Tag Archives: market analysis

December 2013, Market Analysis

It’s been an interesting year in local real estate & also in the larger world’s political & economic environments.

The 21st Century is about connectedness, & that means that nothing is too small an event, anywhere in the world…it has an impact on all other regions. The “butterfly effect” is now our global reality.

December 2013, Market Analysis

It used to be said that economic trends were global, but real estate was regional. I’m not sure that this is the case any longer. Marshall McLuhan’s forecast back in the 1970s, of a global village, has come true.

Salt Spring Island, the Gulf Islands, Vancouver Island (outside of core Victoria), & the Sunshine Coast are all secondary home marketplaces…retirement, recreational…discretionary choices, thus. They mainly rely on a non-local buyer profile…someone wanting to move there from somewhere else.

No one “has to” buy a property on Salt Spring, on Mayne, on Galiano, on Thetis, or on any other Gulf Island. No one has to buy in Tofino/Uclulet, in Parksville/Qualicum, in Yellowpoint, Maple Bay, Cowichan Station…or in Sooke or in Courtenay/Comox…or in Sechelt, Robert’s Creek, Gibson’s. These are all regions that have to be chosen by that mainly non-local buyer…thus, the buyer is always in charge of the “where” & the “when” of purchases.

Read the full article…

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?

August 2013, Market Analysis

August 2013, Market Analysis

An improving real estate sales trend continues to slowly build into place, on Salt Spring & the Southern Gulf Islands. The same improvement in sales is occurring on Vancouver Island…it’s a secondary home marketplace uptick, then. Prices still remain volatile.

Word from south of the border is that all those hard hit areas (Florida, Arizona, California, etc) have been experiencing a significant uptick in both sales volume and in price points. Inventory levels have been reducing. This encouraging stats report from the U.S. is now encompassing the secondary home/discretionary markets (Vail, Aspen, Tahoe, et al), not just primary residence areas.
Blue Sky
Very recently, the upper tier priced properties in the recreational marketplaces, also in the U.S., have been finding significant buyers/sale pricings. This secondary home recovery is good news for all “by choice” destination locations, and that would include the Gulf Islands.

It’s important to pay attention to this significant improvement in sales activity for our near neighbour…Canada does track events and outcomes in the U.S. It’s about general consumer confidence.

In our post-Internet world, real estate is less regional in outcomes, particularly in the secondary home/recreational markets. The buyer profile in any discretionary marketplace tends not to be “local”.

The Internet has opened up the world as a potential buyer for any recreational based region, but it has also created a “pause” while that global buyer searches out all possible areas. No one wants to make a mistake…thus, the buyer takes time, searches out various locales, often returns two or three times to the places that caught attention…& then may finally “act”. Time truly is a component in all sales, then, in discretionary markets, regardless of market trend in play.

The Pacific Northwest Coast tends to be a tail of the dog location. Last up/last down/last back up…the uptick momentum is just now being felt.

At this midpoint in the year, it’s good to take a snapshot of outcomes.

On Salt Spring & the Southern Gulf Islands, this is also the beginning of what has evolved into our main sales window. Our market has truncated down to a mid-July to mid-November window…a late Summer/Fall market, then. Surprisingly, the Spring months are no longer as busy as in previous times. Perhaps the travel patterns of our tourist visitors have changed?

Tourism, in all recreational locations, drives other business outcomes. Someone visits Salt Spring or Galiano or Mayne, falls in love with that Island, then decides to call a realtor and to buy a property…then architects, contractors, excavator operators, septic installers, electricians, plumbers all get busy, too. Plus landscapers, gardeners, cleaners, soft furnishings providers, and so on. Resorts, B&Bs, hotel, motel, restaurants, retail stores…they are busy with tourist arrivals and also with residents and guests.

A recreational/retirement region depends on that tourism buoyancy to experience real estate volumes and then other ensuing business activity.

The past 5 to 6 years globally have been about economic suppression, and discretionary locations around the world saw plunging real estate values and business closures. No one “has to” buy a second or retirement or recreational property. An economic suppression means a real estate downturn, in secondary home environments.

So what might be driving this renewed interest in discretionary markets? Is it a safe haven investment move? A seeking to preserve capital? Perhaps….

Markets rise & fall…like waves on the ocean. In 2006 we began to fall down into the trough of a downturn…which became hugely evident in late 2008. Now we seem to be climbing up the other side of that wall of water. A recovery is not a straight line up…more like ladders between flat benchland. Up/flat/up/flat…takes time, then, for all property types and all price points, to see consistent uptick.

The good news: things are improving. The difficult news? It’s not a fast-track uptick. It may take until early spring 2014 to see consistent uptrend in the secondary home marketplace, and it may take until summer/fall of 2014 to see uptick in undeveloped land, commercial, and upper tier priced residential sales.

We are so lucky to be owners on Salt Spring Island or on another Southern Gulf Island. Buyers seeking what we own will also be very lucky.

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.

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!