Salt Spring Island Real Estate | May, 2011.

Some market “thoughts”…

So, our first “third” is over…January to April. Now begins our real
sales season: May to September.

Potential buyers now arrive physically on island, to view what may have
caught their attention at an earlier moment, either from a targeted
specialty print ad displayed where they live or from an Internet search,
and they may decide to make an offer at a later moment, but the main time
period for viewings falls between mid-May and mid-September.

Essential to be presented to the market throughout the year, though, even
when the buyers aren’t physically present to view…the search engine eye
is never closed.

Time and geography have been erased by the Internet. The buyer is “out
there”, seeking, and so a seller must be visible, at all times.

No time/always time…never “off”.

Sellers and realtors need patience..,the buyer is in charge of the where
and the when of a transaction process in a secondary home/discretionary
area.

No one “has to” buy on any Gulf Island, it’s all a decision about
choice…there is no propeller to action.

Choice of which island and where on a specific island and when to commit
to a purchase…it’s all up to the buyer. In a downmarket, a decision to
buy a second or a retirement home can be put “on hold”.

There are whisperings of action in all discretionary areas, this year, in
residential offerings, and this includes the Gulf Islands marketplace.

Undeveloped land, commercial options, recreational/retreat choices remain
quiet. Step-in ready homes, not “fixer-uppers” are catching the attention
of the reluctant buyer. The main action is still seen in the entry level
price points. When a buyer does make an offer, there is often still a
substantial spread between a list and a sale price.

Some companies/realtors continue to insist on price reductions to try to
encourage more viewings/offers. In a discretionary marketplace, where
the buyer is in charge of the process, this rarely works…it does mean,
though, that all sellers have to follow suit, in an effort to remain
competitive.Local market manipulation is a real thing.

A concern over potential currency instability, a seeking of a safe haven,
a worry about hyper-inflation…these might be a reason for some renewed
interest in good real estate hard asset investment.

All of the above seem to showcase a transition period…in such moments,
everything is on the table, all at the same time, there’s no clear
pattern, and all that can be said is that there is “movement”.

Perhaps we’re in year six of a seven year “downturn”, and thus may be
starting up the slope to improvement. Statistics seem to show an upswing
in volume and in some regions even slight price increases are being seen.

No pattern to be counted on, yet, but the appearance of an improving trend
is heartening. Confidence from the consumer is the key, and slow signs of
this are underway.

There has been a steady residential sales record from first of January to
end of April, and this seems to be a return to 2007 rhythms.

Salt Spring Island Real Estate | April 2011

I often think that the real estate year falls into distinct “thirds”, in our secondary home/discretionary marketplace.

The first third is that January to April timeframe, and so here we are, moving into the last weeks of the first third segment.

Traditionally, sales in January/February are usually outcomes of business from the previous year. Perhaps the buyer chose to make the offer/complete the transaction in a new tax year, but were really thinking about a purchase in the previous year. A sale in the first six weeks, then, of a new year, is not often “new business”.

I often think that a clear picture of the market in any given year isn’t possible until April. March Break activity will have taken place by then, and a forerunner of potential Summer business will have shown itself.

Quite often, the emergence of March Break’s early tendrils do flower into a real Summer season. No action in March Break usually means no activity in the “second third”. That is what happened in 2008, 2009, and 2010…a “flat” market.

A slow “uptick” in all residential , not just in entry level price options, began to show itself by mid-October, 2010. Undeveloped land and commercial options remained quiet.

Throughout 2006 and 2007, “flat” conditions prevailed. 2008 saw the plunge into “market meltdown” territory and a full “stop” to action. Only entry level residential options saw activity from March 2009 to September 2010, and there were very wide price gaps between list and sale pricings.

Price reductions, without resulting in either more showings or in sales, were the pattern throughout 2009 and 2010.

Buyers did not want to act, and in a secondary home marketplace, where a purchase is by choice/not a necessity, nothing happens unless a buyer comes forward.

Such discretionary markets are totally in the control of the buyer, not the seller or the realtor.

Post-meltdown, fear stopped action. Sales were few and far between.

