Market Analysis

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

Market Analysis | December 2010 | Gulf Islands

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December, 2010 | Gulf Islands | Real Estate Market Analysis

Ah…end of year “market thoughts” time….

My “thoughts” are not meant to be a stats report or a hard market analysis.

That kind of statistical analysis can be found elsewhere, such as with mls statistics or other such “numbers reporting” venues.

My thoughts are exactly that…impressions, and based on 20 + years in the real estate business, all on Salt Spring Island and on the Southern Gulf Islands, and on Southern Vancouver Island.

My impressions/thoughts, then:

Salt Spring and the Southern Gulf Islands have evolved into secondary home/discretionary marketplaces, perhaps since 1999. No one “has to” purchase on a Gulf Island; it’s always by choice. Thus, regardless of market trend in play, at any given moment, it takes time to sell an Island property. It often takes 2 and probably 3 visits, before a buyer will “act”.

The internet erased time and geography. Between 2000 and 2006, a low Canadian Dollar against the U.S. Dollar and the Euro, also made us very attractive to an investor/buyer from afar.

The first visit is usually the “discovery time” of the specific island itself. The second visit, the buyer has “chosen for” that particular island, and is now looking seriously at specific properties. If they don’t see what they “imagine“, they will come back a third time, and might even end up buying vacant land/building.

The first visit is usually the “discovery time” of the specific island itself. The second visit, the buyer has “chosen for” that particular island, and is now looking seriously at specific properties. If they don’t see what they “imagine“, they will come back a third time, and might even end up buying vacant land/building.

Since the buyers are not “local“, in the main, there are significant time lags between visits. It can take one to three years to sell a property, on any Gulf Island, and this kind of time pause is also a marker of all discretionary areas, and globally so.

Time lags, then, are involved in every sale, no matter the market trend. This is the marker of all discretionary marketplaces, and in such a marketplace the buyer is always in charge of the process.

The impact of the internet revolution has changed forever the way all business is conducted, and this is the case in sales oriented businesses, especially.

I think real estate was late to the table of change. The car industry and the stock market side of investing were totally changed by the internet’s delivery, to consumers, of easy access to information, and their shift happened five or so years before real estate noted this. The real estate industry thought it was still business as usual, for some substantial timeframe.

Now, the shift from a company or agent-centric business model, to a consumer-centric style, has profoundly affected real estate marketing choices, too.

Now, the shift from a company or agent-centric business model, to a consumer-centric style, has profoundly affected real estate marketing choices, too.

Approximately 98 percent of property searching apparently now begins on the internet, and a good 14 months before a buyer is ready to “act”. All pertinent information can be found, on regions of interest to a buyer, via the internet, and so the role of a real estate agent has profoundly changed.

The way of introducing oneself as an agent, and of marketing listings, has made an internet presence totally necessary. Specialty print media might still have a place, marginally, but less and less so…print apparently only delivers one percent of buyers, today.

If there was a transition period in marketing between 2000 and 2009, which allowed a blend of responses, it is now over. Print media no longer delivers the buyer. To use it as one’s premier means of trying to attract a buyer means that one’s efforts are doomed. The buyer isn’t “there”.

The post-internet world is now with us. What does this mean?

Technology, created to meet the demands of the wired wireless world continues to expand

…traditional emails and websites are already being transplanted by social media options.

It’s important to have a website, but the template model that has been the norm since 1999 era is seen as the box in the basement or the attic…one can go rummage around in it for deeper information, but it isn’t the “initial attractor” that it once was. Same with emails.

Twitter is not a fad, nor is texting. They are “immediacy” formats, in my opinion.

In our time famine world (no time/always time/only now time), we are always looking for shortcuts to essential information. That’s how I see Twitter.

And Facebook? Ah…that is interesting.

The “real” 21st Century, which has created the global village foreseen by Marshall McLuhan, way back in the 1970s, is also busy deleting our 20th Century idea that there was a separation between our personal and our “corporate” worlds.

Facebook, I think, is about that erasure of separation…think about those three words: “social“, “media“, “marketing“. They really do mean something, and the shift is profound for all those hybrid BG (before google) beings still out there. The AG (after google) beings know nothing else, and swim gracefully in the new global data sea.

What else did McLuhan forecast? Oh, yes…”the medium is the message” was his mantra. The technology created to answer the shift of the internet world has changed us as a species, I believe.

Twitter, Facebook, YouTube, and their kin are early responders to the shift moment of the post-internet world. More apps and options will be spawning daily to fill the craving for information.

The separation between the creator of information and the consumer of same is also continuing to blur and to mesh. Concepts such as “privacy”, “time”, “personal”, “expert” are undergoing change, too. Exciting times, indeed!

Will we end up with virtual real estate offices, and a paperless transaction process, with all information totally available on mobile devices? Yes, I think so.

In change lies opportunity!

And what of our local island market? In Fall 2009, I did project that it would take until Fall 2010 to see uptick in activity, in our secondary home marketplace.

This has indeed been the case. The activity seen in Vancouver and in Victoria, primary residence/city marketplaces, in 2009 and first half of 2010, has now arrived in rural areas. Properties listed between one and four years are now selling.

The difference? The “reluctant buyer” is starting to become active! Why? Perhaps in recognition of significant price reductions coupled with historically low interest rates? Or, might also be fear of inflation and currency instability that is driving buyers back to secondary home/discretionary purchases, in order to preserve capital? Wish we could find that lost crystal ball!

Marketing Real Estate in “Interesting Times”

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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…

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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

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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

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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.