March 2015, Market Analysis

March 2015, Market Analysis – Salt Spring Island

Yes, it’s true…real estate in the secondary home marketplaces, including on Salt Spring Island, continues to strengthen.

Clicking into Place

Ganges Harbour

Our season for coastal discretionary regions runs from March Break to the Canadian Thanksgiving celebration in October. More outcomes to be reported on as activity goes forward…the season is just now clicking into place.

Prices on Salt Spring have not yet stabilized, to date, but sales volume has increased. It may take until May to see the true pattern of 2015’s market rhythm for the Gulf Islands.

Meantime…forecasters are noting continuing growth in primary residence/city markets, including from the elder population.

Remember that Country Mouse/City Mouse story? It was a “grass is always greener” alert…Country Mouse was convinced City Mouse’s life was much more fun, & City Mouse returned the favour…just so certain that Country Mouse had the best of all lifestyles.

You know the rest: they switched lives and discovered the old truth that we are usually happiest right where we first find ourselves. Well, most of the time.

Early & Later Retirement

This aphoristic tale might need a little updating for our times. With life expectancies extending dramatically, we might need to separate retirement years into two sections: Early and Late(r) Retirement.

My thought about this is real estate oriented, as it’s about the advantages/disadvantages of primary residence (city) and secondary home (rural & small town) lifestyles, as one truly ages.

In the early 1990s, pre-internet impact, there was an entire movement being discussed, called Penturbia. The idea was that people would retire & leave the cities to seek pleasing small towns…thus leaving a primary residence region for a secondary home area.

Small towns had infrastructure (hospitals, health services, cultural options, rural beauties on their boundaries, some had colleges/universities, & many offered amenities to allure one in those retirement years. What was that hobby you always wanted to explore? You get the idea).

Now, in the real post-Internet world of 2015 & on, there is a supposed move back to the city from small town/rural regions. Forecasts say that over 70% of the world’s population will be living in cities, in the very near future.

There is also the thought that elderly seniors will prefer to walk to services/amenities and will prefer to live in the heart of cities. It’s not a suburb experience that’s being sought…it’s a move to a downtown core.

Hmmm….

In this great Pacific Northwest Coast region, what are some of these potentially impacted smaller townships?

On the Vancouver Island side of Georgia Strait, we could look at Duncan (the main hub of the very large Cowichan Valley, which includes Mill Bay, Cowichan Bay, Maple Bay, Yellowpoint, Lake Cowichan), plus at Nanaimo, at Parksville/Qualicum Beach, at Courtenay/Comox, at Campbell River. Let’s not forget Port Alberni & the wild west coast (Uclulet & Tofino).

What about the lovely Gulf Islands? Southern islands: Salt Spring, Penders, Mayne, Galiano, Saturna, Thetis. Mid-islands: Denman and Hornby. Northern: Quadra & Cortes. And what about southern Vancouver Island: Sooke, Metchosin, Saanich neighbourhoods?

On the Mainland side of Georgia Strait, we have the Sunshine Coast (includes Powell River, Sechelt, Gibsons), plus Texada Island & the Howe Sound Islands (Bowen, Keats, Gambier).

For all of these regions, a B.C. Ferry is involved in transport from the Lower Mainland, and a second ferry is required for a Gulf Island. Or, a floatplane or land based plane as travel opportunities are also possible to these destinations.

Hmmm….

So, if people enjoy vacation places on the Gulf Islands, on Vancouver Island, & on the Sunshine Coast, and then retire to them for that first time discovery retirement age, & then live on to where they might be in that second retirement phase, what then?

Well, if we’re talking about the over 80s age group, and we are, then what about driving? In some areas, one loses one’s driving licence at age 80…regardless. Diminishing physical health may become an issue. The loss of a partner can breed isolation and loneliness.

Hmmm….

I can see that enjoyment of a recreational property between childhood (with parents) to retirement (say, age 60, to your own retreat property), will add to the quality of your life. After 80, however, what might be best alternatives?

