Tag Archives: gulf island

September 2015, Market Analysis

September 2015, Market Analysis

Salt Spring Island, 2015

Salt Spring Island, 2015

Real estate is always a sure-fire conversation starter. “What’s the market doing?” is a classic opener.

For those who have been holding secondary homes/recreational properties, during an almost eight year downturn, it’s welcome news indeed that the answer is now “Definitely improving!”.

All markets are cyclical in nature

All markets are cyclical in nature. Sellers would prefer to sell on a high, and buyers would love to buy on a low. Recognizing pivotal market trends is a tough call. It’s usual to understand things when they have already passed by…easier to enjoy that 20/20 vision of the past.

The recreational markets are particularly difficult to call. Unlike a primary residence/city marketplace, where one lives year-round, works there, sends children to school there, the secondary home/rural marketplaces are by choice areas.

Old Scott Road

Old Scott Road

No one “has to” buy a property on a Gulf Island or in a rural community on Vancouver Island. Such a decision is totally discretionary, and does require consumer confidence in economic outcomes.

The post-Internet world we all now inhabit has changed the fabric of recreational ownership. It’s probable that 100% of such purchases start with an Internet search, and possibly that start occurs a good two years before a purchase is even seriously entertained.

That internet search puts all recreational regions on the same level. The buyer is no longer specifically targeted to one area… all such regions are now in competition with each other. Choice is huge.

The difficulty with several evenly weighted choices is that the viewer of same may put off acting. A buyer wants to “be sure”, before choosing. Why this place? What about that one? How to decide? Too many choices may mean no decision is taken.

I often think that a happy visitor experience in a recreational area can lead to a real estate purchase there. Successful tourism outcomes seem to drive all secondary home economies.

So…tourist discoveries are apparently showing their best patterns since 2007. Real estate sales volume in rural/recreational regions has improved dramatically. We may be just at the beginning of a market trending upward, in such discretionary areas. This might be the brief equilibrium moment between a buyers and a sellers market.

The allure factor that encourages a discretionary property decision might be the opportunity to live, even part-time, in a kinder gentler place. To be self-sufficient. To remember our essential selves.

November 2013, Market Analysis

November, 2013.

Drummond Park

Drummond Park, Salt Spring Island, BC

Change is the mantra of our times…doesn’t matter what is under discussion.

The Internet & its very broad brush, erasing past scripts so new responses can emerge, just continues its message of shift.

Nothing escapes it.

All business models are affected & real estate is no exception. A consumer in charge, & a search rhythm that channels information gathering, are just two aspects of change.

Big picture societal shifts are also well underway.

Is the age of jobs over? If it’s a technology time, then disappearing traditional jobs may never reappear. Is the education system set up to train the engineers & programmers now needed?

One reads think-tank pieces about the hollowing out of the middle class, with fewer people doing well financially & more sliding into lower levels. Is retraining the answer?

Perhaps our time has more in common with the beginning days of the Industrial Revolution…the older Agrarian world was erasing. For a time, the old & the new co-existed…then the wealth tied to land was replaced by wealth from trade & the globalization of Empire.

It must have been a painful shift for those on the Agrarian/land side, & very exciting for those inventing what we now call the Industrial Age. It was a revolution, as it changed a way of thinking about life & one’s place in a social fabric. Dissolution and opportunity, all at the same time. Sound familiar?

Styles of living, with an aging population, are also something to be considering.

A couple of years ago, I wondered, on my radio show, if the boomers would reinvent aging the way they reconfigured childhood & early adulthood…thinking that those who once loved the group/commune life might also enjoy a personal pod space with a community cooking/meeting area.

Just read in a recent Time article that this concept of the tiny home, in a “village” layout, with a communal lodge nearby, is being successfully developed in Texas & in Oregon. One future option for that last third of a life span? Is this a concept that would suit a Gulf Island retirement concept? As Aristotle reminds us, we are a social animal. Isolation is not good for us.

Hmmm…a global village (thank you, Marshall McLuhan, for your imagineering in the 1970s), with a flattening of boundaries due to the multinational culture. A method of communication, the Internet, that furthers a no geographical boundaries world…at the same time that it’s erasing the concept of individual privacy and the idea that the personal & the corporate are separate entities.

Wow…a lot for the remaining hybrid beings (with memory of a pre-Internet world & a knowledge of the post-Internet one) to cope with? Doesn’t matter…the post-Internet beings treat it all like wallpaper…which it is, of course. Important to be in the “now”, always.