Appraisers report that prices reduced between early 2007 and late 2010 by 20 to 30 percent, depending on the type of property involved.

Now the fear of currency instability, post-bailouts, and a seeking of a “safe haven”, in the aftermath of all the resulting societal unrest, may be behind the current return to hard asset investments. Fear can also “propel”.

Or, the renewed interest in discretionary residential real estate may be the simple outcome of the seven year cycle theory.

Seven years up and seven years down…neither scenario in a straight line, of course. It’s one market “philosophy”.

So, are we in year six of a seven year downturn? If so, that’s like 1998-9, and look what happened by 2001-2…a sellers market of huge proportions!

The sales frenzy currently underway in four Vancouver neighbourhoods (West Van, West Side, Richmond, White Rock), driven by Asian buyers (Mainland China), may result in those sellers arriving in the Gulf Islands, on Vancouver Island, on the Sunshine Coast, into the Okanagan “grid”…the very discretionary areas which have been so “flat” in the past four years.

Nothing ever stays up or down forever…and the shift in either direction happens quickly when the “turn” is almost there.

Economic issues continue, “natural” disasters shock, civil wars unexpectedly erupt, societal unrest everywhere…the “global village” is full of unrest and seems without a road map in hand. No one is immune to the societal shifts in this post-internet world.

Locally, businesses reliant on tourism/discretionary buyers (restaurants, galleries, artist studio tours, kayak, scooter, car rentals, B and B, resorts, floatplanes, ferries, hotel, motel, grocery stores, contractors, architects…did I leave anyone out?) also experienced the “pause period” of the past four flat/non-active years. Real estate is a foreteller industry, in a community’s life.

With improving sales patterns, we’re seeing new building, completion of earlier projects, a “freshening” of business/tourism ideas (Blossom Festival in early April is just one example).

What we do know for sure: low interest rates, reduced prices, good inventory…it is a time to be a buyer, and it appears that thoughtful investors are acting.

If undeveloped land starts to sell strongly, which, I think, may occur by late Fall/early 2012, we would then be starting into sellers market conditions again. That’s definitely a positive market indicator, movement in raw land!

So…we are nearing the important “middle third” (May to September), in our secondary home area, which is when the majority of sales take place, IF they are going to occur.

The rhythm of connection seems to be present, for the first time in four years, and buyers are apparently slowly deciding to “act”, and in all residential price ranges.

It is a new and heartening pattern that has shown itself, in these important first months of 2011…good news, indeed!

How may I help you to buy your special Salt Spring Island or Southern Gulf Islands property? I look forward to your call!

Shift, change, whatever we label it, it’s with us, in all aspects of life…including in real estate sales.

No part of life is untouched by the impact of the internet, and its resulting relationship forms of communication.

The internet has delivered a business model that places the consumer at the core; companies and agents are no longer “key” to a sales process. This difference has profound implications for all sales marketing.

It is always the case in a substantive change moment that the first few years of the shift are taken up with trying to push the accepted/existing model into the new one.

We are just humans, and it appears that we tippy-toe up to massive change, poking and prodding and taking baby sips, before we “jump in”.

The hybrid/transition time may have been that 1999 to 2009 period. Transition is erasing, and the truly new is now with us. An explosion of apps and technology vehicles means that the consumer has the power, now, and can be the expediter of outcomes.

For real estate as an industry, it is now sitting fully where the consumer revolution placed the car industry, the travel industry, and the stock market side of investment, some several years back. Real estate as an industry was late to the table of change. The key? It is now an information open model that is required.

The standard franchise company model will have to evolve or be replaced (it’s no longer about companies or agents) and the mls system and related information repositories will have to change to an “open wall” concept…information is not about special interest group control of same. Data cannot be fenced off.

The consumer drops in and out of the information sea, at the consumer’s timeline, and the consumer decides “when” and “where” to contact a realtor. It’s the opposite to the old “call to action” motif of previous sales models, where the purveyor of the service set the rules.

When the consumer is ready to act, they will…after searching the web for answers to their questions, and without ever contacting a realtor, early in the process.

