Tag Archives: March Break

June 2013, Market Analysis

June 2013, Market Analysis

Here we are in June…the half way point in this oddly (to date) haphazard sales year.

In 2012, the majority of sales were in the entry level residential category, and sales took place right from early January. That was unusual, as normally March Break begins a sales pattern. A very few upper tier priced residential options did sell in 2012, but at markedly lower prices than sellers might have hoped for, and these were mainly waterfront choices.

Entry Level Residential Sales Remain Unchanged

To date, in 2013, this pattern of entry level residential sales remains unchanged, although sales did not begin to broadly appear until closer to March…a more typical action.

Galiano 2 Homes & 2 Docks

Galiano 2 Homes & 2 Docks

The bulk of sales remain in that beginning priced residential segment and, again, a very few upper tier priced residential offerings, still mainly waterfront choices, have found buyers.

Many of these waterfront sales, in both 2012 & this year to date, had been on the market for 2 to 7 years, had seen substantial reductions over time, & then received a further reduction at the offer point. In other words, the buyer was in charge of the process.

Price reductions of a substantial nature continue to come in, on a consistent basis, from some realty companies. This may have more to do with the need of that realty company to generate income to balance the very expensive outgoing costs of being in the real estate business.

Local Market Manipulation

Local market manipulation is a real thing, however, and all sellers have to respond to this in an effort to remain competitive in pricings…a series of reductions from one company will then, in the end, impact listings prices from all companies.

A very few undeveloped land options have sold this year, and that is a heartening sign. I always think that sales of raw land are a true indicator of an authentic real estate recovery in our kind of secondary home/discretionary marketplace. In a downmarket, the few buyers around are attracted by rental or income producing options…thus, raw land can be overlooked.

Our Gulf Islands sales window has shrunk to May to October. People may make offers at any time…chances are, though, that they viewed during this narrow timeline of physicality.

It may take until August to understand this year’s market pattern, as there are not enough sales yet to point to a trend. All we can say is that sales volume continues as in 2012, and that there are a lot of choices in residential offerings over 600,000.

Property Inquiries on the Rise

Inquiries do appear to be on the increase, and that’s a good sign! Physicality will follow. Some new listings, in the waterfront segment, are coming onstream at 2007 price points. That is also interesting….

The Gulf Islands form of governance is the Islands Trust. Created in 1974, with a mandate of “to preserve & protect” the environmental beauties of these islands, for the benefit of all B.C. residents, this Trust thus controls growth via severe zoning/bylaw restrictions.

So…sounds like limited inventory, over time, to me.

What’s Next?

As we climb out of the downturn that has gripped all secondary home markets since mid-2007, we will start to encounter a lack of inventory, based on this non-growth Trust stance…just as buyers are once again seeking places to preserve their capital.

Sounds like sellers market conditions are reappearing, in other areas. Multiple offers are being reported in busy primary residence regions. Hmmm….

Important to be paying attention to the shift moment, whether as a seller or a buyer, at this mid-way point between market trends.

Yes, very essential to know the past sales, but also important to recognize the uptick. Pricing by a seller & offered price by a buyer, at such a mixed time, are both needing extra thought.

So, the Gulf Islands (including Salt Spring) have bylaws that control/restrict growth. Plus the real estate market in secondary home/discretionary regions may be entering a recovery…in year 8 of an 8 to 10 year cycle? Buyers have again decided to act. The driver to buyer action may be a safe haven seeking…a hard asset purchase to preserve capital.

Prices have not yet stabilized, but this is just the beginning of our “season”…May to October…will prices be showing firming, by September? Hmmm….

The supply & demand rule is the marker of change.

Important to be paying attention to the “now”, and not to the flatness of the past 5 to 6 years. No rear view mirror reflections, then. We need to be looking ahead.

In change lies opportunity.

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.

March 2012, Salt Spring Island Market Analyses

It seems, in our secondary home/discretionary area, that January & February are often a continuation of the rhythm of November & December, of the previous year.

