October 2011 | Salt Spring Island Market Analysis

October, 2011.

It’s Harvest Time…also, in the business cycle, it’s now the fourth quarter.

The general dishevelment of this “real” 21st Century remains with us all.

Yes, in a way real estate remains localized. It’s the item we know, if we’re local.

In another, it’s not…global issues afflict all regions, no area is exempt from big picture events and economic concerns, and, in the localized moment, the mainly non-local consumer of a secondary home/discretionary and possibly resort based item can put ownership decisions on hold…it’s about consumer confidence, of course!

That Internet, the platform we now all rest upon, changed the terrain of perception forever. It erased time and geography, created McLuhan’s “global village”, and made “someplace” become in competition with “every place”, as the world citizen consumer looked around for “their” retreat space.

This all happened at the same time as financial institutions commoditized housing…the greater fool concept was unleashed, and look where that got us (and globally so…nowhere is exempt, remember). That butterfly effect is in play….

Markets have cycles. There is a theory that real estate trends have a seven year cycle. In looking back, it’s clear that things went into “pause mode”, for secondary home/recreational markets, in early 2006. Sales volume flattened and by early 2008 sale pricing had begun its downward track. The economic collapse of Fall 2008 was just the outward face of what had begun in 2006. If the seven year cycle theory is correct, then we’re in year six…at the subterranean level, perhaps we are already on the way up!

Well…maybe!

What we do know, in secondary home markets, and that includes Salt Spring Island and the Gulf Islands, is the following:

  • – good inventory choice in properties.
  • – significant & impressive price reductions (30 to 50%, depending on location and property type).
  • – historically low interest rates available re mortgage financing.
  • – motivated sellers, willing to look at serious offers, even when a further price reduction is involved, at the point of the offer.
  • – a growing sense that inflationary pressures will be the outcome of the debt crisis issues…the hard asset protection of capital becomes of interest.

Hmmm…sounds like this might be the best buyer’s market scenario in many years! Listening, buyers?

For quality information, expertise, with valuable knowledge of both inventory and of market trends, and a sincere desire that buyers achieve their ownership dream, please call me…I look forward to connecting with you.

September 2011 | Salt Spring Island Market Analysis

September, 2011.

Salt Spring Real Estate Market Update

As we are daily reminded: the only constant in life is change.

It’s also true that in change lies opportunity.

Our post-Internet time has obliterated time and so there is both no time, as in time famine, and also always time, as in never off.

With the search engine never asleep, and anything you want to know just a keystroke away, the power of the search now resides with the searcher…that means the consumer, in a sales situation.

Switzerland

Switzerland via NASA (and flickr.com)

This has huge impact on all real estate in secondary home/discretionary areas, where the Internet has erased both time and geography, and where someplace is now in competition with everyplace…it becomes essential to market the area itself as well as the property located there.

someplace is now in competition with everyplace…

This encourages time lags in decision-making…the buyer has to first discover the area, then visit, then think about what it means to his/her lifestyle, compare it to other options, and then has to focus in on the actual properties of potential interest in the chosen area.

Time is a factor..,perhaps a purchase will take from one to five years in a discretionary area. If it seems to happen more quickly, it may simply mean that the buyer has already been through the above process, may be back for a third “look”, with months between visits, when suddenly a desired property comes on the market, at same time. That can happen!

Patience plus international marketing is the key for secondary home/discretionary/resort based regions..,and globally so.

We are now residing in Marshall McLuhan’s “global village”…a local buyer for a Gulf Island property might come out of Vancouver or Calgary or San Francisco or Toronto or Shanghai or Sidney or Auckland or London or Bern or..,you get the drift! “Local” doesn’t mean in your own backyard, anymore.

Throw in up or down market trends, currency valuations, deflation/inflation arguments…and there’s more “time lag” components!

Over time, an investment in a secondary home/discretionary area will appreciate…it’s a “long tail” investment, though, never a fix & flip.

As soon as a consumer is in charge of a process, time is a companion in a sales situation.

More info? Call me! And your thoughts are? Always welcome!

How may I help you buy your special Salt Spring Island or Southern Gulf Islands opportunity?

Call me!

August 2011 | Salt Spring Market Analysis

Copyright, Li Read, 2011

August, 2011.

Each month that passes, since that October to February 2010/11 timeframe, which may be looked back at as a “transition moment”, shows continuing slow but steady improvement in both showings action and in sales.

It is true that the main sales activity falls into what might be described as entry level residential. To date, undeveloped land, commercial/business options, cottage/retreat properties, and upper tier priced residential opportunities, remain “flat”.