According to some real estate associations, who are trying to track consumer purchasing results, the buyer begins a search approximately 14 months before acting, and waits to contact a realtor until 4 to 6 weeks before a purchase.

In those intervening months between start and finish, it is rare that they contact a realtor…they may be on the mls and other related information sites, and on company and personal websites, but they are not contacting anyone…it’s a passive seeking at this point.

With 90+ percent of all sales apparently beginning via a search on the web portals, and only 1 percent now coming off print media, the shift is clear. Some specialty magazines, with long shelf lives, may still deliver some business, but the classified/newsprint ad style is no longer productive in inviting a customer.

In city markets, apparently around 7 percent of business comes from a sign call off a property realty sign…this is less effective in a secondary home marketplace, with seasonal residency/resort rhythms, and a non-local buyer profile.

At the start of the transition, between 20th and 21st centuries, websites were the form for internet data sharing…it’s still essential to have a website, but perhaps they are more like basements or attics for information…if a searcher needs indepth information, then there’s the website to root about in.

It’s a time famine world now, in these post-internet days…no time/always time, and who has time to dig around in a website, when one hasn’t figured out the questions to even ask yet?

This could be the point of Twitter…a mini website for the time starved/”on-overload” denizens of this post-internet world.

Social media is the new buzzword, and the move to add the word “marketing” to the phrase showcases the blurring of the personal and corporate worlds, now underway in the post-internet world.

It is suddenly a holistic model of being that is being created by the technology and its spin-off “apps” world, and business enterprises are a part of this. In social media, it’s about “everything” and “all at once”, and relationship selling is no longer just an idle concept…it’s “the” concept.

In change, lies opportunity….

With the consumer at the core, it means that any one of us can facilitate change/deliver new pathways. The ground is level.

Hmmmm…an interesting time, for all of us.

At the same time that we have societal change, business solutions change, information dissemination change, we have a real estate market change.

It may be that we will look back and agree that September/October 2010 was the “bottom-bottom” in the real estate market.

Since mid-October, locally, on Salt Spring Island, and on other Gulf Islands, and in the rural communities of Vancouver Island, on the Sunshine Coast, and in the B.C. Interior communities, a consistent though slowly building rise in sales volume has been underway. This is good news, indeed.

Prices have reduced over the past 2 years and the buyer is often able to negotiate a further reduction at the point of an offer. If the seller is from out of country, then the currency rise for the Canadian Dollar can be attractive, and encourage them to take a lower than desired offer.

the property market “crash” may be over

This kind of “spread” may narrow, however, as this year progresses and it becomes clearer that the property market “crash” may be over. Inventory will clear and choice will lessen.

The current sales in discretionary/secondary home areas may be driven by a buyer desire to get out of heavy cash positions (worry about currency instability) and by a search for a “safe haven” (desire for self-sustainability), but it may also be a natural shift from a down to an up market.

If markets experience a 7 year cycle, which is one theory, and our downturn in our secondary home marketplace began at end of 2005/beginning of 2006, then we are now into year 6 of a seven year cycle…a time, then, for savvy investor buyers to be acting. This market trend is perhaps also a driver to this renewed sales activity.

Continuing low interest rates, a reduction in property price values from the highs of 2005 to now, by around 25 to 30 percent, depending on property type involved, and motivated sellers, plus inventory choice…it is an optimum time for a buyer to act.

Looking to buy on Salt Spring Island or on another Gulf Island? Call me!

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With a daily blog since 2005, and a strong social media presence since 2008, I look forward to interpreting with you “your” voyage to the beautiful Gulf Islands, and to connecting you with your dream property. Welcome your call….

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

February 2011 | Salt Spring Island

Markets are not static…up, down, up, down…the thing is, we don’t know the length of these ups/downs…six months? Two years? A decade?

Nevertheless, markets have beginnings/middles/ends, whether going up or down (market equilibrium doesn’t last, if it’s even possible).

When looking back, it appears that the current pause in all secondary home marketplaces, globally, including on the Gulf Islands, began in early 2006. Although sales still took place in 2006/2007, they were sparse and prices had begun to soften. By the time the global economic meltdowns occurred in Fall, 2008, the housing bubble had burst, well and truly, and “everywhere”.