So: real estate markets follow cycles, like any market & consumer-driven item. This may be a natural recovery underway, then…year 9 of a 10 year cycle. Plus, societal shifts may be creating a safe-haven seeking…to preserve capital & to seek a level of self-sufficiency. Fear as a motivator! Certainly, for the first time in a 5 to 6 year downturn, in all secondary home/discretionary/recreational regions, there is evidence of a slow uptick.

The ways of connecting a buyer with a seller, however, have dramatically changed…especially in a discretionary region. What does this mean for you? Call me.

On these Gulf Islands/on Salt Spring Island and on Vancouver Island the activity, since early 2012, has been mainly in the entry-level residential segment…up to $700,000, say. Perhaps investor-buyers, seeking tenants/passive income stream? Maybe end-users, seeing the huge value in a recreational purchase after an almost 6 year flat time? Sellers are highly motivated & prices have reduced around 35% since 2007…it might be the last stages of a buyers market, & finally the secondary home regions are seeing this buoyancy, too.

September 2013, Market Analysis

September, 2013, Market Analysis

Ganges Harbour, July 2013

Salt Spring Island, July, 2013

For those who own a Salt Spring Island or a Gulf Island property, & who listed back in 2006/2007, it’s been a disturbing ride. The same can be said about Vancouver Island, the Sunshine Coast, & the B.C. Interior communities…all secondary home markets, in other words. The economic downturn afflicted all secondary home regions, globally, and the downturn in recreational areas began long before the obvious collapses in October, 2008.

After a dramatic five year run-up in sales volume & pricings, in the range of 60%, (2001 to 2005), there was a distinct pause in activity in 2006/2007. Prices softened around 12%, according to appraisers, between early 2006 & mid-2007. Sales volume was also visibly lower.

The economic meltdowns of late 2008 had global implications, and all secondary home/discretionary/resort-based/recreational regions were hard hit. No one “has to” buy a second home or make a recreational investment.

Througout 2009, 2010, 2011, there were few sales & those that did take place saw substantial price reductions en route to a further reduction at the point of an offer. The sales were mainly in entry-level residential options. Appraisers say we reduced in pricing, between mid-2007 & late 2012, by around 35%.

2012 saw a sales volume uptick of around 30%, but mainly in that entry-level residential category. Prices remained very unstable. It appeared that these were investor-buyers, looking for 3 bed/2 bath homes, easy to rent…a passive income investment, perhaps. In the main, they were not the end users of their purchases. Most sales were below 500,000.

2013 has seen a similar activity to 2012, but more end-user buyers are around, and residential sales are taking place up to 900,000. A definite improving trend appears to be in play.

A very few upper tier priced residential properties sell every year…so far, this year, the highest sale price was 1.75, and was an oceanview home on a large acreage. It had seen severe price reductions on the way to that sale.

Cottages, higher priced residential offerings, undeveloped land, residential needing significant renovations, & commercial/business options are not easily finding buyers. The bulk of the sales to date are residential options below 700,000.

For those who listed in 2006/2007, at much higher price points, which would have been market value at the time of the listing, it’s been an uncomfortable “search for the bottom”. Sellers & realtors do not create a market…buyers do that. If a buyer chooses the path of inaction, in a discretionary market, then constant price reductions don’t easily work. Buyer confidence is a huge part of the equation!

Those constant & severe reductions in 2011 & 2012 had buyers asking two questions: “how low will the seller go?” (plus: “Let’s wait & find out”) OR “what was wrong with the property?”…in a secondary home marketplace the decision to buy is rarely price driven. It’s about desire & confidence to act, on the part of a buyer.

Companies need income to remain in business. Company inspired price reductions try to create a market. Rare that this works in a recreational/discretionary area. Nevertheless, reductions make all sellers react, so as to be seen as competitive in pricing, once that company driven reduction dance begins. This kind of local market manipulation does create a local price point.

So here we are, poised at the moment of possibly authentic market recovery. Our Pacific Northwest Coast region is the tail of the dog: last down & last up.

In other regions we are hearing about thinning inventory and rising prices in entry level residential options. Even multiple offers are being reported. We are also hearing that the luxury residential segment is improving, in some areas.

Our region often follows trends elsewhere in North America within 4 to 6 months. We should thus be experiencing the same improving statistics by late 2013/early 2014.

A natural cyclical improvement, a seeking of a safe haven environment, a desire to protect capital…these are strong motivators to action in secondary home markets.

As we enter September, and that late summer/early Fall market, it may be that we will experience consistent sales…from now right through to late November. Oddly enough, the Spring timeline is no longer our busiest sales window.

The rest of Canada loves to dream about retiring to B.C.’s coast…with the Boomer move to retirement living choices, Salt Spring Island’s year round lifestyle beckons. Europe, Asia, South America, the U.S. are also looking our way.