Good transit, easy walking places, all amenities easily at hand, smaller homes with no yard maintenance (spells “condo” to me), plus options specific to aging seniors to keep those grey cells in good order…all might be on a script for positive aging. Are such aging in place elements strongly in place in a secondary home area property choice?

Behold the Second Segment of Aging

Well…there’s the challenge for all those delectable secondary home & recreational & retirement regions. To be able to remain in these scenically pristine regions will only add to the quality of life for all who are lucky enough to live in same. It’s essential, though, to be paying attention to that second segment of aging, & to meet those challenges.

Time to talk to the elected officials, whether municipal or CRD or Islands Trust…plus provincial & federal. Let’s make sure that the energizing & inspirational aspects of life in a secondary home region continue to optimize lifestyles between 80 & 100+.

The biotech revolution predicts that many will live to 100. The small town/rural options maintain a strong sense of personal community. Surely this is the key to successful aging outcomes?

Hmmm….

I think the smaller & more caring approach is key. It needs to be coupled with a physical infrastructure of ease, tailored to those physical dilemmas that capture the elderly. The personal recognition in a smaller community perhaps far outweighs the anonymity of a city environment. So, public officials, are you on this & are ahead of the need?

Salt Spring Island is well positioned in that it seems to attract a thoughtful population, & this aging in place aspect, for age 80 & older, is actively on the agenda of this unique community. Join in the discussions. Salt Spring often models out successful solutions for many community challenges…positive aging in place is no exception.

February 2015, Market Analysis

February 2015, Market Analysis – Salt Spring Island

Salt Spring Island

The reminder from that savvy Ancient Greek, Heraclitus, that we never step in the same river water twice, is a thought to hold onto. As he noted, the only constant in life is change.

3-D printer, robotics revolution, driverless car…the word is out: humans need not apply. So, if the age of jobs is over, what next?

Is the age of travel also over? Violence is found in all places. Going out to buy bread or meet a friend for coffee can result in death by violence…a politically motivated person can take events into their own hands & too bad for you, in the corner of the cafe, minding your own business, with totally distant thoughts.

What did John Donne alert us to? Never send to ask for whom the bell tolls, for it tolls for thee? That, yes, & also the reminder that any man’s death diminishes us all.

So, as usual, the poets instruct us.

Cavafey, a recent Greek poet, reminded us that there’s no point in waiting for the barbarians to arrive…they are already here…they are us. Isn’t that the news that Pogo brought back from the swamp? I have seen the enemy & he is us?

Hmmm….

Meantime, Voltaire suggested that we might want to just stay home & cultivate our own garden.

It’s difficult to offer specific outcomes in local real estate markets, when societal shifts of such a deep nature are in full swing. These societal shifts are shaping economic outcomes. Global rhythms shape specific regions…it’s called the global economy for a reason. No area is remote. The connectivity of the post-Internet world means the butterfly effect is in play.

A study of history, both far & immediate pasts, might be of some help when attempting an interpretive role.

When the Industrial Revolution exploded onto the centuries old agrarian lifestyle, it was a knife through an established & thus well understood pattern.

Today, technological innovation is slashing through the vestiges of the latter years of the 20th Century.

If you stand on the technology side of this shift, there is endless opportunity. If in the recent past…well…just read a George Eliot or Charles Dickens novel for some gloomier outcomes.

farmhouse

Big picture events colour our tiny lives. Within that frame, what does a move to Salt Spring Island, to a Gulf Island, to a Vancouver Island community offer?

Following Voltaire’s advice, a move to such rural coastal opportunities means experiencing community, means the ability to be self-sufficient, means the luxury of being slightly “apart”, without being isolated. These are safe haven venues. It is possible to be self-sustaining. More information? Call me!

Recent Salt Spring & Gulf Island sales appear to be predicting a shift from a buyers to a sellers market, in the secondary home markets. It is a slow but steady rhythm.

The tax assessments still reflect the past 7 year downturn. It may take until 2016 for the tax assessments to reflect recent sales volume uptick. Prices have not yet stabilized.

