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Salt Spring Island, December 2022, Market Analysis

The first of December is considered meteorological Winter, although the calendar says it begins on the 20th. The great Pacific Northwest Coast experiences shorter days (dark by 4:30 p.m.) and every year is slightly different, weather-wise. This year promises snow and arctic cold. I prefer the usual rain that has our west coast location often described as “the famously wet coast”. (I am allergic to snow at sea level).

Salt Spring Island

Things To Do on Salt Spring Island This Winter

Lots of art gallery openings and receptions in December, plus the annual WinterCraft at Mahon Hall until the 23rd, the annual Beaver Point and Fulford Hall craft fairs (December 2 to 4), and other loved pop-ups…closed for two seasons due to covid closures, these displays of artistic flair are welcomed. ArtSpring offers choral/seasonal concerts…check out the website for dates. Enjoy the lights in the Village, and the decorated shops. Tasty special menus at coffee stops and restaurants…decorated farm gate stands encourage a jaunt around the island. Live music venues (Moby’s, the Legion) are fun. Check out the Christmas on Salt Spring events (the Chamber of Commerce website or Visitors Centre). Does Santa really arrive by floatplane?

Close to major centres and yet wonderfully apart…a visit to a Gulf Island/to Salt Spring Island can be a restorative and peaceful experience at this softer Winter season.

Real estate at this end of the year

Real estate at this end of the year time is still consistently chugging along. Buyers remain interested and active. Snow storms mean some delays for some viewings, but Winter does not last long in our region. Inquiries remain strong. Winter is often a weekend business in a secondary home market. The lack of inventory remains a factor. The desire for a buyer to leave the city and to live in the country is still the main reason for activity. That authentic internet connectivity allows this profound lifestyle change. A softer gentler lifestyle seems to be the goal. A very human need: to be safe.

Housing Supply & Purchase Taxation

The governments (provincial and federal) are attempting to solve the lack of affordable housing supply through taxation (offshore purchase taxation, empty home (speculation) tax, moratorium on non-Canadian buyers, interest rate rises), and yet the federal government is also looking for 1.5 million immigrants by 2025. CMHC has forecast that 22 million housing units would need to be in place by 2030, to solve this “lack of housing” crisis (not including immigration pressures).

First time buyers are affected by the series of interest rate rises. Some experts are forecasting more rate rises to come…others think not (possibly fearing societal unrest?).

Affordability is tied to supply…instead of taxing existing options, which does not grow supply, governments need to encourage construction…an entrepreneurial answer to supply and demand issues.

Real Estate – Still A solid hard asset investment

Meantime, real estate remains a solid hard asset investment (especially during currency fluctuations) and keeps pace with inflation.

December is a time to be thoughtful, a time to acknowledge traditions and to practice the art of gratitude. A time to create new traditions and to include those on their own in our celebrations. It’s fun to research other seasonal events and definitely important to have lots of candles, have a fire in the hearth, and to invite light into our homes. Maybe a year to reread Charles Dickens’ classic: A Christmas Carol?

Feasting is allowed. A pause is encouraged.

December…a time of joy. Good to partake.

Market Analysis, December 2018, Salt Spring Island

December 2018, Salt Spring

Here we are, starting into the last month of this haphazard 2018 market year.

The weeks between January 1 and February 20 did promise continuing brisk real estate sales…inventory was diminishing in residential offerings and prices had solidified…undeveloped lots/acreages were catching interest…higher end properties were being shown…and a seller’s market was in play.

Provincial Government Policies

The coalition provincial government brought in a budget (February 20) that specifically targeted Vancouver, Victoria, Nanaimo, and Kelowna…seeking to suppress the buoyant real estate markets in these areas. Several measures were introduced…the speculation (vacancy) tax being a key one.

Between February 20 and March 27, the Southern Gulf Islands/Salt Spring Island were included in the vacancy tax. The government used regional district boundaries to delineate where this tax would be applied. The government agreed that the Islands Trust (formed in 1974) had created a recreational ownership-resort based region and so all Gulf Islands were finally excluded.

