Market Analysis | August 2010
Here we are, beginning of August, and half way through this calendar year.
Some exciting events this year in B.C. — the Olympics definitely put Canada front and centre in the world’s attention, and Vancouver and Whistler were the focus.
From Spring-like weather in February (trucking in snow to the Vancouver mountain Olympic venues!) to Juneuary weather pattern (very cool throughout that month!) in what should have been “real Spring”, we are now enjoying a wonderful Coastal summer season…hot, clear, sunny, definitely beach and sailing weather!
Along with these pleasures, we had the introduction of the HST tax in B.C., on July 1st. Not sure that it’s well understood yet, but in real estate it is applied to the first sale when buying a lot from a developer or a spec home from a builder. It does not apply to resale real estate. Give me a call for more information.
So, what about the market?
In all secondary home / discretionary marketplaces, it has been in varying degrees of “flatness”, since early 2006. This has been a global phenomenon, so is not a Gulf Island or Salt Spring Island issue.
Between 2002 and 2005, appraisers noted that real estate prices rose about 60 percent in our Island area, and now they are saying that prices have reduced by 12 to 25 percent. So few sales, though, make it very difficult to see any broad patterns!
In 2009, it was mainly entry level homes that sold on Salt Spring. This year there have been a very few upper tier properties that have sold, all residential, and all “step in ready” (no need for additions or renovations). Undeveloped land, commercial property, and very high end residential remain very quiet property segments.
In a secondary home/discretionary area, a purchase can be put on hold. Buyer reluctance may be connected to the concern that deflation is going to win out. Wait it out, and prices may come down further. There is an equal argument for inflation, and some pundits call for deflation first and then runaway inflation to follow. Certainly, the few higher end residential sales this year, most purchased without financing, may be signaling a “get out of cash” move, simply because of that inflationary fear.
Seems like it’s still “all over the map”, no clear path at all: the great debate continues, and all secondary areas are continuing to experience buyer uncertainty.
It may be that when we get to mid-October we will look back to discover that the “market” for 2010 was created between mid-July and end of September.
In the past two years, some realtors and some companies consistently reduced prices. Until the past 2 weeks, this had no effect. No more viewings and no offers.
In the past 2 weeks, however, some people have been coming forward with still lower offers on already substantially reduced properties.
If something is seen as dramatically low, for what is offered, those inflationary minded buyers will act.
At the moment, then, price is still the only vehicle to topple those fence-sitters out there. It remains a mixed moment in all discretionary marketplaces…only the city/primary residence markets are finding action.
This may already be changing, and it may be clear to all, including the media reporting, by end of September/mid-October.
Nothing remains “static”, ever, in a market driven commodity. Real estate sells for more than intrinsic value and for less, at any given time — it’s “the market” that decides, and “the market” is created by buyers, not by sellers or realtors.
One might want to keep an eye on currency valuations right now, and to regularly check that inflation weathervane….
There are exceptional properties on Salt Spring Island and on the Southern Gulf Islands…motivated sellers, protected investment due to Islands Trust cap on growth, low interest rates, beautiful region, a safe haven environment…how may I help you to buy your special Island gem?