November 2013, Market Analysis

November, 2013.

Drummond Park

Drummond Park, Salt Spring Island, BC

Change is the mantra of our times…doesn’t matter what is under discussion.

The Internet & its very broad brush, erasing past scripts so new responses can emerge, just continues its message of shift.

Nothing escapes it.

All business models are affected & real estate is no exception. A consumer in charge, & a search rhythm that channels information gathering, are just two aspects of change.

Big picture societal shifts are also well underway.

Is the age of jobs over? If it’s a technology time, then disappearing traditional jobs may never reappear. Is the education system set up to train the engineers & programmers now needed?

One reads think-tank pieces about the hollowing out of the middle class, with fewer people doing well financially & more sliding into lower levels. Is retraining the answer?

Perhaps our time has more in common with the beginning days of the Industrial Revolution…the older Agrarian world was erasing. For a time, the old & the new co-existed…then the wealth tied to land was replaced by wealth from trade & the globalization of Empire.

It must have been a painful shift for those on the Agrarian/land side, & very exciting for those inventing what we now call the Industrial Age. It was a revolution, as it changed a way of thinking about life & one’s place in a social fabric. Dissolution and opportunity, all at the same time. Sound familiar?

Styles of living, with an aging population, are also something to be considering.

A couple of years ago, I wondered, on my radio show, if the boomers would reinvent aging the way they reconfigured childhood & early adulthood…thinking that those who once loved the group/commune life might also enjoy a personal pod space with a community cooking/meeting area.

Just read in a recent Time article that this concept of the tiny home, in a “village” layout, with a communal lodge nearby, is being successfully developed in Texas & in Oregon. One future option for that last third of a life span? Is this a concept that would suit a Gulf Island retirement concept? As Aristotle reminds us, we are a social animal. Isolation is not good for us.

Hmmm…a global village (thank you, Marshall McLuhan, for your imagineering in the 1970s), with a flattening of boundaries due to the multinational culture. A method of communication, the Internet, that furthers a no geographical boundaries world…at the same time that it’s erasing the concept of individual privacy and the idea that the personal & the corporate are separate entities.

Wow…a lot for the remaining hybrid beings (with memory of a pre-Internet world & a knowledge of the post-Internet one) to cope with? Doesn’t matter…the post-Internet beings treat it all like wallpaper…which it is, of course. Important to be in the “now”, always.

So: real estate markets follow cycles, like any market & consumer-driven item. This may be a natural recovery underway, then…year 9 of a 10 year cycle. Plus, societal shifts may be creating a safe-haven seeking…to preserve capital & to seek a level of self-sufficiency. Fear as a motivator! Certainly, for the first time in a 5 to 6 year downturn, in all secondary home/discretionary/recreational regions, there is evidence of a slow uptick.

The ways of connecting a buyer with a seller, however, have dramatically changed…especially in a discretionary region. What does this mean for you? Call me.

On these Gulf Islands/on Salt Spring Island and on Vancouver Island the activity, since early 2012, has been mainly in the entry-level residential segment…up to $700,000, say. Perhaps investor-buyers, seeking tenants/passive income stream? Maybe end-users, seeing the huge value in a recreational purchase after an almost 6 year flat time? Sellers are highly motivated & prices have reduced around 35% since 2007…it might be the last stages of a buyers market, & finally the secondary home regions are seeing this buoyancy, too.

October 2013, Market Analysis

October, 2013.

Ganges, 2013

Ganges, 2013

It’s odd how the Pacific Northwest Coast has a “tail of the dog” pattern in real estate sales…you know: last down & last up.

The real estate market in many other regions in North America is showing a strong recovery. This began in 2012, unexpectedly & strongly. Yes, it began in entry level residential, but it has now segued into the upper tier priced residential options in many areas.

Yes, the buyer is still in control in the upper level pricings category…not so much in the entry level residential segment. In some regions, there are multiple offer situations, price solidity & even price uptick, as inventory thins. Pricing is always driven by supply & demand. As sales remove upper tier priced properties from the market, we will see price solidity there, too.

What is driving the demand? Perhaps a recognition that the value of cash is negligible? Hard assets can become a vehicle to preserve capital.

Along with that, there is a sense that our long accepted world is imploding…change is the mantra of our post-Internet time…perhaps a purchase in a discretionary/resort based/secondary home environment might be seen as a safe haven investment?

