Market Analysis

Salt Spring Island real estate in depth monthly analysis by Sea to Sky Properties’ broker, Li Read

December, 2011, Salt Spring Island, BC

December, 2011.

The end of the year is a time to both look back, as a kind of summing up, with the benefit of hind-sight, and also a time to look forward, to dare a little, to make some projections.

The hind-sight part:

On looking back, it’s clear that entry level residential was the flavour of the month, IF a buyer could be encouraged to act. When I look at the “solds to date” info, for 2011, I can see that the bulk of the sales have been below $650,000. What doesn’t show on my “solds to date” info is the price reduction track…it only shows last list price plus the sold price. (Please call me for this definitive list…other solds info might be Board specific…mine shows the total sales picture).

The sales over $800,000 (few of them) tended to be waterfront options…many needing work to the dwellings…not move in ready…or, perhaps cottage/retreat, not “house” options.

In a down market, both fine oceanviews and undeveloped land options suffer.

When pricings come down by 30% (this is what appraisers surmise, between mid-2007 & present day), then the spread between fixer upper oceanfront and fine oceanview narrows. We are an island, and so the first choice is always oceanfront. Buyers will pick up a fixer-upper before they will view a state of the art oceanview option…ah, the water, the water!

The lack of interest in undeveloped land choices, no matter how delectable, even superb oceanfront options, is another indicator of a downmarket moment.

In a secondary home/discretionary marketplace (which describes Salt Spring Island & all Gulf Islands, plus Vancouver Island outside of core Victoria, the Sunshine Coast, & many of the B.C. Interior communities) no one “has to” buy anything…it’s all by choice, and the buyer is in control of the entire process, both the “where” and the “when” of all purchases.

In a downmarket, a buyer can put a second home, a recreational, a retirement choice “on hold”, thus.

An entry level price point purchase is either an opportunity for a local to buy (3 bed/2 bath home is the desire) or an investor looking for rental income might also act. It’s not necessarily an end user.

So, that’s the hind-sight view: for the past three years, the activity has been in entry level residential. The price of this has come up from $400,000 to $650,000, however, and this is a good sign.

No interest in undeveloped land (no one looking for a holding property, no one looking to build), no interest in businesses or in commercial/investment options, and little interest in the upper end residential pricings (any sales, and very few of them, saw huge price reductions at the point of the offer, even after significant price reductions en route to the sale)…typical scenario, then, of a downmarket syndrome in a discretionary area.

It seems to be widely agreed now that the U.S. Recession had begun in 2007. It’s also evident now that secondary home/discretionary areas, and globally so, had flattened in 2006. The Wall Street Journal, in January 2007, noted that all discretionary markets had become stable/inactive in 2006…meaning that inventory & pricing was stable & buyers were inactive. This inactive buyer scenario has been in place, in secondary home/resort based areas, from 2006 to present day.

Are we then in year six of a seven year cycle, and thus already on our way up?

Hmmm…wish someone could produce the crystal ball!

It is true that we are in a time of huge shift, and societally so. Economics is the pied piper, and the continuing geopolitical meltdowns continue. No business is exempt from the effects of the Internet, which has placed decisions in the consumer’s hand, and also has opened up the factor that someplace is now in competition with everyplace, re real estate options. It’s almost a given that if something “worked”, in business, even five years ago, it won’t now. No roadmap, then.

Downgrading of the U.S., Eurozone incipient collapses, the rise of China, the bailouts (money being printed?), earthquakes that cause economic loss as well as lives, severe weather problems, Arab Spring revolutions that upset 30 & 40 year patterns, the re-emergence of an autocratic Russia, etc etc etc…no place is exempt from the repercussions of change.

It used to be said that real estate was local…this is less and less true. The post-Internet world is the world of the meshed global village, and every place is affected and is in competition with every other place.

Different days!

The projection part?

Ah…now that is a daring thing to attempt, in this cloudy time of uncertainty. Would we call this moment the Age of Insecurity?

Let’s dare:

– if we are in year six of a seven year cycle then we should notice thinning inventory and increasing sales, perhaps by Spring, 2012.

– when inventory of good properties thins, and the buyer sees good value in buying real estate, most likely to preserve capital, then prices will start to rise.