Thinning inventory will continue to highlight price stability…& possibly increases. The tail end of a transition period between market trends reflects both past & future, in the short-term.

Oceanfronts, oceanviews, acreages, building lots, residential, commercial, investment, recreational…varying types of properties, varying prices…your special property dream is out there, waiting for you.

I often find that the first two months of a new year follow the patterns of last two months of the previous year. Most sales have remained in that entry level residential segment. The spread between list & sale prices has been narrowing in this property segment…lower inventory encourages strengthening prices. Some recent sales in undeveloped land may also predict an uptick in a market. Sales growth in the upper tier priced residential market appears to be underway…price reductions at point of these sales remain dramatic.

The sudden collapse in commodities markets may have serious outcomes for the secondary home marketplaces. An Alberta buyer has been a traditional coastal purchaser.

It takes until mid-March to see the first aspects of a new year market take shape. March Break is the traditional beginning to the “season” on Salt Spring & the Gulf Islands.

I usually write my market thoughts at the beginning of a month. Between early January’s “report” & now, we saw events in France plus a continuing crash in the commodities markets…societal & economic shifts together can deliver a “pause” to a discretionary marketplace.

It’s important to act prudently. Should one make a lifestyle move to a softer/gentler place, & live more simply, & slightly “apart”? Hmmm…. Decisions, decisions. In change lies opportunity.

How may I help you to buy your special property on Salt Spring Island or on another Gulf Island or on Vancouver Island? Please contact me…your best interests are always my motivation.

Looking for information about specific areas? Information about properties and opportunities? Call me! Benefit from my knowledge (of inventory & market trends) and from my expertise (experience counts!).

January 2015, Market Analysis

January 2014, Salt Spring Island Real Estate

Welcome to these early days of the first month of a brand new year.

Named after Janus, the Roman god who looked behind & ahead, at the same time, January straddles what has been & what will be, in real estate outcomes.

Many indicators are out there that are predicting a strong transition from a down to an up market, in the secondary home marketplaces, & globally so.

Salt Spring Island, the Gulf Islands, & Vancouver Island are often the tail of the dog in a market recovery. A recovery is never even-handed. Some places & some property types recover faster than others. The good news: if every story has a beginning & a middle & an end, then here, on the coastal “rim”, we are at the close of the transition “middle ground” between market trends.

The beginning of the recovery might be seen as having become visible by October 2013. It began with sales volume increase in the entry level residential category. Prices did not stabilize.

By October 2014, all property types were finding interested buyers (undeveloped land, higher end residential offerings, thinning inventory in entry level residential options, which helped to solidify prices, & even commercial sales began to occur).

No market ever stays up or down

No market ever stays up or down. Since late 2013, then, our slow coastal region’s recovery, in discretionary areas, had begun.

I often think that secondary home sales mirror the fine art world’s sales pattern…perhaps within six months. The late Fall 2014 art action at the auction houses would seem to point towards an active secondary home sales rhythm to be in place by April/May of 2015.

Perhaps safe haven investing is the biggest motivator to sales in a discretionary/recreational marketplace, right now. If there is a concern about currencies, then a hard asset purchase might be an outcome of such a worry. It’s about preservation of capital. The plus of self-sufficiency might be an alluring factor for choosing Salt Spring & a Gulf Island as the destination. Our lower Canadian dollar against the U.S. dollar is also often an attractor to a buyer, for our area.

Hmmm….

January is a good time to attend investment conferences…listen well. Soak in the prevailing thought. Read investment articles…catch the vibe. Being informed is always the best first step in decision making.

It’s also important to act. The buyers market conditions are dissipating in the secondary home regions. Between now & April, we may see the “deals” evaporating. It has been a long seven year downturn in “by choice” markets. Indecision meant buyer inaction. That is over. Short-term, the upper tier priced residential opportunities may still see some price spreads between list & sale. The entry level market has seen price solidity develop.

