September 2012, Market Analysis

Copyright, Li Read, 2012

September, 2012.

I often think that the Salt Spring Island & Gulf Islands real estate markets fall into thirds.

The longest time segment might be the early Spring: late January to end of April. This takes in March Break & Easter, two holiday periods that can bring property seekers, wanting to be in place for Summer enjoyment.

The next segment runs from May to mid-September. This includes Victoria Day Weekend (Canadian holiday) & Memorial Day Weekend (U.S. holiday)…both of these are seen as the beginning of the “summer season” in each country…plus July 1 & 4, and B.C. Day holiday weekend (first Monday in August), & Labour Day Weekend (early September). Tourist visiting is often the beginning of property seeking.

The timeframe from mid-October to mid-January would be the “off season”/winter period…although people come to Salt Spring over Christmas/New Year, & it can be busy with seasonal events & tourism.

There are up and down rhythms within these time segments…June, for example, is always quiet, no matter the market trend in play. If we get a lengthy continuation of summer weather into October, then it may remain busyish well past our Canadian Thanksgiving Weekend (early October).

These “thirds” are flexible, can be weather dependent, but in general our busier season would span early May to early October.

In a way, it’s seasonless…property seekers can really turn up anytime in our soft climate region.

The newly revitalized Chamber of Commerce is encouraging events in the shoulder season…for the benefit of the community’s lifestyle. Certainly, the strong artistic base to Salt Spring, the organic food growers movement, and the inspired wellness category offer lots of opportunities for visitors, and on a year-round basis. Visitors often become residents, & the renewed Chamber is promoting a year round business climate for the Island experience. Tourism is the main economic driver for all the Gulf Islands.

The economic meltdowns at the end of 2008 caused a total pause in activity in all secondary home/discretionary regions, and globally so. Prices dropped dramatically and few sales occurred. There was a flattening of activity in such regions in 2006/2007, although it took till 2008’s debacle to understand why.

It may be that we will look back in a few year’s time and decide that the bottom-bottom in the market was October 2010 to October 2011. People who acted then may yet be seen to have been very prescient.

On Salt Spring Island, and on the other Gulf Islands, on Vancouver Island, and on the Sunshine Coast, sales volume rose in entry level residential offerings, in 2012. Prices were still unstable, price reductions continued as a market feature, & buyers delivered a final reduction at the point of any offer. As inventory cleared out, though, sellers were firmer in what they would accept. Does this mean the buyers market is over?

Not quite. There has been a lack of buyer interest in undeveloped land options…even waterfronts. A continuing flat time in sales in upper tier priced residential offerings, and a reluctance to consider commercial/business/investment choices all mean that we may be in the latter stages of the buyers market pattern, but not out of it yet. The truly recreational market (cottage/cabin) has not been busy yet, either.

Sales volume in entry level residential is up in the islands, and the Fall market is just beginning. September & October may yet deliver significant sales.

To date, on Salt Spring, the bulk of sales have been below $700,000, with many of those below $500,000. The 3 bed/2 bath family home, in an affordable price range, and with rental potential, has been the item that experienced the activity uptick. This is where the recovery has to start, if it’s authentic & sustainable.

So, this Fall into Winter market moment may see the last gasp of buyer control over the market? Perhaps.

If this is year 7 of a 7 to 10 year cycle, then we should see increasing signs of price stability & even increases where inventory has thinned. Raw land & expensive properties may be where the best buys will occur as we work through Fall/Winter & into early Spring. Perhaps by this time next year we will see the rebuilding of a seller’s market?

One thing for sure: a market is not static.

Stay tuned!

August 2012, Market Analysis

Eurozone continues to implode. Or does it? Up to the brink & then words from the European Central Bank that they will do whatever it takes, to preserve the euro economic union. Does that mean printing more money? Is it a bid to inflate out of debt?

U.S. election insecurity continues. Until the votes are counted and the winner declared, we will hear & see a battle between two totally opposite mindsets…the individual vs the collective voice.

Secondary home/discretionary regions remain sporadic in sales volume…such purchases are by choice. No one “has to” buy a second home or retreat property, no matter how engaging the area might be. An ocean experience? A mountain getaway? What about a lake enclave? A desert or a forest retreat? And on which continent? That’s the interesting thing about that great & hungry search facility…it makes some place in competition with every place. We are McLuhan’s “global village”.

Nothing can be relied on that once seemed so secure. Remember the Lewis Carroll sequel to Alice in Wonderland? Titled Alice Through The Looking-Glass, it noted that one had to run very fast just to stay still…if you stopped, then everything else, trees, animals, people, objects, just whizzed by. Hmmm…is that the description of our 21st Century experience?