On the Pacific Northwest Coast, outside of the city/primary residence markets (Vancouver & core Victoria), it’s been a very slow uptick…the secondary home/discretionary marketplace follows its own rhythm. It has been very flat for past 5 to 6 years. So important to look down the highway & not in the rear-view mirror. Shift happens fast!

While undeveloped land, commercial/business options, & very high-end residential properties remain fairly flat, there are whispers of uptick.

It may be that this Fall Market will be the end of the buyers market pattern in our kind of coastal market. This secondary home/discretionary marketplace includes all Gulf Islands, all of Vancouver Island outside of core Victoria, & the Sunshine Coast. These regions are about choice…not necessity.

However, a seeking of a safe haven is a powerful motivator to action (action has been lacking in the past 5 to 6 years, in all secondary home markets…Spain, Aspen, Salt Spring Island, Palm Desert, Hawaii, Turkey, Tahoe, etc…now, potential buyers appear to be seeking out those slightly apart enclave areas…a pleasing lifestyle but not visibly so)…hmmm…describes Salt Spring & the Gulf Islands very well!

I have often thought of the Gulf Islands, including Salt Spring Island, as the castle…the moat is the sea…the drawbridge is the ferry access. All the amenities/services required for a pleasing 21st Century lifestyle, with that yesteryear apartness, are all certainly available on Salt Spring Island. Plus, a temperate climate that encourages vineyards, olive groves, orchards, that 10k locavore experience…one can be self-sufficient here.

It is, post-Internet, an international buyer profile on the Gulf Islands/on Salt Spring Island. Time is a component in all sales. Time to discover, time to ponder & to compare, time to choose. It can take one to three years to sell any Gulf Island property, in a “normal” market…in a suppressed market, perhaps five to seven years. No one “has to” buy a Salt Spring Island or Gulf Islands property…it’s always by choice & so is beyond market statistics, in a way. Days on market are irrelevant in a discretionary region…price reductions to generate action don’t work…a buyer has to feel the confidence that it’s time to act. In a downmarket economy, discretionary purchases can be put on hold. That pretty well describes the past 5 years!

There are cycles in all markets, and we may be heading into year 9 of a 10 year cycle. We should experience a market uptick in pricings, then, quite naturally, & of a significant nature, as sales build.

On top of that, we have the societal shifts wrought by the Internet, and we also have the continuing repurcussions of the economic meltdowns of late 2008. Preservation of capital is on everyone’s mind. Physical safety is a concern. Is it possible to be slightly apart & also to be self-sufficient?

All of this uncertainty may be the key driver back to real estate investments in secondary home markets…a flight to safety, both physical & economic.

Call me about the advantages to an investment in Salt Spring & Gulf Islands & Vancouver Island properties (Vancouver Island is perhaps just the largest of the Gulf Islands). I look forward to sharing statistics with you, & to discussing the slow forward momentum in real estate sales in this particular coastal marketplace.

The Salt Spring Chamber of Commerce

Chamber Chat…

…meet your Chamber of Commerce Board.

Chamber of Commerce, Salt Spring Island

Chamber of Commerce, Salt Spring Island

The Salt Spring Chamber of Commerce is celebrating 65 years as the authentic voice of Salt Spring business. And remember: anyone providing an item or a service to the public is in business.

There are both new faces & familiar faces on the Chamber Board, and everyone who has volunteered to serve on the Board, and been elected by the Chamber Membership at the May AGM, is enthusiastically working for the best for all business enterprises.

Marnie McCaughtrie, the manager of Mouat’s Clothing is a vice-president & serves on the communications/strategy committee. Her presence on the Finance committee is also valued. Marnie’s expertise in management & marketing is pivotal for the Board & the Chamber.

Fred Lizotte, an accountant at McLean Lizotte Wheadon & Company, is a vice-president & acts as treasurer. He is the chair of the important Finance committee. Fred’s input is very important to the smooth workings of the Chamber…a non-profit enterprise & there for the benefit of the entire Salt Spring business community. Fred’s thoughtful expertise is important for the Chamber’s direction.

Peter Vincent, an accomplished writer, with several articles in local publications, including the Driftwood, is heading up the Membership Committee, and as a subset of that is involved with the evolving website presence. He is the owner of North End Fitness & understands the stresses & the triumphs of small business ownership.

Linda Bradford, a B&B provider, & with extensive background in community service, is part of the membership committee, & is working with Peter Vincent to create meaningful benefits for Chamber members…specific & local B2B advantages that will benefit the entire membership.