The Internet definitely opens up all regions to a global buyer profile. At the same time, it gives that national/international buyer too many choices. So, whether it’s a buoyant or a suppressed market trend, it takes time to sell any Gulf Island property…the buyer looks “everywhere” & is totally in charge of the “where” & the “when” of a purchase decision. Sellers have to practice patience, always.

Salt Spring Island & the Canadian Gulf Islands are not municipalities. They are governed by the provincial government body known as the Islands Trust. The Trust has been in place since 1974, with the mandate “to preserve & protect” the environmental beauties of the Gulf Islands for the benefit of all B.C. residents. This is accomplished by curtailing growth via severe zoning bylaws…in a sense, growth is capped by such controls. Such inventory control does mean, over time, price escalation…as people discover the magic of these islands, want to own a piece of it, and there’s a limited amount available forever…you get the drift!

Are we now on the authentic uptick?

July 2013, Market Analysis

Secondary Home Market’s Afoot?

I found it very interesting to read a June release forecast, on the summer season sales projection, for secondary home markets…from a major real estate franchise in Canada.

A client phoned me up & read it to me…sounded just like one of my much earlier monthly market analyses or some of my various daily blog reports! Check out some of my past thoughts.

I have been projecting, since last August, that it would take until July this year to see a resurgence of interest in secondary home/discretionary regions. I think I am being proved right, & I am not a clairvoyant.

These “by choice” resort-based areas have been “flat”, globally, since mid-2007. Now, movement is afoot! No one can force a market…it has a natural cyclic rhythm. Now, it is with us.

No one “has to” purchase a second home

No one “has to” purchase a second home or retire in any particular timeframe or choose a recreational parcel…such purchasing decisions can be put on hold.

Consumer confidence is the key to secondary home market activity.

Can also be a market movement propelled by fear, though…in this case, might be a concern about currency validity and the preservation of capital…& perhaps even a desire for a safe haven, to be self-sufficient.

For whatever reason this action has started, this report notes that prices have been substantially reduced between 2009 & current date, in secondary home marketplaces, and so the properties selling are perceived to be hugely undervalued. Foreign buyers are apparently a large proportion of the purchasers.

A return to hard asset investments (& real estate, though not liquid, is a big item here) is clearly on the radar.

The Islands Trust

Salt Spring Island & the Gulf Islands are under the jurisdiction of the provincial government’s Islands Trust. This Trust has been in place since 1974, & it severely controls growth through strict land use/density bylaws. Call me, for more information on this.

When one has a growth-controlled model in place, a government mandated body with a “preserve & protect” guideline, and in an area of beauty, soft climate, great protected boating waters, close to major centres and yet beautifully “apart”, one also has the potential to become a global destination for those seeking amenities plus a safe haven lifestyle. What did economics 101 teach? Supply & demand? Hmmm….

I think we will see a strong clearing out of inventory over our season (which has shrunk to July/August/September/October now), with prices remaining volatile. As inventory clears out, though, stability in pricing will follow…will we see substantial price increases by early 2014? Perhaps….

It’s important to me that you enjoy a successful real estate experience on Salt Spring Island, on a Gulf Island, and on Vancouver Island…for all your real estate needs, please call me…discover the difference!

January 2013, Market Analysis, Salt Spring

Market’s Promising Show of Continuing Strength

2013 is promising to show continuing strength in hard asset investment choices, & of course real estate is considered the premier opportunity for same.

Salt Spring Island Real Estate

2013, Salt Spring Island Real Estate

In 2012, on Salt Spring Island & in most Vancouver Island secondary home communities, the entry level residential category showed the most favour. 3 bed/2 bath options, in good order, found an investor-buyer…getting out of the banks/stock market & seeking that rental passive-income stream may have been the incentive to sales volume.

Towards the close of 2012, oceanfront residential below 1.9 began to find favour.

Significant Price Reductions at close of 2012

In most cases, there had been significant price reductions over substantial timelines…both realtors & real estate companies and concerned sellers all seeking that elusive bottom.

At the point of an offer, there was usually a further price reduction delivered at that time. The buyer, especially in secondary home/discretionary regions is always in control of outcomes. No one has to buy a second or recreational home…no one has to retire at any particular moment…everything is by choice.

While it remains (for the moment) without activity over 2 million, in the residential category, and still without action in undeveloped land choices, & in cottage/retreat opportunities, and without interest in commercial/business options, it’s clear that 2012 ushered in consistency in that 3 bed/2 bath family residential opportunity, & in both primary residence & in secondary home markets…this will strengthen & grow in 2013.

