Tag Archives: market analysis

July 2012, Salt Spring Island Real Estate Market Analysis

The short intensity of our “season” is upon us…July/August/Sept/October are the physicality moments on Island, for actual viewings.

Inquiries come in year-round, but physical presence to view happens in this short window. Often, when an offer comes in during other months, it turns out that the viewing of the property occurred during these four key months.

These months are also considered to be the best, weather-wise, in our region…definitely a correlation, then, re this timing issue.

Tourism has been the start of sales action in our Gulf Islands environment. People arrive by private boat, by ferry/car, by floatplane…they stay, meander the charms of Ganges Village & discover the environmental beauties of the Island itself…then they decide on a second home/recreational retreat or, if possible, retire & move here, to discover a new lifestyle.

No one “has to” buy on Salt Spring or on another Gulf Island…..it’s all by choice.

This discretionary quality can often mean time lags in decisions. Important for a seller to be “out there”, though, so that a buyer searching on the internet can discover their property option…even though months may go by before they turn up to view & more months may pass before a sales transaction takes place. There is no motivator to action…it’s all at the discretion of the buyer.

Sellers need to be patient & realtors need to be consistent in their marketing message. The Internet has totally changed real estate as an industry, and this is especially evident in the secondary home marketplace. The consumer is now in control, and in a secondary home/resort-based area, the consumer controls the where and the when of all sales.

That said, both the tourism discovery and the weather pattern that attracts, in this coastal region, are underway.

For the first time in almost four years, buyers are back in our area. Appraisers feel that prices dropped around 35% between mid-2007 and mid-2012. Sales volume this year, however, has gone up over last by around 40%.

The sales activity between January 1 & end of June has mainly been in the entry level residential category. Starting in mid-April, the buyer was having to come closer to a seller in offer price point…before that, a seller had to drop further, never mind the reductions en route, to meet the buyer. The difference? Thinning inventory in the entry level residential segment creates price stability.

Prices in the upper tier priced residential options are not stable. The very few sales between one million and 1.5 still show large reductions at the point of the offer.

Undeveloped land sales and commercial property sales remain “flat”.

At this beginning moment, first of July, we may see a build-up of activity in the upper tier priced properties. Between 2007 and present day, most have seen price reductions in the millions…as they slowly capture a buyer’s attention, price points drop substantially further at point of the offer. In this still sticky segment, the buyer reluctance remains a factor.

So…price stability & thinning inventory in entry level residential, lack of consistent interest in upper tier residential, with accompanying severe price reductions when a sale does take place, and no interest yet in undeveloped land or in commercial opportunities. Hmmm…sounds like a market in flux, to me.

Markets are cyclical, and we may be in year 7 of a 7 to 10 year cycle…this implies a natural uptick in activity. Thinning inventory foretells price increases. Undeveloped land sales/new construction will follow, as good residential options sell off. The upper tier options will also improve in sales as a safe haven seeking continues to grow.

So important, in a shift moment, to be looking down the highway and not in the rear view mirror. A positive change is underway in real estate investing.

We are just entering our “season”…and the larger market cycle is slowly upticking. As a seller, this is good news for the first time in four years. For a buyer, it’s an alert to act now…that proverbial buyers market does not last forever, and by this time next year may have vanished entirely.

Perhaps this is the sales volume season?

More information? Call me! How may I help you to buy or to sell your special Island property? Look forward to bringing my knowledge (of both inventory and of trends) to your benefit.

May 2012, Salt Spring Island Real Estate Market Analysis

Copyright, Li Read, 2012

May, 2012.

It’s Spring in more ways than one…the slow uptick in the real estate market continues. Is this the renewed market everyone has been seeking?

Beginning days of improvement are underway, after the severe three year “Fall & Winter” flat/inaction in the hard asset investment choices…now there is a re-emergence of sales volume…are we in year 7 of a 7 to 10 year cycle? Perhaps.

If so, it’s a natural progression towards stability & growth. All markets follow cycles, and the feedback from all regions is that sales volume has jumped up in the entry level priced residential property category. Prices are still volatile.

This entry level pricings segment always improves first…in our local region, we have seen a sales volume uptick of around 30%, although the majority of sales to date are below 700,000…& most sales still fall below 500,000.

Prices are not stable and there are still serious price reductions at the point of an offer, in spite of earlier reductions en route to the offer.