Ken Byron, of Ken Byron Excavating, is a valued member of the Board, with a strong desire to address the issue of industrial zoning…Ken also works on an advisory committee with the Trust. His agricultural background is another link to an important aspect of the Island lifestyle. This kind of community overlap is very beneficial to the overall Chamber membership.

Matt Steffich, of Steffich Fine Art Gallery, is an enthusiastic supporter of many business initiatives. As a past president of the Chamber Board he brings that experienced voice. Currently, he chairs the Arts committee. The artistic opportunities on Salt Spring are an integral thread in the fabric of the Island’s lifestyle.

Kate Fischer, of McKimm & Lott, brings her background in law, and chairs the communications/strategy committee…a vision path for the future. She is also a member of the Health/Wellness committee.

Genevieve Price is an accomplished member of the Board, offering expertise in Events presentations (important fundraisers for the Board…allowing the Chamber to benefit many groups on the Island). Gen is also an integral member of the Health/Wellness committee. Her business interests include PUR & the Fishbowl.

Fraser Nixon, with Salt Spring Air, is also an important member of the Membership committee. Fraser would like to connect with new business owners, and has an interest in communicating the benefits of Chamber membership to all. He is working with Peter & Linda on creating serious B2B links for all Chamber members.

Murray Nurse is the link between the Chamber Board & the incredibly valued volunteers at the Visitors Information Centre (VIC). The VIC Steering Committee is headed by Murray, & Murray is also Secretary to the Board Executive. His savvy help on the communications committee is an important contribution to the Board.

Mike Best is a member of the Chamber Board, and has been involved in many initiatives of the Board during his service. Currently a member-at-large, Mike’s input on behalf of the Chamber membership is valued.

Bruce Gamble, of Bruce Gamble & Sons Construction, is looking forward to promoting the best interests of those in related businesses. To create a good business climate for same is Bruce’s concern. He serves on the Finance committee.

Bryce Chapman is also a member-at-large on the Board, and his willingness to step into committee work that would benefit from his corporate/development experience, on an as needed basis, is valued.

John Cade, a realtor with Pemberton-Holmes, is a recent voice on the current Board. Previously he was on the Chamber board for 14 years & also served as president. His interest is Small Business & his experience & enthusiasm to grow a successful business profile for Salt Spring will stand us in good stead.

As the current president of the Chamber, I am also the managing broker of Sea to Sky Premier Properties. I am proactively seeking the very best for the Chamber membership at large, & appreciate the enthusiasm & commitment of the newly organized committees. If you would like to be involved in a specific committee, your presence would be greatly appreciated.

It is so important, as we begin a slow recovery from a five to six year economic downturn, that we all work together.

Salt Spring is such an energizing as well as a scenically beautiful place to call home. It is also a place of individual thought, & that is an essential part of it. In that moment of individuality, there is also an opportunity to be a bridge-builder.

Ganges Harbour, Salt Spring Island

Ganges Harbour, Salt Spring Island

Creating connections between the construction trades & the tourism related businesses & the hospitality industry & the arts community & the wellness providers & the educators & the financial sector & the retail merchants & the restauranteurs & the tech inventors & the farming community &…you get the drift. We’re all in this together.

The interesting outcomes of the post-Internet world have created a need for interactive connectivity. What does that mean, exactly, & how will it benefit you? Stay tuned & be a part of the Chamber experience…there for you & working with you.

The next event supported by the Chamber & sponsored by key community businesses is the harvest themed Sip & Savour annual showcase of local produce, local chefs flair, & local wines to pair.

The agricultural community will benefit from this event…which is very fitting, indeed. The Chamber came into being 65 years ago, created by the farm community of that time.

Support the Chamber with your membership. Enjoy the upcoming Sip & Savour event, & help to showcase our agricultural community. Be an attendee & spread the word to others! Both providers & audience are needed. Winemakers dinners on Friday, the 27th. A stellar grazing event on the afternoon of the 28th, with 30 plus wineries in attendance. A dinner & Cuban Dance Party event on Saturday night. Plus the amazing annual Apple Fest on Sunday, the 29th. Call the Chamber office or check the Chamber website for ticket info. Janet Clouston, the Chamber Manager, is ready for your call.

September 2013, Market Analysis

September, 2013, Market Analysis

Ganges Harbour, July 2013

Salt Spring Island, July, 2013


For those who own a Salt Spring Island or a Gulf Island property, & who listed back in 2006/2007, it’s been a disturbing ride. The same can be said about Vancouver Island, the Sunshine Coast, & the B.C. Interior communities…all secondary home markets, in other words. The economic downturn afflicted all secondary home regions, globally, and the downturn in recreational areas began long before the obvious collapses in October, 2008.