Since the slow recovery on Salt Spring (began in mid-March 2016), inventory in place, due to the economic meltdowns of late 2008, had slowly cleared out. Fall 2017 & up to late February 2018 saw consistent sales and in all price ranges. Then the February 20 budget…..

Were the policies effective?

The point of the taxation measures applied to Vancouver was to suppress the real estate market…the theory being that prices would drop and affordability would rise. It might have been a better idea to open up opportunities for construction of affordable rental and purchase units. Sales did shut down in Vancouver, but affordability may not have been addressed.

Salt Spring, like other secondary home markets, is dependent on buyers from elsewhere. The recovery on Salt Spring, after the almost nine-year economic meltdown, was driven by Vancouver people who had sold in Vancouver…and were looking to relocate. The suppression in the Vancouver marketplace, after February 20, caused a corresponding pause in action on Salt Spring, for most of 2018.

Inventory still remains low. During spring/summer there were viewings. Fall saw more sales…not just showings. Sales were mainly below 800,000, and residential, not lots/acreages.

Visiting Salt Spring Island is the Key

Some projections are calling for a bounce back in the Vancouver marketplace by early spring, 2019. This is an unknown. What is known is that Salt Spring and the Gulf Islands are dependent on a buyer from elsewhere.

Before the economic downturn, the main buyers were from Alberta and the U.S. The 2016 beginnings of a recovery on the Islands came out of Vancouver. There may be an upcoming reappearance of Ontario buyers, looking for retirement destinations.

To Preserve & Protect

Although Salt Spring and the Southern Gulf Islands are beneficiaries of the Islands Trust’s mandate of “to preserve and protect”, which controlled growth through strict zoning/density bylaws, the Islands are not unaffected by changes and stresses globally. The Islands are affected also by the current provincial government’s various measures to suppress real estate markets elsewhere in B.C. Pauses in market cycles, no matter the cause, are always a feature…it’s never a straight line up or down.

Lack of inventory, however, seems to imply a buoyancy beneath these many government restrictive measures. Those measures, designed to suppress a real estate market, may be being digested. In the end, consumers set the pace. The guru projection advisors may be right about a resurgence in the Vancouver market, by early 2019. Hmmm….

So…at beginning of December, there were approximately 296 sales on Salt Spring, which can be broken down as follows:

Some Sales Data

  • 11 sales between 138,000 & 195,000
  • 14 sales between 207,000 & 290,000
  • 11 sales between 320,000 & 398,000
  • 22 sales between 405,000 & 492,500
  • 28 sales between 500,000 & 595,000
  • 24 sales between 600,000 & 686,000
  • 25 sales between 705,000 & 795,000
  • 18 sales between 800,000 & 898,000
  • 13 sales between 900,000 & 999,000
  • 25 sales between 1,005,000 & 1,950,000
  • 4 sales between 2,025,000 & 2,850,000

The above numbers relate to the sale figures…they do not show the tracking down of pricings, on the way to that sale figure. For example, a property selling at 730,000 was listed at 774,000. One listed at 2.8 sold for 2.383. Price reductions at the point of an offer can be quite common on listings over 800,000.

Over half the current listings (approximately 106 residential listings, between 309,900 & 4.8, and approximately 57 lots/acreages between 159,000 & 2.495) are priced over a million, if in the residential category. (In a “normal market”, listings might run between 380,000 & 425,000, in total). Listings are not plentiful right now…particularly if below 800,000.

If the water moratorium (put in place by 3 volunteers on the North Salt Spring Water District board) could be resolved, then 255 units (approved and funded), re affordable housing/work rental, could be built.

Those business enterprises that cannot find housing for proposed staff are also recognizing that vacation rentals are required. The visitors staying at airb&b are the buyers of their local products. Both types of rentals are needed in a secondary home/discretionary area, reliant on a tourist based economy.

Last Fall, the current provincial government canceled the fixed tenancy option on a lease, under B.C.’s Tenancy Act. In areas such as Salt Spring, this might be a reason for the reluctance to engage in a regular rental process.