Action in the upper tier priced residential category remains very spotty/flat…undeveloped land options & the commercial segment remain without interest.

Nevertheless, an increase in sales volume of around 30% in the first quarter is a sign of an emerging market. And in our specific area, this renewed activity is fully there at the beginning of our traditional “season”: May to early October. Good news, then, to have seen the first quarter busy when it should be & in the price level it should be. Timing is key to all markets.

Throughout North America, strong sales & thinning inventory are the outcomes of this first quarter activity, & this is now the case in secondary home/discretionary regions, too. Something new! Yes, the strong sales action is mainly in entry level priced residential properties, but this activity is seen across the board.

By July, all media options (they are always behind a market trend, as have to rely on statistics from past months) will be reporting this shift into renewed buyer action.

Why now? Perhaps the fear that cash is eroding as a means to preserve capital is making buyers reappear? Currencies are suddenly perceived as insecure, & there’s a growing desire for a safe haven, a seeking to be self-sufficient, a fear of the stock market’s volatility?…these all might be some reasons for the return to hard asset investment choices, & a resurgence in interest in discretionary properties. Suddenly, a purchase of a unique property in an area like the Gulf Islands is perceived as a good holding.

With huge uptick in entry level sales, which brings strengthening of prices & thinning inventory, and at the time of year this traditionally happens (first quarter), we are positioned to now welcome upper tier priced property buyers, & investors in land. May, July, August, early September are the key months, traditionally, for that investor buyer to appear.

The property market in secondary home/discretionary regions slowed in 2006. Sales volume decreased & a pause was very evident by 2007. The economic collapses of 2008 afflicted all regions, globally.

Primary residence/city markets saw a soft uptick in entry level sales by 2010…the secondary home/resort based marketplaces remained sluggish. Low interest rates never seem to jumpstart action. Buyers set markets, not sellers or realtors. When a buyer is “on hold” (& no one “has to” buy a second home or retire in any particular timeframe), then nothing will happen in a discretionary marketplace.

Price reductions don’t drive action. Those sellers who had the option to do so, and did remove themselves from the market, were wise. Pressure from companies to reduce prices (without an outcome) was perhaps understandable, from the company’s point of view, but it was not reflecting the buyer voice. When a buyer says: “I don’t know…I”ll think about it”…they mean it!

Now, the buyer is back, for the first time in the past three year period. The secondary home marketplace is busying up. By late Fall, we may see action having occurred in upper tier priced residential, in undeveloped land opportunities, & in commercial/investment options. We may be approaching year 8 of a 7 to 10 year cycle, and so should see thinning inventory/price stability/some multiple offer situations for unique & irreplaceable property options. Those owners who waited it out were wise; not always possible to do that, though.

The real estate industry itself continues to shift dramatically, in our post-Internet world. Change is the wallpaper of our global village. Thales was right that we never step into the same river twice. Now, as we enter May & the beginning of our “real” (& very short!) season, the buyers are back in our kind of market-by-choice, & the uptick is here. More info? Call me!

Don’t be looking in the rear view mirror…time for that down the highway vista!

Sales volume + thinning inventory + stability of pricing = movement to a sellers market.

And your thoughts are? Always welcome!

How may I help you to buy your special Salt Spring Island or Gulf Islands or Vancouver Island property? Call me!

Market Analysis | December 2010 | Gulf Islands

2 Replies

December, 2010 | Gulf Islands | Real Estate Market Analysis

Ah…end of year “market thoughts” time….

My “thoughts” are not meant to be a stats report or a hard market analysis.

That kind of statistical analysis can be found elsewhere, such as with mls statistics or other such “numbers reporting” venues.

My thoughts are exactly that…impressions, and based on 20 + years in the real estate business, all on Salt Spring Island and on the Southern Gulf Islands, and on Southern Vancouver Island.

My impressions/thoughts, then:

Salt Spring and the Southern Gulf Islands have evolved into secondary home/discretionary marketplaces, perhaps since 1999. No one “has to” purchase on a Gulf Island; it’s always by choice. Thus, regardless of market trend in play, at any given moment, it takes time to sell an Island property. It often takes 2 and probably 3 visits, before a buyer will “act”.

The internet erased time and geography. Between 2000 and 2006, a low Canadian Dollar against the U.S. Dollar and the Euro, also made us very attractive to an investor/buyer from afar.

