Marketing

Marketing Real Estate in “Interesting Times”

November 2010 | Gulf Islands Real Estate Market Analysis

Interesting times we live in!

Wasn’t that the Chinese Curse?

I think, though, that change offers opportunity…

Check out my radio show podcast and listen to my interview with “Carolina George.”

George, originally from Ontario, now lives in North Carolina, and is a major player in the digital post-internet world we now all inhabit.

As a hybrid being, with a foot in the 20th Century and another in the beginnings of the “real” 21st Century, I feel like my role might be as an interpreter between two beings: BG (Before Google) and AG (After Google).

A divide that is so profound that there is really no true meeting ground.

The historian Barbara Tuchman wrote a book, in the 1970s, bringing to life the world of the 14th Century. It might be prudent to revisit her book. Messages from the 14th to the 21st Century? Perhaps….

After all, Gutenberg‘s discovery at that time, and subsequent implementation of the printing press, erased centuries of agrarian top down culture and gave birth to the ascendance of “the common man” and the creation of that middle class power base that resulted in the Industrial Revolution.

Click here to download a PDF of analysis and here to read in its entirety.

Real Estate | The market today…

At a recent international real estate conference that I attended, realtors from other secondary home/discretionary areas, including hard hit Spain, were noting that tiny baby steps of uptick in sales volume were being detected…just since end of August, so it’s very recent, indeed.

Some saavy and major developers, in Canadian cities, are also newly targeting early Spring as going to be very different, on an upward momentum, for sales volume if not prices, in spite of continuing media reports of impending double dip concerns for the U.S. economy, over supply of inventory in many sunbelt states, and jobless numbers increasing.

It’s almost a given that what used to work won’t anymore, and what is emerging as the new paradigm will work. This is true of the real estate industry, too. Franchise models are in disarray, the entire mls system in Canada is dramatically changing, for the benefit of consumers, (a.k.a., the “enduser“) and the sacrosanct referral system of old is vanishing as a key element in a real estate agent’s business model

A recent Time Magazine (U.S. Edition) article drew attention to parallel universes in economic conditions: digital worlds (iphone 4, ipad, etc) being one kind of Jobs report, and manufacturing aspects being an opposite jobs report. One more example of the schism between the known of the 20th and the unknown of the 21st centuries.

It’s almost a given that what used to work won’t anymore, and what is emerging as the new paradigm will work.

Click here to read and download the entire October 2010 market report.

Salt Spring Island Real Estate & Limited Supply

Salt Spring Island and the Southern Gulf Islands are “governed” by the B.C. Provincial Government, under the Islands Trust. The Trust came into being in 1974, with a “preserve & protect” mandate, to keep the Islands as these pristine and park-like environments, for the benefit of all B.C. residents.

Two trustees per Island (not representative of population, then) are elected every three years, in the B.C. civic elections, to manage the Trust bylaws/official community plan, on each Island. These strong zoning/density bylaws control (& effectively “cap”) growth. Limited supply, and a strong buyer demand, usually result in higher prices, regardless of market trend in play at any given time. There will always be a low inventory of properties for sale, then, on any Gulf Island, due to this Islands Trust mandate and resulting cap on growth.

There is no industry on the Gulf Islands.

Salt Spring Island is the largest and best serviced of the Southern Gulf Islands (Gabriola, Thetis, Galiano, Salt Spring, Pender, Mayne, & Saturna Islands are the ferry accessed options, in the Southern Gulf Islands grouping), with a year round lifestyle, and with all the amenities required in the 21st Century.

One doesn’t “have to” leave Salt Spring Island for anything, but it’s easy to go to Vancouver or to Victoria or to mid-Vancouver Island locations, on day trips. There are three separate ferries that service the Island, plus three regularly scheduled (year round) floatplane services, so it’s very simple to do daytrips to major centres, and to return easily to the Island’s charm. In the “season”, there’s also a floatplane service from Seattle to Salt Spring Island.

Penturbia and the Pacific Northwest Coast

Brief Salt Spring Island journey

When I first arrived on the Island…

These weren’t “new” projects, though, but simply the building out of things always on the books, so to speak, after the Islands Trust came into being in the mid 1970s.

From 1990 to 1997, then, the Island experienced changes in the “seaside village“, with older buildings being removed and new buildings constructed. Some of the multi-family (i.e. townhome) zoned properties began to be built out, too, in this same time period.