The provincial government is in charge of Improvement Districts (water is under this jurisdiction). The government has transferred Improvement Districts to municipalities. Salt Spring is not a municipality. The CRD (Capital Regional District) would have to assume the Salt Spring water districts…or the unfortunate moratorium will not be resolved. There is no water shortage on Salt Spring. The issue is one of capture & distribution. The 255 ready to build affordable housing/work rental units await the outcome.

The changes to the Real Estate Services Act of B.C., enacted on June 15, 2018, are in place. Questions? Call me.

Celebrate!!!

December is a traditional time of celebrations. On Salt Spring there are many craft fairs (Beaver Point and Fulford Hall craft fairs, WinterCraft at Mahon Hall, pop-up events), plus ArtSpring presents seasonal music and theatre to enjoy. Volunteers create the Shop Local events clustered under the Christmas on Salt Spring label. Santa arrives twice: once by floatplane and later via a Carol Ship. The Village sparkles with Light Up. Lots to see and to enjoy.

Be re-inspired by your personal traditions…take time to remember others…take advantage of the fallow field moment of calm. That’s where the creativity lives.

Market Analysis, November 2018, Salt Spring Island

November 2018, Salt Spring

The Fall Real Estate Sales Season

November 2018, Market Analysis

The Fall real estate sales season separates into two parts: late summer/early Fall (end of August to mid-October) and late Fall (mid-October to early December).

Salt Spring is really a “seasonless” market…buyers turn up throughout the year, and sales from later in a calendar year can take place right into very early January of the following year.

Although tourism is most evident in late Spring/Summer months, and a successful visitor experience usually leads to a real estate purchase in our discretionary marketplace, the two don’t always occur at the same time.

It often takes two visits, if not three, for an interested potential buyer to decide to make an offer. There can be substantial time lags between visits…it can take one to two years to have a successful sales transaction, even in a buoyant real estate trend.

Where Do the Buyers Come From?

Buyers are not local. They look in other areas, too. It’s perhaps about “being sure” about the “where”.

Whether they live a ferry trip away or are a substantial flight distant, the buyer usually leaves some time between visits (a few weeks to several months). Their own lives come first and it just takes the time it takes to have a result in any secondary home/discretionary marketplace.

That said, we enter November 2018 with a continuing “thin” inventory of available listings.

Prices stabilized in Fall, 2017.

The provincial government’s February 20, 2018 budget included taxation measures to cool the Vancouver market.

These measures were also expanded to include Victoria, Nanaimo, and Kelowna.

Since mid-2016, Salt Spring has been chiefly dependent on Vancouver buyers. As a recipient marketplace, Salt Spring is affected by events in the areas where the buyers come from.

Anecdotally, it seems that people take around five months to get over anger at something and then to just get on with things. The lack of solid action between February 20 and September 15 has now been replaced with some increased activity. Hmmm….

The last two months of a year and the first two of the following year can be seen as a cohesive timeline.

A Market Trend for properties below 900,000

The market trend right now is showing most action in properties below 900,000. Over half the current listings are over one million. Will we see substantial price reductions at the point of an offer, in order for a transaction to proceed to completion? Will prices begin to suppress, to reflect those marked reductions now evident in Vancouver? Are we starting back into buyer’s market territory? Hmmm….

November 2018, Salt Spring Real Estate Market

Although there is a lovely sense of apartness to the Salt Spring lifestyle, no location is exempt from global issues. Currency concerns, tariff wars, prohibitive tax measures, etc…outcomes in countries around the world also end by impacting SSI. There’s that butterfly concept again.

Uncertainty is not good for any market. We began 2018 with a strong seller’s market underway. We are ending 2018 with the impacts of the coalition provincial government measures to suppress that Vancouver “hot market”. These measures, short term, have been successful.

At the same time, there does seem to be renewed interest out of Ontario (other provinces like to retire to coastal communities). Toronto does not have the tax suppression measures seen in Vancouver. That may augur well, going forward into 2019.

Albertans & US Buyers?