The first visit is usually the “discovery time” of the specific island itself. The second visit, the buyer has “chosen for” that particular island, and is now looking seriously at specific properties. If they don’t see what they “imagine“, they will come back a third time, and might even end up buying vacant land/building.

The first visit is usually the “discovery time” of the specific island itself. The second visit, the buyer has “chosen for” that particular island, and is now looking seriously at specific properties. If they don’t see what they “imagine“, they will come back a third time, and might even end up buying vacant land/building.

Since the buyers are not “local“, in the main, there are significant time lags between visits. It can take one to three years to sell a property, on any Gulf Island, and this kind of time pause is also a marker of all discretionary areas, and globally so.

Time lags, then, are involved in every sale, no matter the market trend. This is the marker of all discretionary marketplaces, and in such a marketplace the buyer is always in charge of the process.

The impact of the internet revolution has changed forever the way all business is conducted, and this is the case in sales oriented businesses, especially.

I think real estate was late to the table of change. The car industry and the stock market side of investing were totally changed by the internet’s delivery, to consumers, of easy access to information, and their shift happened five or so years before real estate noted this. The real estate industry thought it was still business as usual, for some substantial timeframe.

Now, the shift from a company or agent-centric business model, to a consumer-centric style, has profoundly affected real estate marketing choices, too.

Now, the shift from a company or agent-centric business model, to a consumer-centric style, has profoundly affected real estate marketing choices, too.

Approximately 98 percent of property searching apparently now begins on the internet, and a good 14 months before a buyer is ready to “act”. All pertinent information can be found, on regions of interest to a buyer, via the internet, and so the role of a real estate agent has profoundly changed.

The way of introducing oneself as an agent, and of marketing listings, has made an internet presence totally necessary. Specialty print media might still have a place, marginally, but less and less so…print apparently only delivers one percent of buyers, today.

If there was a transition period in marketing between 2000 and 2009, which allowed a blend of responses, it is now over. Print media no longer delivers the buyer. To use it as one’s premier means of trying to attract a buyer means that one’s efforts are doomed. The buyer isn’t “there”.

The post-internet world is now with us. What does this mean?

Technology, created to meet the demands of the wired wireless world continues to expand

…traditional emails and websites are already being transplanted by social media options.

It’s important to have a website, but the template model that has been the norm since 1999 era is seen as the box in the basement or the attic…one can go rummage around in it for deeper information, but it isn’t the “initial attractor” that it once was. Same with emails.

Twitter is not a fad, nor is texting. They are “immediacy” formats, in my opinion.

In our time famine world (no time/always time/only now time), we are always looking for shortcuts to essential information. That’s how I see Twitter.

And Facebook? Ah…that is interesting.

The “real” 21st Century, which has created the global village foreseen by Marshall McLuhan, way back in the 1970s, is also busy deleting our 20th Century idea that there was a separation between our personal and our “corporate” worlds.

Facebook, I think, is about that erasure of separation…think about those three words: “social“, “media“, “marketing“. They really do mean something, and the shift is profound for all those hybrid BG (before google) beings still out there. The AG (after google) beings know nothing else, and swim gracefully in the new global data sea.

What else did McLuhan forecast? Oh, yes…”the medium is the message” was his mantra. The technology created to answer the shift of the internet world has changed us as a species, I believe.

Twitter, Facebook, YouTube, and their kin are early responders to the shift moment of the post-internet world. More apps and options will be spawning daily to fill the craving for information.

The separation between the creator of information and the consumer of same is also continuing to blur and to mesh. Concepts such as “privacy”, “time”, “personal”, “expert” are undergoing change, too. Exciting times, indeed!

Will we end up with virtual real estate offices, and a paperless transaction process, with all information totally available on mobile devices? Yes, I think so.

In change lies opportunity!

And what of our local island market? In Fall 2009, I did project that it would take until Fall 2010 to see uptick in activity, in our secondary home marketplace.

This has indeed been the case. The activity seen in Vancouver and in Victoria, primary residence/city marketplaces, in 2009 and first half of 2010, has now arrived in rural areas. Properties listed between one and four years are now selling.

The difference? The “reluctant buyer” is starting to become active! Why? Perhaps in recognition of significant price reductions coupled with historically low interest rates? Or, might also be fear of inflation and currency instability that is driving buyers back to secondary home/discretionary purchases, in order to preserve capital? Wish we could find that lost crystal ball!