January 2010 | Market Analysis

Market Analysis | January 2010

Li Read's Market Analysis download (pdf)

Market Analysis

Here we are, striding into a new decade, never mind a “New Year”!

In the Chinese zodiac system, we are also entering the Year of the Tiger. It’s a year of turbulence, change, plus enormous opportunity…so it’s important to keep one’s focus and to pay attention to the ‘surround sound’ of one’s life. The Chinese New Year begins, this year, on February 14th. Interesting, that this is also Valentine’s Day, the day that celebrates love….

My December market analysis was divided into “past”, “present”, and “future”: here’s a repeat of my “future” thoughts….

The future:

The media, which reported horrendous gloom in Fall, 2008, suddenly switched to euphoric reporting by Summer, 2009.

The reporting made it sound like all real estate had suddenly bounced back. Not so. It was only busy in that “beginner” segment/or investor-rental category.

This still appears to be the case. It remains slow in the upper end properties, and few raw land sales take place. Commercial sales are also very slow.

Meantime, gold and commodities are the flavour of the month in the equity markets. Interest rates remain low. Government bailouts continue.

A fear that currencies are under attack, and that hyperinflation is on its way, may encourage further real estate purchasing — hard asset investment simply as a means to preserve capital.

With significant price reductions continuing to somersault through the upper end properties, and continuing worry about preserving capital if cash is the next bubble, and with continuing low interest rates, we may see buyers deciding to get off the sidelines, out of cash positions, and into purchases in the upper end residential and in the raw land segments. This may now be seen as “where the bargains are”.

“As the unity of the modern world becomes increasingly a technological rather than a social affair, the techniques of the arts provide the most valuable means of insight into the real direction of our own collective purposes.” ~ Marshall McLuhan

Certainly, all properties are more affordable, and buyers may deliver a significant further price reduction at the point of the offer. If the seller is seriously for sale, they will have to accept.

It does appear that an international buyer may be back, looking to pick up estate style holdings, at prices that might be half what they were valued at, two years ago. This is a feature of all areas in North America, so there it is again — real estate trends are increasingly global and regionality seems to have been erased by the indefatigable search engines.

As the “real” 21st Century continues to evolve under our feet, with its on/off, act/react instantaneous world, we are getting more nimble at living with uncertainty.

So important to keep practicing peripheral vision, though, and to fight against tunnel vision. Just stepping back a few paces allows that more panoramic view, and thus the creative solution can spring forward.

In times of shift/change, there is enormous opportunity. As humans, we have a creative sense that is both entrepreneurial and positive. Fear inhibits. A cautious optimism can reinvent.

As we float into 2010, with all its challenges (early days of societal shift are always challenging!), let’s meet it with an open-handedness and a willingness to explore new ways of dealing with change.

I always like that Buddhist challenge: “start where you are”.

I wanted to repeat the above tail end of my December market analysis, as it sums up what I feel about the opening moments of 2010.

We are in the middle of a huge shift in the real estate industry itself, never mind the economic meltdowns that occurred in the latter part of 2008, and which shaped the uncertainties still evident in 2009.

The internet erased time and geography. The “global village” promised by Marshall McLuhan, back in the 1960s, has now come into being. The buyer of a property, then, can come from anywhere. A key issue for listing agents and sellers is to discover how to make sure the buyer “knows” about the property for sale.

Since buyers are the ones who create markets, sellers need to realize that things will sell for more than intrinsic value and for less, at any given time. The buyers desire to “act” in a transaction is what drives a market trend…supply and demand are a part of the equation, of course. Now, though, properties on Salt Spring and on the Southern Gulf Islands are in competition with properties around the globe.

That buyer living in London, or Vienna, or Singapore, or Sidney, or San Francisco, or Calgary, or Vancouver, or…you get the drift!…that buyer can purchase anywhere, and so it’s essential to be “seen” by them, so one is at least on their shopping list. In the end, however, the buyer will decide on area first, on house second, and the reasons for and against a successful sale can be quite emotional. As usual!

Leave a Reply

Your email address will not be published. Required fields are marked *