If you have long dreamed of owning & enjoying a Salt Spring & Gulf Islands property, now is your moment to buy. The market is shifting upwards…which results in less inventory & higher prices. That’s the description of a sellers market.

December 2014, Market Analysis

Salt Spring Island

December 2014, Market Analysis

Market Shift? Hmmm….

Is this the market moment where we trend into a real estate uptick in the secondary home marketplaces?

What was that great rock song? Sign, sign, everywhere a sign, sign….

Signals of Change

Hmmm…lots of signs that we are slowly gliding towards sellers conditions in discretionary regions, including on Salt Spring Island & on the Gulf Islands.

The slow recovery for our coastal secondary home/discretionary regions began in late 2013. It started with entry level residential options…3 bed/2 bath homes, close to services/amenities, good rental accommodations. Perhaps most buyers in these early days were investor-buyers, not end-users.

As inventory slowly thinned out, prices began to incrementally stabilize, & this busier entry level sales segment continued to strengthen throughout 2014. End-users are now outweighing investor-buyers.

Initially, on Salt Spring, sales were mainly below $450,000…now, the bulk of such family home/residential sales are below $700,000. This rise in buyer willingness to seek properties in that higher price range is a good sign. It shows that buyers are less in charge of outcomes & that the seller voice is strengthening.

As inventory thins, we begin to see undeveloped land sales & building decisions…perhaps one can still come in on budget, & get what one wants, without having to pay to renovate? I’ve always thought that the start of raw land sales points to an upward renewal of a real estate market.

Since late Summer, we have also seen more sales between 1 & 1.8 million. This is a definite signal of an improving real estate market in a by choice area. The higher end discretionary buyers had ignored secondary home/recreational regions during the economic downturns.

Yes, price reductions were significant at the point of those few upper tier priced residential sales, but even that spread between list & sale is now narrowing…another sign of an authentic improving trend.

In late September/early October, there were two higher end sales: both waterfront properties had seen severe price reductions over a several years timeline, & both sold for substantially lower than those reduced list prices. In mid-November, a small bidding war occurred on another waterfront, also listed for a substantial timeframe & also seeing reductions over time…in the end, it sold close to that final list figure, & with more than one interested party. With just a scant few weeks between these sales, is this latter one the marker of change for the higher priced opportunities? Hmmm….

Over 2 Million?

To date, except for a large lakefront equestrian centre, there have not yet been sales over 2 million. There are a number of irreplaceable estate style properties listed between 2.4 & 8.2…all private, many are large acreages, most with exquisite homes, some waterfront & some stellar oceanviews. Salt Spring & the Gulf Islands are slowly returning to their previous position of global awareness, & we may see those international buyers returning to purchase these luxury style gems.

With ease of access to major centres, & yet wonderfully “apart”, & within the best protected boating waters in the world, these stellar Gulf Islands offer a delectable lifestyle and a protected investment opportunity.

Strengthening Prices & Time Differential

So: strengthening prices, less spread between list & sale, soft “bidding wars” for unique parcels, renewed interest in undeveloped land options & willingness to consider building new, plus beginning sales in the upper tier priced residential offerings…a return to sellers market conditions? Well, it’s certainly a strong transition period right now, & with a definite upward direction.

Does the Secondary Home Market Follow Fine Art Sales Patterns?
I look to the fine art market for further guidance. Recently, at a Christie’s auction, paintings sold for hugely more than expected. My anecdotal “thought”: secondary home real estate follows fine art sales patterns within 6 months. Hmmm…. With that script, we should see sellers market conditions in play in discretionary regions by May/June of 2015.

The recovery after the economic meltdowns of late 2008 has been slow in secondary home marketplaces, including on Salt Spring & the Gulf Islands, & it has not been even-handed.

As we enter December, it’s evident that there is a significant improvement underway in tourism & in real estate sales…which augurs well for the entire business climate on the Gulf Islands. Positive change, with an upward track, does now appear to be firmly underway. We may look back, in coming months, & see that 2014 was that important transition period in the discretionary regions. Stay tuned….

