace, on Salt Spring Island and on the Southern Gulf Islands, this year opened with a continuation of the Fall, 2009 market trend.

This is very typical, of course.

Our “season” really runs from March Break to the Canadian Thanksgiving Weekend, in early October.

The early stages in a year, then, always reflect the latter days of the previous year.

Any trend, up or down, isn’t really noted, for any particular year, until June — have to let the sales take place from mid-March to end of May, to be able to draw any conclusions about the current market and any potential changes to it.

There were slow but steady sales in this first quarter, 2010, and this rhythm mirrored late 2009 activity.

Very early January sales are usually completions of business done in late Fall of the previous year — buyers and/or sellers often prefer an early new year completion date, for tax reasons. Not “new biz”, then.

From mid-January to end of March, any early bird buyers appear, acting before the main sales window of our seasonal marketplace truly begins.

It was good news, then, that a consistent sales pattern continued, though still mainly in the low end/entry level residential property segment, in the first quarter.

This is exactly what took place in our area, too, throughout 2009.

No rural area (Vancouver Island, Gulf Islands, Sunshine Coast, B.C. Interior communities) experienced the buoyancy seen in Vancouver or Victoria (primary residence markets), in 2009.

In the city markets, the main business was in the entry level / investor-rental segment. This category is still where the most action is taking place.

Yes, there are occasional one-off higher end sales in all areas, but they are exactly that — one unique property would sell, for a somewhat reduced price (but not hugely so), and there wouldn’t be another. No “market trend” to point to, then.

On Salt Spring, the main business was in the “below 550,000” range in 2009, and this has continued into 2010’s first quarter. Not heartening news for those sellers of upper tier properties.

There was one waterfront sale in early February, for close to 3 million, and a water access only “off the grid” oceanfront sale at end of February, close to 2 million. Both of these had been exposed to the market, for varying time periods, for 2 to 3 years. Otherwise, it’s still that “below 550” range that is consistently active.

Undeveloped land (building opportunity or holding property), commercial options, and higher end residential properties remain very “quiet”. A buyer willing to act is not looking to “stretch” the limits, as was often the case between 2002 and 2006.

Fear is still the prohibiting factor that “stops” action.

Fear can also propel, and it’s important to be paying attention to the monetary printing presses. In inflationary times, it is good to own a fine hard asset.

A Gulf Islands purchase carries with it the allure of protected investment: the Islands Trust capped growth on all Gulf Islands.

The Trust came into law in 1974. Its purpose was to preserve the park-like ambiance of all the Islands, for the benefit of all B.C. residents.

In the early days, with a lot of potential land for development, the inevitable outcome of zoning restrictions wasn’t seen. Now, on many of the Gulf Islands, including Salt Spring Island, we’re very close to what I call “the wall of no more”.

Lack of inventory, due to government restrictions, and the effects of the internet world (erases geography and time, allowing a global buyer to come to the fore), have conspired to create the Gulf Islands, residentially, as enclave areas.

Limit on growth, a protected environment, ease of access to major centres, a wonderful “apartness”…over time, such areas escalate in price, and if anyone is to “blame”, it is the Trust. Call me, for more details on the Trust’s impact on growth.

Meantime, we are entering the first period of serious viewings/potential offers (April, May, June), for the Gulf Islands secondary home marketplace.

The media continues to report a myriad of findings: projections for continuing deflation combined with forecasts for hyper inflation; signs of returning consumer confidence combined with job loss tallies that predict collapses of some industries; statistics that show price rises in housing in some areas combined with dark news of more foreclosures/increasing inventory…the usual mish mash of confusion is a continuing theme, then, just as it was in 2009.

There is still no road map, it is not business as usual, and the buyer of a service (that’s the consumer!) remains on the sidelines (I call it the pointy fence of indecision), even when they don’t “have to”.

No road map yet, to this “real” 21st Century!

Very important in such times of extraordinary societal change to remember to practice one’s peripheral vision skill. Tunnel vision does not create solutions. It’s our creative response that will show us which path to take, to emerge from this confusing white noise moment of disruption of the old/birth of the new….

It’s also important to become familiar with new methods of communication (yes, I do mean social media marketing). As Marshall McLuhan prophesied, back in the 60s, the medium is the message. New technologies do change us as people…opportunity is everywhere.

When the consumer moves to a different venue, for information, then mainstream marketing will have to move there, too. Not biz as usual, remember!

So important, too, to make sure our editing function is up and running! Data is not information until we make it so.

Looking for the latest information on “what is for sale” and “what has sold”, to date? Call me…ask for “li’s list” (all available listings info).

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