In the secondary home/discretionary markets, appraisers noted that prices had reduced by 20 to 30 percent between mid- 2007 and mid-2010.

No one “has to” buy a recreational property, and one can decide to retire later than initially planned. A buyer always sets the pace for sales in all discretionary marketplaces.

While primary residence/city markets experienced “uptick” in entry-level properties, throughout 2009 and first half of 2010, this was not seen in any B.C. rural/secondary home markets.

Buyer reluctance was the name of the game, in all our B.C. discretionary areas.

Substantial price reductions, always a classic response to stagnant conditions, did not result in more viewings and seldom resulted in offers (particularly in the upper tier priced properties).

Tax assessments are arrived at by a “snapshot” of the market on July 1st, and this then becomes the government assessed value in January of following year. Based on the lengthy “flat” conditions, many properties on Salt Spring experienced reductions in assessed values…between 7 and 20 percent, apparently. It is true that on July 1, 2010, the “doldrums” were still in evidence.

By mid-October 2010, though, a rise in buyer willingness to act was noted, in all residential properties, including in luxury offerings.

Fear can both “stop” action and propel activity. This renewed push to action seems to be fueled by both a fear of currency instability and a search for a “safe haven”.

So much paper money has been created in the bailouts, globally, that cash itself is becoming valueless. Inflationary pressures are growing, and the seemingly evenly balanced argument of the past couple of years, between deflation/inflation, appears to be falling on the inflation side.

People are worried…best to seek an area a little “apart”, where one can be self-sustaining.

Salt Spring Island and the other Gulf Islands are seen as very appealing venues…temperate weather, ability to grow food locally, a community based lifestyle, services/amenities available on site or nearby, proximity to major centres but a ferry trip “apart”, privacy, cultural life available…the current issue of Sunset Magazine even names Salt Spring Island as one of the top 10 places to live, on the Pacific Coast of North America.

The Islands Trust, a B.C. provincial government body, preserves the environmental beauties of the Islands through severe zoning restrictions, which have been in place since 1974.

Whispers of activity, then, in our residential market segment, since mid-October of 2010…still quiet in undeveloped land and in commercial options, however. These two market segments usually follow the residential pattern within six months.

Historically, markets seem to follow that seven year pattern…there’s always a beginning/middle/end…if it began in early 2006, on a downward track, then we’re now in year six of a cycle…that’s a transition moment, where we still see some sellers further suppressing prices to attract interest and buyers back, making low offers. The buyer is still in charge of the process!

Inventory is “thinning” out, few new options coming on the market, consistent sales volume, with viewings activity now into the “over a million” segment…all this is concurrent with continuing low interest rates.

Hmmm…we do seem to be on the upward track, creeping out of the “flatness” of the past 3 to 4 years. Saavy investor buyers are around (always early responders to market shifts), and those seeking a “safe haven” address, and those coming with cash (many offers without a financing clause right now), looking to “preserve capital”….hmmm…2011 is already a very different landscape in the secondary home market regions, including on Salt Spring Island and the other Gulf Islands.

January, 2011.

Some thoughts, as we begin a new calendar year….

A reminder: my market thoughts are exactly that…”thoughts”.

If graphs and statistics are your thing, then the Real Estate Boards provide same.

Something to remember: in the Southern Gulf Islands, the various real estate boards (Vancouver, Victoria, and Vancouver Island are the 3 in our region) describe the entire Gulf Islands area as “grey territory”.

This means that realtors who work in the islands, under various companies, are a member of a specific Board…in a “grey territory” the Board affiliation can be chosen by the company in that “fringe” area. What does this mean?

Well, the “private client service”, for example, is Board sensitive — that means the listing alerts received by a consumer, who has agreed to receive same from a particular realtor, will only be alerts for listings in the Board area of that realtor.

If the realtor works for a company on the Victoria Board, say, then the consumer only gets “alerts” for Victoria Board listings. Vancouver Board and Vancouver Island Board listings will not show, thus. Such a service then, whether offering listings or “solds” information, is only partial information/is Board specific.

