February 2014, Market Analysis

February, 2014. Salt Spring Island Real Estate

We live in such an interesting time! Change is its mantra.

Some early February “thoughts”:

Salt Spring Island

Salt Spring Island

Although the eraser of the Internet began to disturb existing business models around 1996, it initially seemed “business as usual”, with some small modifications, might prevail.

In those beginning moments of not really well understood change, we were all trying to get former successful options to fit into new venues. Suddenly, for example, everyone had a website…as if that was “it”.

It’s normal, though, in the early days of a serious societal shift, that the old and the new intermingle…perhaps for 20 years or so? Then the hybrid moment is over…I think that’s where we are now.

The profound nature of the shift into consumer driven outcomes, combined with continuing & dramatic technological inventions, have totally reconfigured our lives.

5 Issues Facing Salt Spring Island & The Future of The Gulf Islands

Locally, in our just slightly apart Gulf Island region, we have some serious issues facing us, in 2014:

1 Salt Spring Island is going to choose, in the November civic elections, whether to continue with the Islands Trust & CRD governance model or whether to go forward with a Gulf Islands Municipal structure.

The Trust document, in place since 1974, with its strict land use zoning/bylaws, would remain in place in a Gulf Islands municipal model.

The CRD (Capital Regional District) function would be replaced by an elected local mayor & council (the two trustees would be designated from the locally elected council).

All taxes raised on Salt Spring would remain on Salt Spring. Current grants from CRD would disappear. The other Gulf Islands would no longer benefit from monies raised on Salt Spring, a change that is bound to have implications for less populated Gulf Islands.

There will be many public meetings on this issue, during the run-up to the November elections…be informed!

The “preserve & protect” mandate, from 1974’s Trust inception, did preserve the park-like status of the Gulf Islands.

Evolving over time from summer places to retirement choices to year-round communities relying on tourism, the Islands were all seriously affected by the severe economic downturns between 2008 & 2012.

Younger families found it difficult as jobs erased (no construction if no real estate sales if no tourism…& around the wheel goes).

Aging retirees were rethinking country living…downtown city life, in a condo, with no need for a car, & close to medical options, suddenly had allure, as the aging process continued.

Demographic shifting was underway, & happening at the same time as all other changes.

If Salt Spring does vote for a Gulf Islands municipal structure, will that allow for creativity in decision making? Will it be possible to re-energize the community? Big questions! Certainly, the status quo does not seem possible in any venue, including in governance models.

Your voice is important. It’s your Island! Take part in the discussions.

2 The B.C. Ferries decision to cut service on some routes (coastal ferries, not interior ones), & to raise fares significantly, & to cut the seniors free fare for pedestrians or driver, on non-weekend days, will affect all Gulf Islands & Vancouver Island.

Tourism drives business on Vancouver Island, on the Gulf Islands, & on the Sunshine Coast…the very coastal communities that will be affected by Ferries decisions.

A tourist visits, falls in love with an area, buys a property through a realtor, & then every other business enterprise follows in activity: contractors, excavator operators, building inspectors, designers, plumbers, electricians, well drillers, soft furnishing providers, landscapers, gardening services, cleaners, restaurants, marine facilities, golf courses, service clubs, fitness gyms, hospitality options…you name it, if it’s an item or a service being provided to a consumer, then the process in any secondary home region initially had its start with tourism. No different on our coastal region!

On the coast, Ferries had (until recently) been considered as part of the B.C. Highways system. They were not meant to be cruise ships. After the economic collapses of late 2008, the tourism industry also suffered a downturn. One can see that lower ridership for 4 to 5 years, due to reduced tourist activity in the severe downturn, would result in shortfalls at B.C. Ferries. 2013 saw a renewal in tourism in most coastal communities. Perhaps the natural swings of market conditions should be allowed to re-create growth?

The Chambers, for all the coastal communities, are getting together to lobby the provincial government to hold off on proposed changes to Ferries scheduling & fares for 2014…& to have workable solutions in place by 2015. All parties recognize the need for change.

Although affected less adversely, as it has 3 ferries & 3 different routes, Salt Spring is joining with all coastal communities (Vancouver Island & Sunshine Coast, plus Haida Gwaii & northern coast, & all other Gulf Islands) in working for a pro-community & pro-tourism outcome. Stay tuned…get involved!

3 The local weekly newspaper on Salt Spring has been printing a real estate supplement, in some form or another, for my entire career (since 1989!). A couple of years ago, some realtors lobbied the paper to drop the monthly presence to seven issues. This reflected the lack of sales activity during the downturn & the continuing high costs of print advertising. Now, the same realtors would like it reduced to 4 (possibly 5) issues. This is certainly all a result of the suppression in real estate sales between 2008 & 2013.

Real estate is totally about the rhythm of “now”. It’s definitely driven by immediate & current information. A supplement that right now (7 issues) remains in place from mid-November to end of February, & then again from end of February to end of May, is already meaningless. To go to 4 or 5 issues is the description of a tourist brochure, not a real estate catalogue.

If the Driftwood paper has relied on realtor ads, to date, as the largest advertising segment, what outcome will result if there is a further reduction in numbers of supplements?