After a dramatic five year run-up in sales volume & pricings, in the range of 60%, (2001 to 2005), there was a distinct pause in activity in 2006/2007. Prices softened around 12%, according to appraisers, between early 2006 & mid-2007. Sales volume was also visibly lower.

The economic meltdowns of late 2008 had global implications, and all secondary home/discretionary/resort-based/recreational regions were hard hit. No one “has to” buy a second home or make a recreational investment.

Througout 2009, 2010, 2011, there were few sales & those that did take place saw substantial price reductions en route to a further reduction at the point of an offer. The sales were mainly in entry-level residential options. Appraisers say we reduced in pricing, between mid-2007 & late 2012, by around 35%.

2012 saw a sales volume uptick of around 30%, but mainly in that entry-level residential category. Prices remained very unstable. It appeared that these were investor-buyers, looking for 3 bed/2 bath homes, easy to rent…a passive income investment, perhaps. In the main, they were not the end users of their purchases. Most sales were below 500,000.

2013 has seen a similar activity to 2012, but more end-user buyers are around, and residential sales are taking place up to 900,000. A definite improving trend appears to be in play.

A very few upper tier priced residential properties sell every year…so far, this year, the highest sale price was 1.75, and was an oceanview home on a large acreage. It had seen severe price reductions on the way to that sale.

Cottages, higher priced residential offerings, undeveloped land, residential needing significant renovations, & commercial/business options are not easily finding buyers. The bulk of the sales to date are residential options below 700,000.

For those who listed in 2006/2007, at much higher price points, which would have been market value at the time of the listing, it’s been an uncomfortable “search for the bottom”. Sellers & realtors do not create a market…buyers do that. If a buyer chooses the path of inaction, in a discretionary market, then constant price reductions don’t easily work. Buyer confidence is a huge part of the equation!

Those constant & severe reductions in 2011 & 2012 had buyers asking two questions: “how low will the seller go?” (plus: “Let’s wait & find out”) OR “what was wrong with the property?”…in a secondary home marketplace the decision to buy is rarely price driven. It’s about desire & confidence to act, on the part of a buyer.

Companies need income to remain in business. Company inspired price reductions try to create a market. Rare that this works in a recreational/discretionary area. Nevertheless, reductions make all sellers react, so as to be seen as competitive in pricing, once that company driven reduction dance begins. This kind of local market manipulation does create a local price point.

So here we are, poised at the moment of possibly authentic market recovery. Our Pacific Northwest Coast region is the tail of the dog: last down & last up.

In other regions we are hearing about thinning inventory and rising prices in entry level residential options. Even multiple offers are being reported. We are also hearing that the luxury residential segment is improving, in some areas.

Our region often follows trends elsewhere in North America within 4 to 6 months. We should thus be experiencing the same improving statistics by late 2013/early 2014.

A natural cyclical improvement, a seeking of a safe haven environment, a desire to protect capital…these are strong motivators to action in secondary home markets.

As we enter September, and that late summer/early Fall market, it may be that we will experience consistent sales…from now right through to late November. Oddly enough, the Spring timeline is no longer our busiest sales window.

The rest of Canada loves to dream about retiring to B.C.’s coast…with the Boomer move to retirement living choices, Salt Spring Island’s year round lifestyle beckons. Europe, Asia, South America, the U.S. are also looking our way.

The Internet definitely opens up all regions to a global buyer profile. At the same time, it gives that national/international buyer too many choices. So, whether it’s a buoyant or a suppressed market trend, it takes time to sell any Gulf Island property…the buyer looks “everywhere” & is totally in charge of the “where” & the “when” of a purchase decision. Sellers have to practice patience, always.

Salt Spring Island & the Canadian Gulf Islands are not municipalities. They are governed by the provincial government body known as the Islands Trust. The Trust has been in place since 1974, with the mandate “to preserve & protect” the environmental beauties of the Gulf Islands for the benefit of all B.C. residents. This is accomplished by curtailing growth via severe zoning bylaws…in a sense, growth is capped by such controls. Such inventory control does mean, over time, price escalation…as people discover the magic of these islands, want to own a piece of it, and there’s a limited amount available forever…you get the drift!

Are we now on the authentic uptick?