Sales Volume in 2012

Sales volume in 2012 was up dramatically, then, up to a certain price point, and only in residential. There was no price stability.

By the summer season in 2013, all property segments should see the activity so far only enjoyed by residential offerings. Thinning inventory brings price stability, & in some cases creates price escalation.

The uptick is underway.

It seems that the patterns of the last two months of a year are mirrored in the first two months of the new year…especially so in a secondary home/discretionary region. It takes time in a discretionary marketplace to catch the trends flavour of a year.

In our recreational regions there is a seasonality to physicality/viewings…March Break to Canadian Thanksgiving in October, perhaps?

Search Engines Never Sleep

However, the eye of the search engine never sleeps…essential to be visible at all times. Essential to be discovered. That’s what brings the physicality. There is no time in an Internet search. It is always. If you’re for sale, be visible…it’s no longer about waiting for Spring, & better weather. Somewhere, someone is searching.

1% of a buyer discovery comes off print. In a city 7% off signage. On a Gulf Island? Maybe back to that 1%. The buyer profile is not local in a discretionary area. That means the bulk of buyers in such regions come off an Internet search.

Local print media does not bring them to the island & neither does local signage.

While important to be there, the mls system no longer delivers buyers the way it once did…globally, there is no mls system. It’s a North American item. Buyers from Asia & Europe & U.K. are not seeking information off an mls system.

Franchise “big box” companies no longer deliver referral business as was the case in the pre-Internet era.

Hmmm…everything & nothing are both important in the hunt for the elusive buyer. What do I mean by this? Call me…let’s discuss the profound changes in marketing in today’s consumer driven & post-internet real estate industry. What will work for you? Let’s talk!

In change lies opportunity.

The economic downturn was in play by early 2007. The collapses of late 2008 were just the visible outcomes. Now, the uptick is underway, and as usual the mainstream pack has missed the signals…too much rear view mirror gazing & not enough looking down the highway?

These are just the opening days of this New Year…much to solidify in the coming weeks. By late February/early March, the tone of this calendar year will be clearer, in our secondary home marketplace.

Is the buyers market over? What’s next? Contact me, for some thoughts on this and also on how to create value for you, in a real estate holding.

Always disturbing to see a business closing….

Very disappointing news that Mark’s Wear has closed, in Ganges Village.

Although a type of franchise, it was owned & operated locally.

All franchises (Re/Max & Sotheby’s are on-island franchises, as is 1% Vancouver Island Realty, in the real estate world) are usually owned & operated locally. The banks (CIBC & BMO) are a type of franchise, as are the gas stations, the grocery stores, etc. In some people having complained, last year, when the landlord built out the space & Mark’s moved into it, on this issue of a “franchise” coming to the Island, they may have overlooked that it was local people and a local enterprise. Locally owned and operated has a meaning, under the larger umbrella of a company franchise name.

Royal Lepage‘s local office (another real estate franchise, locally owned & operated) closed its branch office in March. A result of the past four years of suppressed economic conditions globally, as well as locally. Now we have Mark’s Wear closing. This means the staff have lost their jobs, quite apart from the losses of the owners. It also means that the landlord, who built out the third phase of a three phase building plan, a good 12 or so years after the initial phases, will be out of pocket. To recoup, he may turn the large space into 3 storefronts…we will have to wait to see. Then, if he does do this, he will have to attract businesses/tenants willing to take the risk of entrepreneurship.

So…the Salt Spring Roasting Company, with its 40 employees, has left the Island…unable to find a commercial/industrial zoned parcel to expand its enterprise. Fields Store has closed. Now, another effort to create a viable business, Mark’s Wear, has closed. Very worrying.

The Chamber of Commerce has tried to renew itself in order to address business interests on Salt Spring…to support business & to encourage local support. Has the concerted & advocacy based work over the past two years had any effect?

There are new businesses on Island, this year: Dragonfly (art supplies), Thrive (local ecologically green clothing store), Pure (new pharmacy), Fever Tree (specialty clothing & design items), Salt Spring Mercantile (in Fulford). Two bookstores closed, one remains, & a new Library building is almost completed. A Grace Point art gallery (Starfish Gallery) closed its doors. However, Treasures of the Heart, a metaphysical store that has replaced the loss of Windflower Moon, has opened. What about restaurants/cafes? Galleries? Home studios? Able to wait out the economic slowdown?

So…one up/one down? Hmmm….

A strong business core is the engine of a healthy community. In a non-municipal area, without funding resources, and a faltering tourism sector, will it be possible to sustain a viable commercial core on any Gulf Island?

Important question.

And your thoughts are? Always welcome!