– the sale of undeveloped land choices may signal this shift of market dynamics. If good residential inventory thins, then it makes better sense to seek land deals and to build, rather than to renovate severely a so-so option.

– with the continued bailouts, inflation may be the outcome to the past four years of maybe yes (inflation) / maybe no (deflation) debates. If so, buyers may choose discretionary real estate again, as that preservation of capital move…unique properties will be their quest.

– people may also look again at smaller communities, well apart from big city pressures…where sustainability is possible. The recent occupy movements, which crystalized diffuse anger, may encourage a seeking of a safe haven….

An aging population, a desire for a gentler lifestyle, a seeking of a location that offers the ability to enjoy the pleasures of life in the wired world of the 21st Century while still retaining the bliss of a “yesteryear” experience (of appeal to a young family), where all strata of a population and all demographics mingle…sounds a lot like a search for Salt Spring Island, or a nearby Southern Gulf Island…temperate climate, sustainable lifestyle, educational opportunities, rich cultural options, in the heart of the best protected boating waters in the world…it is special.

How may I help you to discover this lovely area? Benefit from my expertise and knowledge, of both inventory and of market trends. A full time and full service real estate agent, successfully connecting sellers with buyers, since 1989, I await your call.

How may I help you to buy your Salt Spring Island or Southern Gulf Island property?

November 2011, Salt Spring Island, BC

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November, 2011.

At this time of year, it’s a mix of settling into a softer season, with an emphasis on holiday celebrations, with family & friends, and also a time for business planning for the following year.

I often think of November, December, January as the “fallow field” moment…we drop inward, to the root level of our lives, the surface appearing quiet, not much happening, and yet below ground there’s all that prepping for the next phase…a “getting ready for the new” time.

It’s essential to look back, to take stock…an inventory check is always important. Then it’s a plan focused on going forward, encouraging new momentum, using what still works while creating new paths.

This is a very buoyant shift moment in time, with a technology explosion that continues to erase old business models…anyone of us is capable of rewriting the business plan in order to be creatively current.

A good idea, then, to use this fallow field segment in our year, to make sure we’re swimming in the pool of now, and not hanging onto past methodologies. That means making sure all our systems are proactively using technology and that we are also reconfiguring our systems to benefit the consumer.

The consumer is now enabled and is in control of information outcomes. It’s a pull forward concept, not a push out plan. Profound shift….

Global economic uncertainties abound, still. Perhaps the insecure scenario is the surround sound for our time…perhaps shift, instability, upheaval, change is the ground we now walk upon? Important, then, to remember to “flow”…trying to stop a flood means we’ll be swept under. “Go with the flow” was the old hippie ethic, and it’s one to remember.

A good idea to go for a 15 minute walk, every day, to experience physical movement in the natural world. At this time of year, where trees are stripped of leaves and nature is pared down to its essentials, we can be inspired to be thoughtful and so to catch at our particular pathway forward. This kind of rhythmic pause is a form of walking meditation, and may be helpful in awakening our editing function.

Easter Island Ahu Tongariki

Easter Island

In change lies opportunity. We need to be a little quieter so “our” opportunity can come forward…this fallow field moment at year’s end allows us to calm, and then to go forward, renewed. That’s when we will notice our individual opportunities.

Big picture concerns out there, of course…government bailouts, debt defaults, currency instability worries, societal breakdowns, deflation vs inflation arguments, and at the end of October, the seven billionth human was born. Food, water, a safe place to live, health care, education…the same needs to be met, for all of us. In Africa, the bulk of the population is under 16. Interesting….

So important, though, to practice peripheral vision, and not to fall into the tunnel vision encouraged by the “shout media”. Peripheral vision captures the creative response that leads to discovery and that is the pathway out of fear. A time of shift/change is unsettling…remember the mantra: go with the flow.

In this lovely Pacific Northwest Coast area, we are lucky to be surrounded by natural beauty, in a protected & still quite pristine region…remembering the attitude of gratitude is important at this time of year, too.

Looking to relocate to a Salt Spring Island or a Southern Gulf Island or Southern Vancouver Island property? Call me! Good choice of properties in all prices/types, continuing low interest rates, prices reduced substantially over the past three years, a very pleasing lifestyle opportunity…a time to step forward, as a buyer.

