Market Analysis

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

August 2013, Market Analysis

August 2013, Market Analysis

An improving real estate sales trend continues to slowly build into place, on Salt Spring & the Southern Gulf Islands. The same improvement in sales is occurring on Vancouver Island…it’s a secondary home marketplace uptick, then. Prices still remain volatile.

Word from south of the border is that all those hard hit areas (Florida, Arizona, California, etc) have been experiencing a significant uptick in both sales volume and in price points. Inventory levels have been reducing. This encouraging stats report from the U.S. is now encompassing the secondary home/discretionary markets (Vail, Aspen, Tahoe, et al), not just primary residence areas.
Blue Sky
Very recently, the upper tier priced properties in the recreational marketplaces, also in the U.S., have been finding significant buyers/sale pricings. This secondary home recovery is good news for all “by choice” destination locations, and that would include the Gulf Islands.

It’s important to pay attention to this significant improvement in sales activity for our near neighbour…Canada does track events and outcomes in the U.S. It’s about general consumer confidence.

In our post-Internet world, real estate is less regional in outcomes, particularly in the secondary home/recreational markets. The buyer profile in any discretionary marketplace tends not to be “local”.

The Internet has opened up the world as a potential buyer for any recreational based region, but it has also created a “pause” while that global buyer searches out all possible areas. No one wants to make a mistake…thus, the buyer takes time, searches out various locales, often returns two or three times to the places that caught attention…& then may finally “act”. Time truly is a component in all sales, then, in discretionary markets, regardless of market trend in play.

The Pacific Northwest Coast tends to be a tail of the dog location. Last up/last down/last back up…the uptick momentum is just now being felt.

At this midpoint in the year, it’s good to take a snapshot of outcomes.

On Salt Spring & the Southern Gulf Islands, this is also the beginning of what has evolved into our main sales window. Our market has truncated down to a mid-July to mid-November window…a late Summer/Fall market, then. Surprisingly, the Spring months are no longer as busy as in previous times. Perhaps the travel patterns of our tourist visitors have changed?

Tourism, in all recreational locations, drives other business outcomes. Someone visits Salt Spring or Galiano or Mayne, falls in love with that Island, then decides to call a realtor and to buy a property…then architects, contractors, excavator operators, septic installers, electricians, plumbers all get busy, too. Plus landscapers, gardeners, cleaners, soft furnishings providers, and so on. Resorts, B&Bs, hotel, motel, restaurants, retail stores…they are busy with tourist arrivals and also with residents and guests.

A recreational/retirement region depends on that tourism buoyancy to experience real estate volumes and then other ensuing business activity.

The past 5 to 6 years globally have been about economic suppression, and discretionary locations around the world saw plunging real estate values and business closures. No one “has to” buy a second or retirement or recreational property. An economic suppression means a real estate downturn, in secondary home environments.

So what might be driving this renewed interest in discretionary markets? Is it a safe haven investment move? A seeking to preserve capital? Perhaps….

Markets rise & fall…like waves on the ocean. In 2006 we began to fall down into the trough of a downturn…which became hugely evident in late 2008. Now we seem to be climbing up the other side of that wall of water. A recovery is not a straight line up…more like ladders between flat benchland. Up/flat/up/flat…takes time, then, for all property types and all price points, to see consistent uptick.

The good news: things are improving. The difficult news? It’s not a fast-track uptick. It may take until early spring 2014 to see consistent uptrend in the secondary home marketplace, and it may take until summer/fall of 2014 to see uptick in undeveloped land, commercial, and upper tier priced residential sales.

We are so lucky to be owners on Salt Spring Island or on another Southern Gulf Island. Buyers seeking what we own will also be very lucky.

July 2013, Market Analysis

Secondary Home Market’s Afoot?

I found it very interesting to read a June release forecast, on the summer season sales projection, for secondary home markets…from a major real estate franchise in Canada.