We are still not seeing Albertans or U.S. buyers. Before the economic meltdowns of late 2008, these two buyer profiles were 50% of our buyers. They were also seasonal. The Vancouver buyers want to live on Salt Spring. This may be why they take longer to choose the “where”. Salt Spring has competition from nearby Vancouver Island communities…why choose here? Why not there? Hmmm….

Late Fall-into-Winter season, a softer time for tourism, is also an opportunity. The fallow field moment allows for some creative thinking, to keep that Salt Spring allure in play. The outcomes of the “real” 21st Century are around us all…Salt Spring is not exempt from the profound technological changes that are now the surround sound of our lives. Yes…block chain technology is our present.

Initially, the Islands Trust, created by the provincial government in 1974, had the purpose of preserving the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents…the Trust capped growth and effectively created a park-like ambiance. Now, in our always-on, always-connected world, perhaps the real value of visiting and of living on Salt Spring Island is the ability to enjoy an experiential lifestyle…and not a mere searchable environment.

The Gift of Reality

The gift of reality…real reality, not virtual, not augmented…perhaps that’s the point of 1974 meeting up with 2018?

Markets are always a wave of up and down. Over time, an investment in real estate, in an area where growth is strongly controlled, where a community blueprint pays homage to 1974 concerns about over-growth, will become an enclave area…it will rise in value. Important, then, to always be thinking five years out.

At this moment in time, listings remain low, buyer interest is very present, and the allure of Salt Spring as a destination is high. Projections for early 2019, in areas that deliver buyers to Salt Spring, are about a bounce back in real estate dynamics. Hmmm….

Meantime, November unrolls before us: craft fairs (WinterCraft), Village galleries showcasing their artists, studio tours, continuing Farmers markets, theatre and dance and choral presentations at ArtSpring, hiking/walking trails beckon, and kayaking adventures and sailing races delight year-round.

There’s always lots to see and to do, on special Salt Spring Island.

Enjoy the softer season!

Market Analysis, August 2018, Salt Spring Island

August 2018, Salt Spring

The Mid-way Point

The first of August reminds us all that summer-summer is at the mid-way point.

Salt Spring Island

Salt Spring Island

Well, for those with school-age children that’s certainly the case…summer is over with the back-to-school ads.

The calendar, though, says summer ends on September 20th.

The real estate market on Salt Spring and the Southern Gulf Islands became a summer/fall market, some years back. Many sales take place between August and December. So…for real estate, summer and fall remain busy.

Sellers who panic when July folds into August need to remember that the main business on Salt Spring is just ramping up.

And what about that business? Thin inventory in any property type below one million is a fact. Prices have stabilized. There are both small bidding wars and back-up offers.

Although the market segment between one and three million is a slower paced sales pattern, that more affluent buyer also tends to turn up from August on. There is also a growing interest in estate style properties between 2 and 5 million (Canadian Dollars).

No matter the property type or the price point, the inventory is the thinnest I can remember, since 2003.

Salt Spring Islands Trust

Salt Spring is governed by the Islands Trust. This provincial body was formed in 1974, with the mandate “to preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents. This cap on growth maintains a pleasing and community based lifestyle. A “yesteryear” experience coupled with everything required for a 21st Century life…a winning combination. It’s also a reminder of Economics 101: low supply coupled with high buyer demand create price increases.

Sellers and realtors do not create markets…buyers do that. The Gulf Islands were in an almost nine year downturn (late October, 2008 to mid-2016), as a result of the economic meltdowns of late 2008. Buyers vanished in those downturn years, and sellers lingered on the market…price reductions did not generate action. That was the classic buyer’s market (lots of listings and no buyers).

Now, we are in the classic seller’s market in the recreational/secondary home marketplace of the Gulf Islands: low inventory and lots of buyers. During the slow recovery of mid 2016 to late 2017, there was a sales volume increase in that entry level residential segment.

At the moment, as we start into August, most buyers are seeking residential options between 650,000 and 1.3 million. In waterfronts, we are seeing interest between one and three million. With the main part of our sales window still before us, there is an expectation that we may be looking towards significant price increases by 2019. If so, it will be based on continuing lack of inventory and the continuing return of buyer interest.