Certainly, change is the mantra of the moment. In change, there is discovery. And opportunity. To make it all possible, the need for an editing function has never been so necessary. Undifferentiated data is not information. Interpretation could be the gift.

Locally, we are noting a significant sales volume uptick in residential properties below 900,000, with most action below 600,000. The one million and up category is beginning to see stronger inquiries. A slow recovery appears to be underway in the secondary home/discretionary marketplace, & globally so. Prices are not yet stable, and reductions continue to take place at the point of an offer. Our main sales window in our basically seasonless marketplace is mid-July to mid-October, so this is “it”, right now.

We may be in year 7 of a 7 to 10 year cycle, which implies improvement. The economic issues from 2008’s meltdown continue to have impact…nowhere is immune in our connected universe.

Meantime, back on the Island, the pause that renews awaits your pleasure. It’s always a good time to buy if it’s your time. You’ll know when that is.

The Island offers environmental protection. It offers all 21st Century necessities. It offers a yesteryear experience of community. It offers a thoughtful pause. It offers ease of access and the comfort of familiarity. It’s not perfect, but it’s pretty close! I call that the right kind of investment.

July 2012, Salt Spring Island Real Estate Market Analysis

The short intensity of our “season” is upon us…July/August/Sept/October are the physicality moments on Island, for actual viewings.

Inquiries come in year-round, but physical presence to view happens in this short window. Often, when an offer comes in during other months, it turns out that the viewing of the property occurred during these four key months.

These months are also considered to be the best, weather-wise, in our region…definitely a correlation, then, re this timing issue.

Tourism has been the start of sales action in our Gulf Islands environment. People arrive by private boat, by ferry/car, by floatplane…they stay, meander the charms of Ganges Village & discover the environmental beauties of the Island itself…then they decide on a second home/recreational retreat or, if possible, retire & move here, to discover a new lifestyle.

No one “has to” buy on Salt Spring or on another Gulf Island…..it’s all by choice.

This discretionary quality can often mean time lags in decisions. Important for a seller to be “out there”, though, so that a buyer searching on the internet can discover their property option…even though months may go by before they turn up to view & more months may pass before a sales transaction takes place. There is no motivator to action…it’s all at the discretion of the buyer.

Sellers need to be patient & realtors need to be consistent in their marketing message. The Internet has totally changed real estate as an industry, and this is especially evident in the secondary home marketplace. The consumer is now in control, and in a secondary home/resort-based area, the consumer controls the where and the when of all sales.

That said, both the tourism discovery and the weather pattern that attracts, in this coastal region, are underway.

For the first time in almost four years, buyers are back in our area. Appraisers feel that prices dropped around 35% between mid-2007 and mid-2012. Sales volume this year, however, has gone up over last by around 40%.

The sales activity between January 1 & end of June has mainly been in the entry level residential category. Starting in mid-April, the buyer was having to come closer to a seller in offer price point…before that, a seller had to drop further, never mind the reductions en route, to meet the buyer. The difference? Thinning inventory in the entry level residential segment creates price stability.

Prices in the upper tier priced residential options are not stable. The very few sales between one million and 1.5 still show large reductions at the point of the offer.

Undeveloped land sales and commercial property sales remain “flat”.

At this beginning moment, first of July, we may see a build-up of activity in the upper tier priced properties. Between 2007 and present day, most have seen price reductions in the millions…as they slowly capture a buyer’s attention, price points drop substantially further at point of the offer. In this still sticky segment, the buyer reluctance remains a factor.

So…price stability & thinning inventory in entry level residential, lack of consistent interest in upper tier residential, with accompanying severe price reductions when a sale does take place, and no interest yet in undeveloped land or in commercial opportunities. Hmmm…sounds like a market in flux, to me.

Markets are cyclical, and we may be in year 7 of a 7 to 10 year cycle…this implies a natural uptick in activity. Thinning inventory foretells price increases. Undeveloped land sales/new construction will follow, as good residential options sell off. The upper tier options will also improve in sales as a safe haven seeking continues to grow.

So important, in a shift moment, to be looking down the highway and not in the rear view mirror. A positive change is underway in real estate investing.

We are just entering our “season”…and the larger market cycle is slowly upticking. As a seller, this is good news for the first time in four years. For a buyer, it’s an alert to act now…that proverbial buyers market does not last forever, and by this time next year may have vanished entirely.

Perhaps this is the sales volume season?

More information? Call me! How may I help you to buy or to sell your special Island property? Look forward to bringing my knowledge (of both inventory and of trends) to your benefit.