June 2013, Market Analysis

June 2013, Market Analysis

Here we are in June…the half way point in this oddly (to date) haphazard sales year.

In 2012, the majority of sales were in the entry level residential category, and sales took place right from early January. That was unusual, as normally March Break begins a sales pattern. A very few upper tier priced residential options did sell in 2012, but at markedly lower prices than sellers might have hoped for, and these were mainly waterfront choices.

Entry Level Residential Sales Remain Unchanged

To date, in 2013, this pattern of entry level residential sales remains unchanged, although sales did not begin to broadly appear until closer to March…a more typical action.

Galiano 2 Homes & 2 Docks

Galiano 2 Homes & 2 Docks

The bulk of sales remain in that beginning priced residential segment and, again, a very few upper tier priced residential offerings, still mainly waterfront choices, have found buyers.

Many of these waterfront sales, in both 2012 & this year to date, had been on the market for 2 to 7 years, had seen substantial reductions over time, & then received a further reduction at the offer point. In other words, the buyer was in charge of the process.

Price reductions of a substantial nature continue to come in, on a consistent basis, from some realty companies. This may have more to do with the need of that realty company to generate income to balance the very expensive outgoing costs of being in the real estate business.

Local Market Manipulation

Local market manipulation is a real thing, however, and all sellers have to respond to this in an effort to remain competitive in pricings…a series of reductions from one company will then, in the end, impact listings prices from all companies.

A very few undeveloped land options have sold this year, and that is a heartening sign. I always think that sales of raw land are a true indicator of an authentic real estate recovery in our kind of secondary home/discretionary marketplace. In a downmarket, the few buyers around are attracted by rental or income producing options…thus, raw land can be overlooked.

Our Gulf Islands sales window has shrunk to May to October. People may make offers at any time…chances are, though, that they viewed during this narrow timeline of physicality.

It may take until August to understand this year’s market pattern, as there are not enough sales yet to point to a trend. All we can say is that sales volume continues as in 2012, and that there are a lot of choices in residential offerings over 600,000.

Property Inquiries on the Rise

Inquiries do appear to be on the increase, and that’s a good sign! Physicality will follow. Some new listings, in the waterfront segment, are coming onstream at 2007 price points. That is also interesting….

The Gulf Islands form of governance is the Islands Trust. Created in 1974, with a mandate of “to preserve & protect” the environmental beauties of these islands, for the benefit of all B.C. residents, this Trust thus controls growth via severe zoning/bylaw restrictions.

So…sounds like limited inventory, over time, to me.

What’s Next?

As we climb out of the downturn that has gripped all secondary home markets since mid-2007, we will start to encounter a lack of inventory, based on this non-growth Trust stance…just as buyers are once again seeking places to preserve their capital.

Sounds like sellers market conditions are reappearing, in other areas. Multiple offers are being reported in busy primary residence regions. Hmmm….

Important to be paying attention to the shift moment, whether as a seller or a buyer, at this mid-way point between market trends.

Yes, very essential to know the past sales, but also important to recognize the uptick. Pricing by a seller & offered price by a buyer, at such a mixed time, are both needing extra thought.

So, the Gulf Islands (including Salt Spring) have bylaws that control/restrict growth. Plus the real estate market in secondary home/discretionary regions may be entering a recovery…in year 8 of an 8 to 10 year cycle? Buyers have again decided to act. The driver to buyer action may be a safe haven seeking…a hard asset purchase to preserve capital.

Prices have not yet stabilized, but this is just the beginning of our “season”…May to October…will prices be showing firming, by September? Hmmm….

The supply & demand rule is the marker of change.

Important to be paying attention to the “now”, and not to the flatness of the past 5 to 6 years. No rear view mirror reflections, then. We need to be looking ahead.

In change lies opportunity.

May 2013, Market Analysis

Ch-Ann

Recently watched a cable t.v. knowledge network style bio on a local game designer…he was one of a few game programmers/designers to be given new virtual tour equipment, to see what kind of game he could come up with, in using it. Wow! There’s the 21st century for you. A small town techie on a par with silicon valley style locations.

Beyond the “anyone anywhere can invent the future” scenario, though, lives (perhaps) the next great thing.

If within 2 to 5 years virtual reality will be seamless & everywhere, a guesstimate by this game designer, then why will we need real malls, real storefronts, real showrooms, real offices…already the retail world is moving online, the most recent recipient of that Internet eraser.

Salt Spring Island

Salt Spring Island


What will our world look like in 5 years, when this gamer thinks virtual reality will be mainstream?

Will we need real schools? Will we have offices seemingly “there”, but just virtual versions? Retail will be virtual? What will home designs look like?

Hmmm…ok imagineers, it’s change that brings opportunity. Time to be creatively thinking.

And specifically, as it’s my current world, what effect will virtual reality have on real estate marketing?

And your thoughts are? Always welcome!

Locally, our real estate sales window has now become May, June, July, August, September…with the reminder that the first three weeks of June are always quiet.

A short and intense timeline, thus. People search all the time & year round, so it’s important to “be there”, on all the internet opportunities. Otherwise, areas won’t be discovered…people won’t come. So, marketing is a year round business and physicality is a 6 month affair with 3 months being the busiest. Hmmm….

In 2012, we saw a substantial increase in sales volume in entry level residential options. In the main, sales were below 400,000…best described as investments, with rental potential. Prices were not stable and reductions continued, in that search for the bottom. A handful of sales in higher end properties, towards year’s end, in waterfronts, was perhaps a sign of a move back into authentic real estate investment in unique areas. Many of these offerings had been on market for 4 to 7 years, & in spite of reductions in price, en route, there were further reductions at point of the offer.

The first quarter of 2013 has been oddly flat in sales. It may be that a digesting moment is underway: concerns over currency instability, the perceived over-creation of paper monies, banks not easily lending, the Cyprus issue, the threat of terrorism in North America, the intermingling of inflation & deflation scenarios, the search for a safe haven, the desire for sustainability…it’s a mix of all things, and the bottom line could be a flight to hard asset investment as a way to preserve capital.

Safe Haven Investing is my name for it, and Salt Spring Island & the Gulf Islands are beautifully positioned to deliver on this requirement: proximity plus being “apart”.

In many U.S. States, real estate has become very buoyant, with approximately 40% of sales to international buyers. And they are mainly cash sales.

I always feel that our area follows such statistics within 4 to 6 months. Thus, we may see this rush back to property by late July/early August…and there is not a large inventory of listings, as soon as one prioritizes type & price. Hmmm….

Treading water in May/June is perhaps a good idea. The trend for this year is just developing now.

If needing a sale, perhaps try to hang on till mid-July. Things are just starting to clarify.

If a buyer, an alert that the buyers conditions of the past 4 to 5 years may almost be over. These weeks may be the last time to discover a good residential offering at a price that recognizes the buyer point of view.

In either case, change is underway & is happening right now.

Hmmm. In change lies opportunity.