A client phoned me up & read it to me…sounded just like one of my much earlier monthly market analyses or some of my various daily blog reports! Check out some of my past thoughts.

I have been projecting, since last August, that it would take until July this year to see a resurgence of interest in secondary home/discretionary regions. I think I am being proved right, & I am not a clairvoyant.

These “by choice” resort-based areas have been “flat”, globally, since mid-2007. Now, movement is afoot! No one can force a market…it has a natural cyclic rhythm. Now, it is with us.

No one “has to” purchase a second home

No one “has to” purchase a second home or retire in any particular timeframe or choose a recreational parcel…such purchasing decisions can be put on hold.

Consumer confidence is the key to secondary home market activity.

Can also be a market movement propelled by fear, though…in this case, might be a concern about currency validity and the preservation of capital…& perhaps even a desire for a safe haven, to be self-sufficient.

For whatever reason this action has started, this report notes that prices have been substantially reduced between 2009 & current date, in secondary home marketplaces, and so the properties selling are perceived to be hugely undervalued. Foreign buyers are apparently a large proportion of the purchasers.

A return to hard asset investments (& real estate, though not liquid, is a big item here) is clearly on the radar.

The Islands Trust

Salt Spring Island & the Gulf Islands are under the jurisdiction of the provincial government’s Islands Trust. This Trust has been in place since 1974, & it severely controls growth through strict land use/density bylaws. Call me, for more information on this.

When one has a growth-controlled model in place, a government mandated body with a “preserve & protect” guideline, and in an area of beauty, soft climate, great protected boating waters, close to major centres and yet beautifully “apart”, one also has the potential to become a global destination for those seeking amenities plus a safe haven lifestyle. What did economics 101 teach? Supply & demand? Hmmm….

I think we will see a strong clearing out of inventory over our season (which has shrunk to July/August/September/October now), with prices remaining volatile. As inventory clears out, though, stability in pricing will follow…will we see substantial price increases by early 2014? Perhaps….

It’s important to me that you enjoy a successful real estate experience on Salt Spring Island, on a Gulf Island, and on Vancouver Island…for all your real estate needs, please call me…discover the difference!

June 2013, Market Analysis

June 2013, Market Analysis

Here we are in June…the half way point in this oddly (to date) haphazard sales year.

In 2012, the majority of sales were in the entry level residential category, and sales took place right from early January. That was unusual, as normally March Break begins a sales pattern. A very few upper tier priced residential options did sell in 2012, but at markedly lower prices than sellers might have hoped for, and these were mainly waterfront choices.

Entry Level Residential Sales Remain Unchanged

To date, in 2013, this pattern of entry level residential sales remains unchanged, although sales did not begin to broadly appear until closer to March…a more typical action.

Galiano 2 Homes & 2 Docks

Galiano 2 Homes & 2 Docks

The bulk of sales remain in that beginning priced residential segment and, again, a very few upper tier priced residential offerings, still mainly waterfront choices, have found buyers.

Many of these waterfront sales, in both 2012 & this year to date, had been on the market for 2 to 7 years, had seen substantial reductions over time, & then received a further reduction at the offer point. In other words, the buyer was in charge of the process.

Price reductions of a substantial nature continue to come in, on a consistent basis, from some realty companies. This may have more to do with the need of that realty company to generate income to balance the very expensive outgoing costs of being in the real estate business.

Local Market Manipulation

Local market manipulation is a real thing, however, and all sellers have to respond to this in an effort to remain competitive in pricings…a series of reductions from one company will then, in the end, impact listings prices from all companies.

A very few undeveloped land options have sold this year, and that is a heartening sign. I always think that sales of raw land are a true indicator of an authentic real estate recovery in our kind of secondary home/discretionary marketplace. In a downmarket, the few buyers around are attracted by rental or income producing options…thus, raw land can be overlooked.

Our Gulf Islands sales window has shrunk to May to October. People may make offers at any time…chances are, though, that they viewed during this narrow timeline of physicality.

