June & July 2015, Market Analysis
Well…here we are…it’s the month when the calendar spells Summer…& the great Pacific Northwest Coast erupts into lush beauty.
Salt Spring Island and the Southern Gulf Islands are nestled in the heart of the very best protected boating waters in the world…and summer-summer is the premier season of all.
Sailing, kayaking, power boat discoveries…fishing…hiking, walking, climbing…farm gate stalls & farmers markets pleasures…galleries, studio tours, theatre, dance, live music venues around the town…spas, alternative health explorations, meditative & restorative experiences…it is all here, for your enjoyment, on special Salt Spring Island.
I often think that real estate sales mirror visitor arrivals, & so the importance of tourism cannot be ignored in any secondary home/discretionary area.
One visits, falls in love, calls a realtor, & then everyone else gets busy: designers, architects, contractors, soft furnishing providers, painters, excavators, septic installers, well drillers, landscapers, gardeners, galleries, food providers, restaurants…you name it…it starts with tourism (which also initially benefits restaurants, hotel, motel, resorts, B&B providers, car and scooter rentals…boat & kayak rentals, fishing charters, whale watching tours…vineyard wine tastings, farmers markets)…you get the drift.
The main industry on Salt Spring & the Gulf Islands is tourism…and all businesses benefit, whether at the front end or the back end.
The good news?
Visitors are back. Travel to the coastal regions is experiencing a resurgence. And the real estate markets are also on the “improve” side of the equation in all the “by choice” marketplaces. That includes on Salt Spring Island & the Gulf Islands.
A real estate recovery always starts in the entry level residential category. As sales volume increases and inventory “thins”, in this beginning property segment, then either the buyer has to raise the expectation level price-wise, or has to buy inexpensive raw land and build a cottage or move on a modular, to stay on budget. This is another strong sign, the sale of raw land parcels, of an authentic improving real estate market trend.
Many sellers on the Gulf Islands & on Vancouver Island, in the past 5 years, had wondered why the very brisk sales in 4 key neighborhoods of Vancouver had not spilled over onto our side of Georgia Strait.
Well, it’s the great divide between a city/primary residence market and a rural/secondary home marketplace. Totally different dynamics are in play.
In a downmarket, buyers can put a purchase in a discretionary market “on hold”… and indeed, this inaction on the part of buyers characterized the past 7 to 8 years on Salt Spring & the Gulf Islands. Same story on Vancouver Island & on the Sunshine Coast.
Similar statistics in Whistler & in B.C. Interior communities…no one has to retire or choose a softer lifestyle or purchase a recreational/second property for summer/weekends use…one needs a level of economic confidence to consider such “extra” property options.
Now however, (after 7 to 8 years of inaction from buyers) activity has begun…and soon it will be in evidence in all property types and price ranges, in all these recreational/retirement venues.
Salt Spring and the Gulf Islands are very different from small coastal towns on Vancouver Island & on the Sunshine Coast. The Gulf Islands are a part of the Islands Trust, a government body that was created in 1974, to preserve & protect the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents. Salt Spring is not a municipality.
The two trustees & the CRD representative (elected positions) are the form of governance…the restrictive zonings/bylaws, put in place in 1974, to severely control growth, remain in effect.
I think the lovely things of value on the Island have been created by volunteers: ArtSpring, Trail & Nature Club, Island Natural Growers, the Rainbow indoor pool, the Library, the pathways linking the Villages, various clubs & organizations, etc)…all the positive outcomes to benefit the community are the result of volunteers, and their fundraising efforts. Wow! An entrepreneurial & generous community, indeed.
So, when the real estate recovery starts, it’s not immediately even-handed. It begins in the entry level category. As inventory disappears, prices stabilize. The spread between list & sale narrows. In the end (say a year out?), all properties will find their buyer.
At the moment, we are often seeing substantial price reductions at the point of the offer, in the high end residential. These dream properties are unique/”one offs”…when one sells, that’s it…thus, just as in the case of entry level properties, that spread between list & sale prices in higher end opportunities will also narrow.
Salt Spring & the Gulf Islands basically had growth “capped” when the Trust was created. It’s about supply & demand, just as we learned in Economics 101.
There is a lot of “unrest” afoot in the world. Things that used to “work” no longer do so (thank you Internet world). Economies pretend to recover. Underneath it all, a subtle return to hard asset investment choices is underway. Keep an eye on the fine art sales at major auction houses. A purchase of a unique item is a preservation of capital move, I believe. A purchase of a property where growth is curtailed is a marker of overall uptick, in the long term. Supply and demand is the key. Safe haven investing? More info? Call me!
The good news right this minute?
The amazing Gulf Islands & Salt Spring Island are seeing an authentic recovery of the real estate market, after a very lengthy “pause” (7 long years?). All good news.
In real estate, no matter the terrain of market trends, there is always opportunity. In a shift, one just needs to reposition.