I look forward to sharing my knowledge, of both inventory and of market trends, with you…maps, information on all listed properties, links to professionals to advise on immigration & legal issues, a full service real estate experience, to benefit you. I look forward to helping you to discover this beautiful area!

How may I help you to buy your Gulf Island / Salt Spring Island property? Call me!

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October 2011 | Salt Spring Island Market Analysis

October, 2011.

It’s Harvest Time…also, in the business cycle, it’s now the fourth quarter.

The general dishevelment of this “real” 21st Century remains with us all.

Yes, in a way real estate remains localized. It’s the item we know, if we’re local.

In another, it’s not…global issues afflict all regions, no area is exempt from big picture events and economic concerns, and, in the localized moment, the mainly non-local consumer of a secondary home/discretionary and possibly resort based item can put ownership decisions on hold…it’s about consumer confidence, of course!

That Internet, the platform we now all rest upon, changed the terrain of perception forever. It erased time and geography, created McLuhan’s “global village”, and made “someplace” become in competition with “every place”, as the world citizen consumer looked around for “their” retreat space.

This all happened at the same time as financial institutions commoditized housing…the greater fool concept was unleashed, and look where that got us (and globally so…nowhere is exempt, remember). That butterfly effect is in play….

Markets have cycles. There is a theory that real estate trends have a seven year cycle. In looking back, it’s clear that things went into “pause mode”, for secondary home/recreational markets, in early 2006. Sales volume flattened and by early 2008 sale pricing had begun its downward track. The economic collapse of Fall 2008 was just the outward face of what had begun in 2006. If the seven year cycle theory is correct, then we’re in year six…at the subterranean level, perhaps we are already on the way up!

Well…maybe!

What we do know, in secondary home markets, and that includes Salt Spring Island and the Gulf Islands, is the following:

  • – good inventory choice in properties.
  • – significant & impressive price reductions (30 to 50%, depending on location and property type).
  • – historically low interest rates available re mortgage financing.
  • – motivated sellers, willing to look at serious offers, even when a further price reduction is involved, at the point of the offer.
  • – a growing sense that inflationary pressures will be the outcome of the debt crisis issues…the hard asset protection of capital becomes of interest.

Hmmm…sounds like this might be the best buyer’s market scenario in many years! Listening, buyers?

For quality information, expertise, with valuable knowledge of both inventory and of market trends, and a sincere desire that buyers achieve their ownership dream, please call me…I look forward to connecting with you.

September 2011 | Salt Spring Island Market Analysis

September, 2011.

Salt Spring Real Estate Market Update

As we are daily reminded: the only constant in life is change.

It’s also true that in change lies opportunity.

Our post-Internet time has obliterated time and so there is both no time, as in time famine, and also always time, as in never off.

With the search engine never asleep, and anything you want to know just a keystroke away, the power of the search now resides with the searcher…that means the consumer, in a sales situation.

Switzerland

Switzerland via NASA (and flickr.com)

This has huge impact on all real estate in secondary home/discretionary areas, where the Internet has erased both time and geography, and where someplace is now in competition with everyplace…it becomes essential to market the area itself as well as the property located there.

someplace is now in competition with everyplace…

This encourages time lags in decision-making…the buyer has to first discover the area, then visit, then think about what it means to his/her lifestyle, compare it to other options, and then has to focus in on the actual properties of potential interest in the chosen area.

Time is a factor..,perhaps a purchase will take from one to five years in a discretionary area. If it seems to happen more quickly, it may simply mean that the buyer has already been through the above process, may be back for a third “look”, with months between visits, when suddenly a desired property comes on the market, at same time. That can happen!

Patience plus international marketing is the key for secondary home/discretionary/resort based regions..,and globally so.

We are now residing in Marshall McLuhan’s “global village”…a local buyer for a Gulf Island property might come out of Vancouver or Calgary or San Francisco or Toronto or Shanghai or Sidney or Auckland or London or Bern or..,you get the drift! “Local” doesn’t mean in your own backyard, anymore.

Throw in up or down market trends, currency valuations, deflation/inflation arguments…and there’s more “time lag” components!

Over time, an investment in a secondary home/discretionary area will appreciate…it’s a “long tail” investment, though, never a fix & flip.