It’s interesting to note, though, that the entry level pricings that found buyers, in 2009, were below $450,000. By 2010, this had crept up to $650,000. Now, we are seeing sales in the low to mid-700s.

There are random encounters in the $900,000 to 1.8 million range, with the higher tier being found in the oceanfront residential options, but they are few and far between, with little pattern developing as to a trend.

Price reductions have been a feature of our secondary home/discretionary marketplace for the past two to three years. Until very recently, these reductions did not result in more viewings or in offers. The buyer remained reluctant.

However. since it is essential to be seen as competitive in pricing, most sellers did reduce substantially over the past 18 month period. Some appraises feel that we reduced in pricings by around 30%, between mid-2007 and current date. With so few sales to point to, though, in any one category, it’s difficult to rely on this totally.

As of July 22nd, the weekly solds to date for 2011 saw the bulk of sales in residential, up to $680,000 (72 in total, up to $700,000, with over 50 of these sales coming in under $500,000). There were seven sales between $700,000 and $900,000. There were four sales between $900,000 and one million. Another four sales between one and two million. Only one sale over two million.

In most secondary home/discretionary regions, globally, there is always an inverted pyramid, I think, with the “affordable” entry level residential being a smaller inventory, and the higher end/luxury options being the majority…a different circumstance from a primary residence/city market.

In all discretionary regions, it has been slow in sales since early 2006. In January, 2007, the Wall Street Journal did note that all secondary markets were “stable/inactive” throughout 2006…they meant by this that inventory and prices remained stable and the buyer had become inactive.

So, in spite of all the worries afoot in our post-internet time, with change the constant mantra for all business, there are still cyclical patterns in markets…this is true for the stock market side of investment, and also so for the hard asset options (including real estate).

Although the city markets may not have calmed until late 2007/early 2008, Salt Spring and the Gulf Islands followed the global trend in all discretionary markets…we were “on hold” from that early 2006 moment. No one “has to” buy a second home or a retreat property or a future retirement option in any particular timeframe. It is always by choice. Since early 2006, then, the reluctant buyer syndrome has been present in all similar discretionary areas, around the world…the Fall, 2008 economic meltdowns just solidified for everyone/all markets just what that early hesitation dance had been about, in the secondary home / resort based regions.

Throughout 2009/2010, the sales were slow, were only residential, and mainly entry level pricings. In a downturn, no one is looking for a holding option or a building opportunity, and so undeveloped land does not attract interest. Houses are viewed (3 bed/2 bath), and that means a lack of interest in a recreational/cottage purchase. Higher priced residential lingers, too, as people hold cash…sometimes hoping that prices will come down further, and sometimes out of concern that cash is best to keep, if deflation wins out over the inflation scenario. That “argument” continues!

Underneath all of that worry over currency instability, and a seeking of a safe haven, which might be the driver to action in the rural and secondary home marketplaces right now, there is that cyclical nature of all markets. We may actually be in year six of a seven year cycle, which means we’re already on the way up. Savvy investor buyers may be acting now, while prices remain very soft, sellers are highly motivated, interest rates remain historically low, and there is good inventory choice in all property types/price ranges. Such purchasers may be of the opinion that the inflation scenario will be the winner of this lengthy argument between two outcomes…deflation vs inflation.

Whatever the reason, there is a difference out there right now. Locally, and for the first time in two years, we are seeing consistent interest, with physicality on Island to view options, not just phone calls or emails or facebook inquiries. In the viewing, it doesn’t mean an offer will come in, but the viewing has to happen first…good news, then, that there is this uptick.

Tourism has also increased, after a good two years of inaction. The marinas are busy with boaters, the galleries and markets in the park are busier, B & Bs and restaurants are busier, and the general “verve” of the Island does seem to have returned to 2007 levels. Good news all the way around, then.

Slow, yes, but it is steadily processing onward, and if this is year six, then we will see next year turning out to be very active and a start into Seller’s Market conditions again.

Nothing stays up or down, and equilibrium is a passing aspect…the sign of a transition moment. Perhaps that’s where we are, right this second?

Hmmm….

It appears, as well, that our local market will be brisk throughout August, September, October, and possibly into early November. A later / longer trend for this year. Perhaps a part of the year six moving into seven scenario? Always welcome your thoughts, too!

Looking for a Salt Spring Island or Southern Gulf Islands property? Call me! Successfully connecting buyers with sellers, since 1989, I look forward to bringing my expertise and knowledge (of both inventory and trends) to your benefit.

How may I help you to buy your special Island property?