January…it starts with resolutions.
There’s something about that blank palette at this very beginning of the month, in this introduction to a new year. We want to shape ourselves up.
A new year invites change. Change offers inspiration and also brings uncertainty. A mixed bag. The beginning of January is also full of forecasts for the new year…investment suggestions are at the forefront. The key question: how to be safe?
And what about specific real estate forecasts?
For Salt Spring and the Southern Gulf Islands, it always seems that the last two months of the preceding year are similar to the first two months of the new year.
Rise of Interest Rates
Looking at late Fall, 2022, then, we noted that the listing inventory continued to be very low. Properties below a million tended to be strata options or small homes/cottages (most needing renovation or rebuild work). There were quite a few residential listings between one and two million. Sales were mainly below the million mark. A very few sales took place between 2 and 3 million. That “middle” person price category of one plus million seemed to have softened by late 2022. Was this a result of rising interest rates?
Arriving at the beginning of the new year, we note continuing low inventory. Prices have seen downward pressure since late Fall, and this may continue in early 2023. Price reductions do not always trigger viewings or offers. If a buyer is reluctant to act, they will tread water, seeking some market clarity. Most buyers continue to be from Vancouver and the desire to drop urban and seek rural remains a propeller of action.
It’s a good idea to attend investment seminars, whether in person or by webinars/podcasts. No one really has a definitive blueprint in this time of shift, but it’s good to let information pass through us…something that speaks to us will jump out. Be listening.
I found it interesting that some major National real estate brands were surprised that very little inventory came onstream in late 2022. They had thought the interest rate rises would have led to a spill-out of listings. However, if they can, it appears that most owners are choosing not to be sellers.
Some Certainties Lie Ahead
The Canadian government is seeking 1.5 million immigrants by 2025 (that’s 500,000 new arrivals each year, starting in 2023). At the same time, the federal government is banning foreign purchases for two years…starting January 1. Mixed messaging?
As long as supply is low, it seems to promise price stability in real estate markets. CMHC (Canadian Mortgage & Housing) noted in 2022 that 22 million dwellings would need to be in place in Canada by 2030, or the lack of housing problem would not be addressed. Hmmm….. Add in that real estate keeps pace with inflation, and may protect from currency issues, and it seems that stability in real estate, especially in unique and beautiful places, may continue.
Until March, Predictions can be in vain
The very beginning of January is too early to make any significant projections about local real estate markets. Impacts of government taxation measures, interest rate rises, lack of supply, concerns about impending recession, continuing inflationary pressures, questions about currencies…one cannot ignore these global concerns. Locally, it always takes until March Break in the Gulf Islands to see the possible tone of this new calendar year. Continuing low inventory will be key.
Meantime: it’s the beginning of January. Time to enjoy the softer season on the Gulf Islands. There are always things to see and do…and every day is that little bit lighter and longer. Meteorological Spring begins on March 1st…a hop, skip, and a jump from January 1st.
So, time to hike and walk the trail systems, to do some early spring cleaning, to sort files and spiff up the office, to keep up on projections, to meander the art galleries (to inspire one’s soul), to do lunch at our great restaurants and ponder the views (important to support local), to take 5 as the great Brubeck played…and to simply be. A fallow field moment is always restorative. A time out.
It’s January. Enjoy!