As soon as a consumer is in charge of a process, time is a companion in a sales situation.

More info? Call me! And your thoughts are? Always welcome!

How may I help you buy your special Salt Spring Island or Southern Gulf Islands opportunity?

Call me!

August 2011 | Salt Spring Market Analysis

Copyright, Li Read, 2011

August, 2011.

Each month that passes, since that October to February 2010/11 timeframe, which may be looked back at as a “transition moment”, shows continuing slow but steady improvement in both showings action and in sales.

It is true that the main sales activity falls into what might be described as entry level residential. To date, undeveloped land, commercial/business options, cottage/retreat properties, and upper tier priced residential opportunities, remain “flat”.

It’s interesting to note, though, that the entry level pricings that found buyers, in 2009, were below $450,000. By 2010, this had crept up to $650,000. Now, we are seeing sales in the low to mid-700s.

There are random encounters in the $900,000 to 1.8 million range, with the higher tier being found in the oceanfront residential options, but they are few and far between, with little pattern developing as to a trend.

Price reductions have been a feature of our secondary home/discretionary marketplace for the past two to three years. Until very recently, these reductions did not result in more viewings or in offers. The buyer remained reluctant.

However. since it is essential to be seen as competitive in pricing, most sellers did reduce substantially over the past 18 month period. Some appraises feel that we reduced in pricings by around 30%, between mid-2007 and current date. With so few sales to point to, though, in any one category, it’s difficult to rely on this totally.

As of July 22nd, the weekly solds to date for 2011 saw the bulk of sales in residential, up to $680,000 (72 in total, up to $700,000, with over 50 of these sales coming in under $500,000). There were seven sales between $700,000 and $900,000. There were four sales between $900,000 and one million. Another four sales between one and two million. Only one sale over two million.

In most secondary home/discretionary regions, globally, there is always an inverted pyramid, I think, with the “affordable” entry level residential being a smaller inventory, and the higher end/luxury options being the majority…a different circumstance from a primary residence/city market.

In all discretionary regions, it has been slow in sales since early 2006. In January, 2007, the Wall Street Journal did note that all secondary markets were “stable/inactive” throughout 2006…they meant by this that inventory and prices remained stable and the buyer had become inactive.

So, in spite of all the worries afoot in our post-internet time, with change the constant mantra for all business, there are still cyclical patterns in markets…this is true for the stock market side of investment, and also so for the hard asset options (including real estate).

Although the city markets may not have calmed until late 2007/early 2008, Salt Spring and the Gulf Islands followed the global trend in all discretionary markets…we were “on hold” from that early 2006 moment. No one “has to” buy a second home or a retreat property or a future retirement option in any particular timeframe. It is always by choice. Since early 2006, then, the reluctant buyer syndrome has been present in all similar discretionary areas, around the world…the Fall, 2008 economic meltdowns just solidified for everyone/all markets just what that early hesitation dance had been about, in the secondary home / resort based regions.

Throughout 2009/2010, the sales were slow, were only residential, and mainly entry level pricings. In a downturn, no one is looking for a holding option or a building opportunity, and so undeveloped land does not attract interest. Houses are viewed (3 bed/2 bath), and that means a lack of interest in a recreational/cottage purchase. Higher priced residential lingers, too, as people hold cash…sometimes hoping that prices will come down further, and sometimes out of concern that cash is best to keep, if deflation wins out over the inflation scenario. That “argument” continues!

Underneath all of that worry over currency instability, and a seeking of a safe haven, which might be the driver to action in the rural and secondary home marketplaces right now, there is that cyclical nature of all markets. We may actually be in year six of a seven year cycle, which means we’re already on the way up. Savvy investor buyers may be acting now, while prices remain very soft, sellers are highly motivated, interest rates remain historically low, and there is good inventory choice in all property types/price ranges. Such purchasers may be of the opinion that the inflation scenario will be the winner of this lengthy argument between two outcomes…deflation vs inflation.

Whatever the reason, there is a difference out there right now. Locally, and for the first time in two years, we are seeing consistent interest, with physicality on Island to view options, not just phone calls or emails or facebook inquiries. In the viewing, it doesn’t mean an offer will come in, but the viewing has to happen first…good news, then, that there is this uptick.