It may take until August to understand this year’s market pattern, as there are not enough sales yet to point to a trend. All we can say is that sales volume continues as in 2012, and that there are a lot of choices in residential offerings over 600,000.

Property Inquiries on the Rise

Inquiries do appear to be on the increase, and that’s a good sign! Physicality will follow. Some new listings, in the waterfront segment, are coming onstream at 2007 price points. That is also interesting….

The Gulf Islands form of governance is the Islands Trust. Created in 1974, with a mandate of “to preserve & protect” the environmental beauties of these islands, for the benefit of all B.C. residents, this Trust thus controls growth via severe zoning/bylaw restrictions.

So…sounds like limited inventory, over time, to me.

What’s Next?

As we climb out of the downturn that has gripped all secondary home markets since mid-2007, we will start to encounter a lack of inventory, based on this non-growth Trust stance…just as buyers are once again seeking places to preserve their capital.

Sounds like sellers market conditions are reappearing, in other areas. Multiple offers are being reported in busy primary residence regions. Hmmm….

Important to be paying attention to the shift moment, whether as a seller or a buyer, at this mid-way point between market trends.

Yes, very essential to know the past sales, but also important to recognize the uptick. Pricing by a seller & offered price by a buyer, at such a mixed time, are both needing extra thought.

So, the Gulf Islands (including Salt Spring) have bylaws that control/restrict growth. Plus the real estate market in secondary home/discretionary regions may be entering a recovery…in year 8 of an 8 to 10 year cycle? Buyers have again decided to act. The driver to buyer action may be a safe haven seeking…a hard asset purchase to preserve capital.

Prices have not yet stabilized, but this is just the beginning of our “season”…May to October…will prices be showing firming, by September? Hmmm….

The supply & demand rule is the marker of change.

Important to be paying attention to the “now”, and not to the flatness of the past 5 to 6 years. No rear view mirror reflections, then. We need to be looking ahead.

In change lies opportunity.

May 2013, Market Analysis

Ch-Ann

Recently watched a cable t.v. knowledge network style bio on a local game designer…he was one of a few game programmers/designers to be given new virtual tour equipment, to see what kind of game he could come up with, in using it. Wow! There’s the 21st century for you. A small town techie on a par with silicon valley style locations.

Beyond the “anyone anywhere can invent the future” scenario, though, lives (perhaps) the next great thing.

If within 2 to 5 years virtual reality will be seamless & everywhere, a guesstimate by this game designer, then why will we need real malls, real storefronts, real showrooms, real offices…already the retail world is moving online, the most recent recipient of that Internet eraser.

Salt Spring Island

Salt Spring Island


What will our world look like in 5 years, when this gamer thinks virtual reality will be mainstream?

Will we need real schools? Will we have offices seemingly “there”, but just virtual versions? Retail will be virtual? What will home designs look like?

Hmmm…ok imagineers, it’s change that brings opportunity. Time to be creatively thinking.

And specifically, as it’s my current world, what effect will virtual reality have on real estate marketing?

And your thoughts are? Always welcome!

Locally, our real estate sales window has now become May, June, July, August, September…with the reminder that the first three weeks of June are always quiet.

A short and intense timeline, thus. People search all the time & year round, so it’s important to “be there”, on all the internet opportunities. Otherwise, areas won’t be discovered…people won’t come. So, marketing is a year round business and physicality is a 6 month affair with 3 months being the busiest. Hmmm….

In 2012, we saw a substantial increase in sales volume in entry level residential options. In the main, sales were below 400,000…best described as investments, with rental potential. Prices were not stable and reductions continued, in that search for the bottom. A handful of sales in higher end properties, towards year’s end, in waterfronts, was perhaps a sign of a move back into authentic real estate investment in unique areas. Many of these offerings had been on market for 4 to 7 years, & in spite of reductions in price, en route, there were further reductions at point of the offer.