In the past, perhaps there used to be one overall repository of knowledge, but those days are gone forever, in our post-internet world.

Now, there is choice in information…no one place has a monopoly on information on listings or on “solds to date”.

As a part of this post-internet era, the mls system in Canada must now offer a broader spread of services to a consumer, after several years of discussion with the Competition Bureau in Canada (more info? Call me!).

The consumer must check several sources now, to get the “full picture”. There is no “one stop shop”. This applies to both listings information and to “solds” statistics.

Just know this, then, when a realtor is stating the “solds for the year”…they mean the “solds” on their particular Board affiliation, which is their source of that information.

So…no longer just one dedicated place for full information.

Also, no one checking on personal realtor websites…thus, information on these may not be current.

Just be aware, that’s all.

So…here we sit, at the beginning of a New Year.

There has been a sudden, though late in the season, difference in our secondary home/discretionary resort-based area, and it seems to date back to the first week in October, 2010.

An uptick in interest in residential properties, in all price ranges, appeared at that time.

Throughout 2009, and most of 2010, the sales pattern was only seen in entry level residential options.

A very few higher end properties sold, but such sales appeared to be “one offs”, isolated cases, and thus no market trend was in evidence.

Commercial and undeveloped (raw land) offerings were not of interest, either, to the still reluctant buyers.

After an increase in pricing of close to 60 percent, between 2002 and 2005, we saw a plateau period develop in 2006 and 2007.

This “flat” time was followed by the economic meltdowns of Fall, 2008. Appraisers feel that prices have now reduced by 20 to 30 percent, depending on the type of property involved, from 2007 levels.

Fear makes people “stop”, and this expressed itself in all secondary home markets and globally so. (Although real estate is regional in one sense, the market trends are now global…another outcome of the post-internet era, perhaps?).

In uncertain times, no one has to buy a second or retirement home…such discretionary purchases can be put “on hold”. This is what happened on the Gulf Islands, and in all similar secondary home venues.

When price reductions of a substantial nature were tried, in an effort to jumpstart activity, it very rarely resulted in either increased viewings or in sales. When a buyer sits back and says: “I don’t know…I’ll think about it”, they mean it. In such a downtime, it’s rare that pricing will create a desire to buy.

Fear can also propel activity, though, and the sales at the moment seem to be happening, for the most part, without a financing subject condition…is this a “get out of cash” movement, then?

Fear of currency instability, coupled with a concern that inflation will be the inevitable outcome of the massive bailouts at government levels, globally, may be pushing people out of cash heavy investment options and back into “real” hard assets. If so, it will be a desire to preserve capital that is propelling this activity.

No one has a crystal ball.

It is true, though, that no market remains static. Real estate is a market driven item. It has been “flat” and “depressed” since very early in 2006. That’s five years of sluggish conditions. One theory is that markets have seven year cycles.

Indicators seem to be pointing, even in the U.S., to an acceptance that the housing market has bottomed. That implies that a slow shifting to an uptick trend may be occurring now.

Inventory often shrinks in the off season…sellers take properties off market in poor weather months. What if they are also removing product from the market, though, in recognition of a shift back to hard asset investment?

January is a time when first indicators of a coming year’s trend slowly begin to take shape. By mid-March, that trend is usually much clearer.

It’s good to attend investment seminars, just to hear “prevailing wisdom”. Be listening, and remember to practice “peripheral vision”. Media like us to be locked into tunnel vision, focusing on data. Back up a little, catch a wider field of vision…there, on the edges, shimmering, is the creative impulse that delivers solutions. Up to us to be attentive to the unexpected!

Since early October, 2010, then, our local Gulf Islands market has been showing strength in all price ranges, in residential offerings.

I think we are getting close to the moment when a buyer will consider buying land and then building a home. As quality residential options sell off, well priced undeveloped land will suddenly appeal, and building will once again be a viable choice.

Short term, then, we have continuing low interest rates, good inventory, motivated sellers, and the Gulf Islands / Salt Spring Island remain very alluring opportunities, over time, for both enjoyment and investment.

How may I help you to achieve your special Island dream? I look forward to your call!