March, then, usually begins the pattern of the current year, and the number of March Break arrivals to view property, and possibly to make offers, forecasts the summer season…busy at March-Break-into-Easter usually means brisk sales time from mid-May to mid-September (our traditional “season”).

We may be in year seven of a seven to ten year cycle, which means a slow upticking in sales volume may already have begun. To date, there have been fourteen firm sales, since beginning of January. Ten have been under 620,000…most below 500,000.

This steady sales pattern mainly in the entry level residential category has been a feature of the Salt Spring sales picture for about two years…this busier first two months is perhaps a sign of consistency to the marketplace…a good feature, indeed.

Sales in undeveloped land options have not yet improved. In a downmarket, buyers are not seeking a holding property nor do they want a building project. The slow roll-back of the HST tax may help in the new home category
, particularly in city or large town environments, with developments & spec housing…in discretionary/secondary home areas, where building projects are custom & personal options, the HST repeal may or may not create activity.

The upper tier priced luxury residential segment also remains quiet. In some few cases on Salt Spring & the Gulf Islands, extraordinarily motivated sellers have accepted very low prices, well below intrinsic or replacement values & also below tax assessments. Personal need is not noted by appraisers; they look at the sale price, only. These lower prices will affect stats.

In many cases, in the luxury segment, local realtors have encouraged very broad price reductions, in an effort to jump start action from a buyer. These reductions do not appear to create buyer interest. In a secondary home marketplace, a purchase is about choice…and that choosing can be deferred until the buyer sees a definite sign of a hard asset recovery. Buying is an action propelled by confidence.

Price reductions do affect all sellers, however, as it is essential to be seen to be competitive in pricing, when a buyer might be looking at equivalent properties, also for sale.

Thinning inventories may lead to price stability and then to slowly increasing prices.

Nothing ever stays down (or up)…that equilibrium moment, when the teeter-totter of a market cycle appears to be evenly balanced, is of very short duration.

Low mortgage rates are not the motivator to action that one might think. It is buyer confidence that creates a market response. Sellers and realtors do not create a market…buyers do.

In a city market, there are usually more entry level options available, overall, and correspondingly fewer luxury choices. In a secondary home/discretionary and resort-based area, the opposite is true. Such areas attract buyers lucky enough to own more than one property, or purchasers who, because of the Internet, can choose to live anywhere in the world and thus could work from a Gulf Island, or perhaps the buyer is someone who has done well elsewhere & can now choose a Gulf Island to retreat/”retire” to…it’s a specialized buyer profile who is in a position to create their personal dream.

A purchase in an area like Salt Spring Island and the Gulf Islands is about choice…and choice in timing is also a part of this. The buyer sets the pace in a discretionary marketplace.

The Gulf Islands are not municipalities…they are governed by the government body known as the Islands Trust. The Trust has been in place since 1974, & development on all the Islands is firmly controlled by strict zoning/density bylaws.

Bowen Island voted to become a Gulf Islands Municipality some years ago…the Trust & its bylaws remain in place, however. Salt Spring might consider this outcome, too.

There is an impression that the international market is moving out of cash right now and back into hard assets/commodities, including real estate. The continuing unraveling of the global economic picture has an impact on every region. We are in the post-Internet world, vitally interconnected, and the Global Village is with us. In difficult times, hard asset investment is understood as a way to protect capital.

An interesting sidebar to the post-Internet world is that it has not only erased time & geography, but has also made “someplace” in competition with “everyplace”. It’s a big world, after all! Choice, again….

Salt Spring Island and the Gulf Islands enjoy scenic beauty and environmental protection. They enjoy all of the amenities necessary to partake of life in the “real” 21st Century, and yet experience the allure of “yesteryear”. They have easy access to major centres, yet offer a village lifestyle. A temperate climate creates opportunity to be self-sustaining…the 10K diet is alive & well, here. A strong arts community, a dynamic cultural life, an oceanfront pleasure…these islands are in the heart of the best protected boating waters in the world. One is gifted to be able to live in this still very undiscovered area.