Tourism has also increased, after a good two years of inaction. The marinas are busy with boaters, the galleries and markets in the park are busier, B & Bs and restaurants are busier, and the general “verve” of the Island does seem to have returned to 2007 levels. Good news all the way around, then.

Slow, yes, but it is steadily processing onward, and if this is year six, then we will see next year turning out to be very active and a start into Seller’s Market conditions again.

Nothing stays up or down, and equilibrium is a passing aspect…the sign of a transition moment. Perhaps that’s where we are, right this second?

Hmmm….

It appears, as well, that our local market will be brisk throughout August, September, October, and possibly into early November. A later / longer trend for this year. Perhaps a part of the year six moving into seven scenario? Always welcome your thoughts, too!

Looking for a Salt Spring Island or Southern Gulf Islands property? Call me! Successfully connecting buyers with sellers, since 1989, I look forward to bringing my expertise and knowledge (of both inventory and trends) to your benefit.

How may I help you to buy your special Island property?

July 2011 | Salt Spring Island Market Analysis

July, 2011.

Well, here it is…the “real season” has begun!

In the past, there used to be 3 “seasons” on Salt Spring & the Southern Gulf Islands: a short early Spring (Feb/March/early April), Summer (late May to early September), and the “off season” (October to January).

Tourism worked hard to keep activity consistent…events to bring attention to the Islands were stressing the “shoulder season” moments…different days, now!

Post-Internet, seasonality has been heightened. Someplace has become in competition with every place. The season in our region has shrunk to July/August/September, perhaps into early October.

The Gulf Islands/Salt Spring Island are not viewed as alluring winter venues…they are now seen as summer places.

The tourist visitor and prospective buyer (complementary streams of arrivals) go to Tucson, Palm Desert, Maui, Cabo…or the Caribbean…in the winter and enjoy the Pacific Northwest Coast in the summer…a skier might have a fractional ownership condo in Whistler or its equivalent, but main winter holidays would be in a sunny locale.

The Internet erased time & geography, & created Marshall McLuhan’s proposed “global village”.

Someone in the U.K. can enjoy a home in Spain, for winter vacations or seasonal retirement. Someone in Texas can escape the searing summer heat by retreating to a summer home on Salt Spring Island.

You get the drift…the entire world is now available to anyone…Chinese buying in Vancouver…or in Australia…or in Paris. Albertans buying in Scottsdale or Palm Springs . Brazilians buying in Florida….

What did I say? Some place is now in competition with every place?

It is essential to market to a breadth of potentials, to get the information out to where the buyer “is”…& then to create interest in the specific area, so that the buyer will choose the Island over Tofino or Qualicum or Sechelt or Kelowna or…anywhere at all.

Why here? Why not there? Time lags become more evident, as choice grows!

This is an amazingly beautiful part of the world, & the Southern Gulf Islands are in the heart of the best protected boating waters in this world.

The form of government, the Islands Trust, has a mandate of “to preserve & protect“, the environmental beauties of these island gems, for the benefit of all B.C. residents…their bylaws/zonings control growth.

No market stays up or down, and rarely “holds” in equilibrium. In the cyclical nature of a market, we may be in year six of a seven year downturn…which means we’re already on the way back up.

It may be that we will look back & decide that Sept/October, 2010, were the “bottom-bottom” of the market…certainly, savvy investor buyers were active then.

It’s not too late to act. Low interest rates for now, still motivated sellers, good inventory to choose from, price reductions around 30% from 2007 to present day…all of the above intertwined with a seeking of a safe haven and a concern over currency instability…sounds like an ideal time to turn to a good hard asset investment, for preservation of capital.

Hmmm…the societal shifts delivered by the Internet continue to work themselves out, and no endeavor is untouched.

Looking for your Island paradise? Call me! Successfully connecting sellers and buyers, on Salt Spring & on the Southern Gulf Islands, since 1989, it’s important to me that your best interests are promoted…I look forward to bringing my knowledge & expertise to your benefit.

Farms, waterfronts, acreages, view properties, commercial enterprises, investments for appreciation, private islands…I look forward to introducing you to your special opportunity.

How may I help you to buy your special Salt Spring Island or Gulf Island property?

Copyright, Li Read, 2011