The first quarter of 2013 has been oddly flat in sales. It may be that a digesting moment is underway: concerns over currency instability, the perceived over-creation of paper monies, banks not easily lending, the Cyprus issue, the threat of terrorism in North America, the intermingling of inflation & deflation scenarios, the search for a safe haven, the desire for sustainability…it’s a mix of all things, and the bottom line could be a flight to hard asset investment as a way to preserve capital.

Safe Haven Investing is my name for it, and Salt Spring Island & the Gulf Islands are beautifully positioned to deliver on this requirement: proximity plus being “apart”.

In many U.S. States, real estate has become very buoyant, with approximately 40% of sales to international buyers. And they are mainly cash sales.

I always feel that our area follows such statistics within 4 to 6 months. Thus, we may see this rush back to property by late July/early August…and there is not a large inventory of listings, as soon as one prioritizes type & price. Hmmm….

Treading water in May/June is perhaps a good idea. The trend for this year is just developing now.

If needing a sale, perhaps try to hang on till mid-July. Things are just starting to clarify.

If a buyer, an alert that the buyers conditions of the past 4 to 5 years may almost be over. These weeks may be the last time to discover a good residential offering at a price that recognizes the buyer point of view.

In either case, change is underway & is happening right now.

Hmmm. In change lies opportunity.

April 2013, Market Analysis

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.

So…what happened?

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!

March 2013, Market Analysis, Salt Spring

In like a lamb, out like a lion…

love those weather lore quotes. Always said with firmness, as if weather is a known quantity, unchanging, to be counted on.

March hovers between winter’s grey and Spring’s allure. This might be the year where we are gifted with one of those delectable Pacific Northwest Coast early Spring moments…fingers crossed.

A change of seasons is always welcome. Other changes may not be so pleasing. Attitude decides, perhaps?

Our moment in time seems to be about nothing but change, where suddenly what used to work no longer does.

The eraser of the Internet just keeps brushing through all of society, wiping clean earlier solidities.

That search engine eye never sleeps. Anyone anywhere (if governments allow it) can seek and find. Suddenly the seeker of information is in control of the process.

We can buy cars via an Internet search. We can buy stocks through Internet trades, do our banking online, purchase gifts and groceries and household items online, discover real estate choices via Internet marketing, make travel arrangements and accommodation bookings online, pay bills, meet significant others, and take part in online delivered education choices. Medical appointments dealt with virtually, books and music purchased and enjoyed online, business webinars held in lieu of flights to meetings in central locations…there is no aspect of our business and personal lives untouched by the impact of the Internet. Retail storefronts are abandoning their fixed locations and easing into online versions. What does this mean for commercial malls? What about the disguises offered by virtual worlds?

Two realities are meshing…face to face and virtual meet-ups. Isn’t that what social media is all about? Is one encounter better than the other?

Hybrid pre-Internet beings are betwixt and between, able to speak both Twentieth Century dialect and Twenty-First lingo. Post-Internet inhabitants don’t understand what all the fuss is about…it’s all just the surround sound of our time…the wallpaper, if you will, and not to be paid attention to.

So, a table of diners in a restaurant are observed flowing between texting those not present on that ubiquitous smart phone and chatting to each other…often at the same time. People walk along texting or checking emails or making calls. Laws are passed to prohibit driving and texting or using a cell phone, at the same time.

That smart phone blurs the physical and the mind’s eye, floating us between here and there, and effortlessly so.

Neither good nor bad…just what is.

Language is an elastic communication device, and as Marshall McLuhan reminded us: “the medium is the message”. So what if twitter and texting prescribe short-hand symbols? As long as the messaging is understood by the recipient, does it matter?

We live in a time when everything is still available to us, pre and post Internet styles seemingly evenly weighted. The terrain continues to quickly evolve. Still a brief time left to enjoy this moment of shift, between two world views.

Oh, yes…all you hybrid beings out there: how long did it take you to figure out LOL?

Laughter, remember, is essential at the cellular level. Out loud is just fine with me.