November 2014, Market Analysis

Seasonal Adjustments?

Late Fall is usually the beginning of the “softer season” on Salt Spring & the Gulf Islands & on Vancouver Island. Although our Winter weather is more like a long late Fall or a prolonged early Spring, it is still considered our “off season”. This year, the so-called off season remains busy. Hmmm….

Salt Spring Island

Tourism drives real estate sales in secondary home/recreational markets, & then all other businesses experience good outcomes. The engine of those positive results is a stellar visitor experience, & the downturn in tourism between 2009 & 2012 did affect real estate outcomes in all coastal discretionary regions.

Slowly, since late summer of 2013, a slow resurgence in visitor arrivals began. Most businesses on Salt Spring, in summer/early Fall, this 2014 year, did see their “season” as the best since 2007. This local business outcome is a clear signal of an improving trend for real estate sales in all recreational areas.

Entry Level Residential Patterns

The pattern of entry level residential sales, that began in Fall 2013, has continued throughout 2014. Inventory in this property segment is thinning. Sales volume has increased substantially. List prices are slowly stabilizing, in that entry level category. The viewing price point considered by the buyer for same is also rising…from a search between 300,000 & 500,000 to one that would include properties up to 700,000. All good news for a strengthening market.

There has been a small increase, this year, in residential sales between 1 & 1.8 million. Some of these are step-in ready newer homes on large view acreages. A few are older homes on pleasing waterfront parcels, able to be enjoyed as summer places for now, & ready to develop as permanent homes later.

Although many of these options had been listed between 2 & 6 years, & had come down significantly in list prices before selling, their eventual sales do point to a renewal of interest in the higher end opportunities…a sign of an authentic recovery for a secondary home marketplace. Yes, offers are lower than sellers might have hoped for, but the fact of interest is a market dynamic that predicts change…& on an uptick momentum.

Salt Spring Island

Sign of Recovery: Undeveloped Land Sales

Another sign of a recovery: the slow increase in undeveloped land sales. When a buyer will purchase a lot or acreage, in a “by choice” region, to either “hold” or to develop, it shows a growing confidence in the overall economy…& a recognition of where the best deals might be found. Secondary home markets may have seen a 45% drop in value since 2008’s meltdowns. An investor-buyer recognizes this is a premier moment to act in such markets.

In spite of lateness in the year, the property viewings & subsequent sales continue on Salt Spring, on the Gulf Islands, & on Vancouver Island. Yes, the bulk of such sales are still in that entry level residential category, but prices of same are rising.

Our usual Pacific Northwest Coast “season” (May to October) seems to have shifted this year to an August beginning…& it is still continuing.

2014 may be recognized as the true transition year between a severe & prolonged downmarket and a serious hard asset uptick. If so, then our Spring Market (in play by March Break) in 2015 may show higher prices & less inventory.

Recently, tax assessed values were being relied upon by buyers as market value indicators. This may be another area of upcoming change. Previously, in all secondary home regions, market value was always much higher than government tax assessments. This recent timeline in favour of buyers may be slow-dancing to the seller side of the transaction equation. February 2015 should tell the tale.

Change in The Buyer Profile?

One serious change post-downturn (which may have been in place since 2006, in all secondary home/discretionary regions): the buyer profile. Pre-2008 economic meltdowns, that “boomer” demographic was a strong buyer profile on Salt Spring & the Gulf Islands, & on Vancouver Island. An aging population in this segment may lead to a reliance on “millenials”…& their property decisions may be very different from those earlier boomer desires.

Will secondary home marketplaces be as popular? Hmmm…that might be the big unknown, for all discretionary/recreational communities. Changing tastes mean changing visitor outcomes…which directly affect real estate sales in all “by choice” regions. Hmmm, indeed!

Many positive signs, then, as we ease to the final weeks of 2014. Continuing entry level sales activity, growing interest in undeveloped land, a slow renewal of sales in the million plus range, a recognition of excellent values in secondary home markets…plus a renewed safe haven seeking.