If one had visited the Island in 1985, and then had returned in 1995, it would have been a quite different village core that one would have returned to.

All of the changes, though, had been put in place, as “potentials,” when the Islands Trust was created by the then Provincial Government, in the mid-70s, and were not “new” options. The changes conformed to the Official Community Plan, (where one can read the bylaws and the development permit area regulations, which are the Gulf Islands form of “government”).

From about 1995 to 2001, the Island “rested” in a fairly stable moment; part of this was due to a recession in the Province of B .C., generally, and part of it was the usual resting that takes place after a spurt of building & development occurs.

In early 2001, B.C began to pull out of its recession, and the Gulf Islands and Salt Spring Island were no exception.

Post 9/11, however, it seemed that a general rewriting of one’s life script occurred, world-wide. A movement known as “penturbia“, which was talked about in the 1980s, seemed to have a resurgence of interest. People began to seek out smaller communities.

Marketing of Real Estate in 2010

The arrival of the Internet, and its ease in allowing one to “do business” anywhere in the world, was also a factor in this ability to live somewhere and work, in virtual space, elsewhere.

The beginning of retirement for that broad generational grid known as the “boomer generation” might also have been a factor in the allure of smaller & more recreationally oriented areas.

Several things began to converge, then, and Salt Spring Island’s year round & stand alone community lifestyle began to be noted.

The pleasing microclimate, here, was also a factor (known as cool Mediterranean).

The Islands Trust’s “preserve & protect” mandate, which capped densities on all of the Gulf Islands, including on Salt Spring Island, inadvertently created a higher priced marketplace.

It may not have been their intention to do this. To preserve the park like atmosphere of the Gulf Islands, for the benefit of all of B.C. may have been their reason for coming into being,

but the outcome of these rules prohibiting growth means that the old maxim of “supply and demand” has come into being, too.

The Gulf Islands, including Salt Spring Island, have seen substantial price increases, in recent years, due to the stringent controls on density, put in place by the Islands Trust, in the mid- 70s.

The allure of the Pacific Northwest Coast, and the extra charm of the Gulf Islands, means that we’ve been “discovered”, as an area, in some fashion, & discovered by a “global audience”.

There’s a limited amount of land available for development, on any Gulf Island, because of the Islands Trust’s mandate.

It seems, as one encounters Salt Spring and the Southern Gulf Islands, that they are very close to what I term the “wall of no more”. As one drives around the Island, today, one is seeing it as it will always be — some new areas may be opened up, but they won’t be visible from the main roads, and the Island is pretty well its “essential self”, now.

Price escalation, in the end, will be inevitable because of the cap on density.

Markets are cyclical in nature, of course, and there will be ups and downs in the “hard asset” marketplace of real estate. If one is lucky enough to be a homeowner on this special and beautiful Island, though, it is a gift for the future to one’s family. It is an investment of a different kind.

The Salt Spring real estate market, though, over the years that I’ve been on the Island, seems to have evolved into a secondary home marketplace.

At the moment, most purchases are second or third home alternatives. Busy people, with main lives “elsewhere”, can’t just immediately “arrive” and stay.

They may end up calling this their principal residence, but it doesn’t often start that way. There may be landed immigrant issues, too — to be here year round requires further conversations, perhaps with an immigration lawyer. It is a mainly out of province purchaser profile, and they cannot always “be here”, full time, to begin with.

All of these shifts create change

Thales once commented, in Ancient Greece, that

one never dips one’s toe in the same river water, twice.

Change is the only constant, other philosophers state. In change is opportunity, perhaps.

Whether Islanders care for this concept or not, change has occurred, steadily, over the past several years. Salt Spring is not a backwater, although it does owe the Trust a debt of thanks for having retained its essential “rural charm,” in these past years.

Realtors are able to be “interpreters” of change, as they are often, just like mortgage brokers and appraisers, in the “front line” of shifting markets. They aren’t the creators of change, though.

With the pressure “on” to allow more development, on the Island, as a result of the desire of some property holders to subdivide, and the desire of the Trust to fulfill its mandate of “to preserve & protect“, and, at the same time, reflecting the growth in population in this unincorporated area, the Island does face some interesting challenges, at this moment in time.

Affordable housing, an aging population, a wish to attract a seasonal recreational visitor and to create a viable business core in the commercial sector, etc. etc. — these are concerns and suggestions of and from Islanders.