October 2012, Salt Spring Market Analysis
Here we are…half way through our Fall Market. The Fall Market encompasses late August to late November, in our region.
Traditionally, around 60% of transactions used to take place between late August and late November.
During the past 3 to 4 years, however, nothing has been “traditional”.
The economic meltdowns of late 2008 unleashed a real estate collapse in the U.S. which, within a year, had afflicted all regions, globally.
Secondary home/discretionary regions were the most sorely afflicted…no one has to buy a second or third home, or retire in any particular timeframe, or buy a recreational/retreat property…it’s all by choice. Globally, secondary home markets saw little to no action, between 2009 & late 2011…appraisers noted that prices reduced around 35%, in our island region, between mid-2007 & late 2011.
At the same time, the local Chamber’s gathering of tourist information noted that tourism on the island was down by around 40%, in past two years (2010 & 2011).
Since tourism is the usual first entry pointer to the islands, it’s easy to understand that a real estate purchase is usually generated by a tourist visitor falling in love with the area and then deciding to buy a property to enjoy.
No visitor…so no follow-up real estate buy…& then no hiring of an architect or designer, no work for a contractor, an electrician, a plumber, an excavator to create a driveway/prep a site, a back hoe to prep for a septic system or a landscape plan…then there are the painters, interior designers, furnishing providers, appliance providers, flooring installers…etc. etc. etc.
What about restaurants, galleries, banks, insurance agencies, gas stations, car maintenance, schools, grocery stores, accomodation providers, clothing outlets…basically, a community’s lifestyle! All were affected, in the end, by the faltering of tourism between 2009 & 2011, and thus the corresponding lack of sales in real estate offerings.
Realtors truly do start the train of a community’s business health!
2012 has seen a resurgence in sales volume in the entry level residential category, with some few sales in upper tier priced properties also lately beginning to sell.
In spite of dramatic price reductions en route, most sales still see a further reduction at the point of the offer. The buyer, at this moment in time, is still in control of the sales process. As inventory thins, prices will solidify…even multiple offers will be possible.
Markets are not static
Markets are not static items…they flow between the extremes of a sellers and a buyers market. We may be going into year 8 of an 8 to 10 year cycle, which promises stronger sales & more stable pricing…the downturn of late 2008 to early 2012 should have erased, perhaps by this time next year. No crystal balls, so only best guesstimates in play!
Secondary home markets, unlike city/primary residence areas, are driven by buyer activity. Buyers are back this year, even if it’s mainly only been active in the entry level residential segment. Good news, indeed. Sales in upper tier residential options are beginning to emerge. To date, undeveloped land sales remain inactive. No interest in commercial options yet, either.
The media is reporting downturns in real estate sales/prices in both Victoria and in Vancouver. These are primary residence/city markets. The pattern in the Gulf Islands/on Vancouver Island is a secondary home rhythm. Nevertheless, no area or market trend is untouched by another…an outcome of the Internet is the blurring of such divisions.
Uncertainty remains, and this may continue to impede strong action in all secondary home areas…purchases there, remember, are by choice.
Worry about societal outcomes, though, can also encourage action…safe haven investing is a real thing. That may result in much stronger sales.
Beginning of October
So, we arrive at the beginning of October with mixed messages. Price reductions continue to flow in from all local realty companies, in an effort to jumpstart action. Sellers of upper tier priced properties, many needing updating, who have been listed for 3+ years, take very low offers when they are presented, & yet step-in ready, almost new homes, up to 2 million, find buyers, & often sell close to their list price. Undeveloped land remains quiet.
So…sounds like everything is on the table, & price points of what is selling continue to slowly increase. A market slowly upticking? I think so. It appears that 2013 may be the year of renewal in real estate markets.
Meantime, this still evident buyers market, plus low interest rates, do encourage a thoughtful purchaser to consider buying a Gulf Islands/Salt Spring Island property opportunity “now”.
Soft temperate micro-climate, scenic beauty, rich cultural opportunities, good schools, easy access to major centres, hospital & health services on Salt Spring…it’s a plum!
How may I help you to buy your special Salt Spring Island or Gulf Islands property?