All indicators point to better days for tourism & real estate sales in all coastal discretionary areas. The recovery is not even-handed, but it is underway.

October 2014, Market Analysis

October really is the segue from mellow Fall to stark Winter.

Early October pretends it’s still September…late October says, no-no…leaves flying, November’s almost here…it’s the Pacific Northwest Coast season of grey. (I think that means our form of Winter).

This thin strip of coastal beauty does offer a northern California “off season” weather pattern…& even more so on the amazing Southern Gulf Islands.

Salt Spring enjoys a “cool Mediterranean” climate, one that encourages orchards, berry production, vineyards, olive groves…& yet…Winter is Winter in any latitude that offers four seasons.

What about real estate sales in this soft “off season”?

What about real estate sales in this soft “off season”? The odd thing is that it can be busier in late-Summer-into-Fall than in the Spring/Summer season.

This change in physical arrivals on island, to view & to make decisions about buying, shifted into a last half of the year sales moment some substantial time ago.

It’s important to be consistently listed year round, if selling, so that a buyer can discover the property & then make plans to visit, & to view. The Internet search eye never sleeps & it’s important to be displayed to it, no matter the time it takes for a buyer response. The buyer profile for Salt Spring & the Gulf Islands is not “local”. Time is a component of the discovery-&-then-action cycle.

Very probable, though, that the arrival time to view will be in late Summer/Fall. Odd, when Spring can be such a beautiful time on this great Pacific Northwest Coast, but it is what it is.

So. The sales pattern to date: a repeat of late 2013. The bulk of sales remain in entry level residential, 3 bed/2 bath family homes, close to Ganges…good rental opportunities. This seems to point to a continuing investor-buyer purchaser, & not necessarily an end-user.

At the same time, undeveloped land sales, commercial/business interests, & upper tier priced residential opportunities remain flat segments. Random one-off sales infrequently take place, in these less active categories, but no clear pattern is yet in evidence. Also, in these random sales, a large reduction still takes place at the point of any offer, even when there have been previous reductions to that point.

Where are the best deals?

It may be, from a buyer perspective, that the best deals will now occur in the higher priced residential options or in the undeveloped land choices, in a secondary home marketplace.

Very slowly, there are whispers of interest in commercial opportunities, & from offshore investors. It may be that the strict zoning controls of the Islands Trust (in place since 1974) have an attraction…unique zonings, that can’t be repeated, have a value.

As inventory clears out, in that entry level residential category, it implies price strengthening. This may be the authentic transition moment between the end of a downturn & the beginning of an uptick. Rumours of mortgage rate increases, from recent historic lows, may also be a signal of an uptick momentum in a market.

The rhythm of the uptick is not a racing forward pattern…yet. It’s still a slow chug-chug momentum, but it’s steadily going forth. This consistency, even though most sales still remain in that entry-level category, is a very positive sign.

Not everything is market related… Other considerations…

It’s important to remember to appreciate the illuminating and naturally beautiful Islands we inhabit. Slightly “apart”, and yet close to major centres…with all services/amenities close at hand…with an interesting & caring community…with the thoughtfulness that an artists community encourages…with a self-sustaining lifestyle to preserve and protect…certainly, Salt Spring Island & the Gulf Islands are alluring locations to enjoy as a visitor or to call “home”, no matter the market trend in play.

Markets are a wave pattern. The downturn may have started in secondary home markets as early as 2006, though not have been totally evident till late 2008. The uptrend may be underway, now. Waves are not static, & markets are always in a flow of shift.

There are beginnings/middles/ends to all market cycles. Recovery also has a beginning, but it’s rarely even-handed. The Pacific Northwest Coast always seems to be the “tail of the dog”…last to see change. The secondary home/discretionary/recreational regions have been slow to recover, all over the Coast. Patience on the part of sellers is still an essential.

Buoyancy in that entry level residential segment, in these “by choice” regions, is a very good sign, & is the traditional start of an authentic market recovery. We may see more sales in the upper tier residential segment between now and early January.

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March 2015, Market Analysis