Certainly, we all accept that almost 100% of real estate searches start on the Internet…however, it can take a good 2 years before such casual searching solidifies into a decision to buy. Is print, at the community level, still helpful in creating a local presence?

In a discretionary area, it can take much longer than a 2 year timeline to choose a specific community…a lot of window-shopping & region interviewing goes on before that specific decision is made (often decided in 4 weeks, after that slow 2 to 5 year identifying search).

If the real estate print supplement disappears, no longer a current marketing medium, then what will happen to the weekly community paper? Will jobs be lost…staff perhaps leaving the island…another example of changed business models and the need to be where the consumer is? Outcomes, outcomes….

4 Many storefronts throughout Vancouver Island & Gulf Islands & Sunshine Coast have disappeared from their retail locations. Absence at streetside or in a mall does not necessarily mean a business has gone under…it might mean the owner chose to go online as soon as the lease on the physical space was over. What does this portend for real estate investment in commercial plazas? Small shopping centres? Rental income from storefront tenants may no longer be a landlord’s guaranteed investment outcome?

5 We’re hearing a lot about 3-D printers right now. Manufacturing, storage facilities, shipping of products, handling of same…these are business segments that will all change & possibly disappear.

Good outcomes are being reported: a design for a prosthetic limb for a child wounded by an unexploded bomb in an African field is emailed & a 3-D on site printer creates the item for the specific need. Along with this humanitarian outcome, there are other aspects to the demise of manufacturing & supply opportunities.

If those who lose the old jobs have no other option, does that mean the age of jobs is truly over?

It’s being projected that within two years most people will have affordable access to this 3-D technology.

So many more things are being invented, constantly, daily, all capturing the real gift of the Internet…the ability of a consumer to achieve an individual need, in a cost effective way, without the need for a middle segment handler.

This innovation is a good sign, I believe, and this spirit of discovery could benefit any region. Change can come from anywhere, post-Internet. You might have the answer….

Hmmm…what does all this shifting mean for real estate sales? Particularly in the secondary home/discretionary regions?

I think the perception that Ferries are too expensive may harm business success in all coastal communities. I do think tourism is the igniting engine of a discretionary region’s community growth.

Perception can be taken as reality in this instant Internet age. A bad impression of Ferries travel may be difficult to recover from. Get involved with the coastal ferries communities initiatives.

An aging population on the Gulf Islands, with the lack of opportunities for younger families, means a potentially less vibrant lifestyle on the Islands.

The final outcome of the 1974 Trust document, without any change to the mandate, may end up being the creation of enclave areas, where seasonal global owners either bring their own with them or are serviced by off-island centres. That means a ferry connection or perhaps even a bridge.

Hmmm…in preserving the park & ignoring people outcomes, over the many years between 1974 & now, is this the law of unintended consequences at work?

On Salt Spring, pay attention to the public meeting debates pre-civic election: stay the same or do a Gulf Islands municipal structure of government? Choice, choice, choice….

Real estate sales numbers and values of properties are directly impacted by outcomes. Why move to Salt Spring? (or Galiano, Mayne, Pender, Thetis, Gabriola, Denman, Hornby, Quadra, Cortes?…or even to Tofino/Uclulet, to Parksville/Qualicum, to Courtenay/Comox, to the Cowichan Valley?). An important question.

Right now action? Join the local Chamber, if you’re on Salt Spring. If you offer an item or a service for sale, then you’re in business.

At the moment, the Chamber is the only voice on the Island to be able, legitimately, to lobby the provincial government, on behalf of the community’s business interests.

Advocacy, information, support, education…important options offered by your Chamber, a non-profit, working for your best interests. Get involved!

A thoughtful & caring population can figure out solutions to issues that are suddenly everywhere…it’s about fitting into the true script of the 21st Century. Technology is just the expediter of a mind’s solution. The first step? Get involved.

2014 may be the year of recovery in the secondary home/discretionary regions, and globally so. It’s not an even-handed recovery pattern…faster in some areas & slower in others.

For real estate seekers, I think the interviewing an area moment will precede any purchase. Each area is in competition with another. Why you? Why here? Why not there? Important to have an answer! Sellers need to visualize the buyer point of view more intensely than ever.

A community’s health is dependent on the intangible of the desire to live there. Hmmm….

In change lies opportunity. Let’s not forget that!

Salt Spring Island & the Southern Gulf Islands offer beauty, a temperate climate, the ability to be self-sustaining, with a thoughtful & environmentally aware resident population. The Islands are in the heart of the best protected boating waters in the world. They are close to major centres & yet offer that safe haven “apartness”…definitely a recipe for an enjoyable & year-round lifestyle.

Property prices have reduced, over the 5 year downturn, between 29% & 45%, depending on your start date for the flattening of action. A soft uptick in sales volume in 2012/13, in the entry-level residential segment, has meant a diminished inventory. A rise in consumer confidence has created renewed buyer interest in a second home/recreational purchase.

If 2014 is the year of the discretionary real estate market recovery, then right now is the optimum time to finally be a buyer. Low asking prices, low interest rates, good inventory choices, & motivated sellers. I call that the tail-end of the buyers market of the past 5 to 6 years.