Government-Induced “Pauses”

There have been many government-induced “pauses” during the current slow market recovery. It is true that in all areas, city or rural, there is a lack of affordable housing and/or work rental options. Salt Spring struggles with this, too.

The current provincial government has turned to taxing an owner’s asset (their primary or secondary home) via severe taxation measures, in an attempt to create both affordable homes and a rental stock….this does not alleviate the problem. It may actually make things worse.

Vancouver is experiencing these taxation measures and the Lower Mainland market outcomes do affect the Gulf Islands. (The Gulf Islands are exempt from the vacancy tax, because they are part of the Islands Trust).

Yes, in 1974 the then provincial government capped growth on every Gulf Island…now, in 2018, we see the outcome of this 1974 decision…never a lot of listings and varying buyer desire patterns…it keeps choices lower and prices higher. In 2017, Salt Springers voted (63%) to retain the Trust, without change, as the form of governance.

Where do these buyers for the Gulf Islands come from? In the early 2000s, we saw a lot of buyers from Alberta and the U.S. After the economic crash of late 2008, this buyer profile disappeared.

The recovery that slowly began in 2016 was driven by Vancouver sellers. The Vancouver area still supplies most of the buyers on Salt Spring. This is why we pay attention to the real estate rhythms of Vancouver…those sellers have become our buyers. Any market cooling there will affect sales here.

Any questions about the changes to the Real Estate Services Act of B.C., which came into being on June 15? Call me.

Market Analysis, November 2017, Salt Spring Island

November 2017, Salt Spring

Salt Spring Island, November, 2017, Salt Spring

Salt Spring Island

There’s a total of 170 listed properties (November 2017, Salt Spring) at this moment (counting only residential of all types & undeveloped residentially zoned land of all types…not including commercial or industrial zoned listings).

In a “slow/downturn” market, there can be between 380 to 420 listings (residential and undeveloped lots/acreages).

The listing inventory, since mid-March 2016 to current date, has thinned out. Mid-March 2016 was the very first sign of a small recovery on Salt Spring, after the long 8 year downturn.

It was a very slow sales volume increase, however, between then & now, with several non-market driven “pauses”.

The 15% offshore tax in early August, 2016, for metro-Vancouver, for example, also completely stopped the secondary home regions recovery…those Vancouver sellers had become the buyers on Sunshine Coast, on Vancouver Island, and on Salt Spring Island. On Salt Spring, Aug/Sept/Oct, of 2016, were “lost”.

Then: “real winter” (between Dec 3 & May 15) struck: all over the Coast. Both tourism & real estate viewings on Salt Spring were dramatically slowed.

Almost a 9 month pause, then, between August 2016 & May 2017.

The Summer Market was 6 weeks late…it usually starts in last week of June, & did not kick in until July 15, 2017. There were pauses within the summer season, as well…due to smoke from both Interior & Washington State fires…again, affected the whole Coast, but also caused significant delays in Salt Spring activity.

That 6 weeks later scenario seemed to carry into the Fall Market, too. Perhaps October was really September!

August 2017 may also have seen a hesitation in activity due to the incorporation vote on Sept 9th…several people, on either side of the question, were waiting for the vote outcome. There was a lot of off island media coverage leading up to the vote. It may have caused a bit of a “digestion” pause throughout September. Difficult to track these kinds of hesitations.

All these fits and starts sales rhythms aside, the main sales on Salt Spring Island remain below 850,000.

November 2017, Salt Spring

To date, the sales are as follows, from January 1, 2017 to October 31, 2017:

  • 21 sales between 95,000 & 199,500.
  • 25 sales between 200,000 & 299,000.
  • 31 sales between 305,000 & 396,000.
  • 43 sales between 400,000 & 489,000.
  • 30 sales between 500,000 & 599,000.
  • 20 sales between 605,000 & 690,000.
  • 16 sales between 700,000 & 795,000.
  • 12 sales between 800,000 & 899,000.
  • 6 sales between 900,000 & 950,000.
  • 25 sales between Private Island Estate.
  • 4 sales between 2.2 and 2.5.

The sales between one & two million were either waterfronts (both ocean & lake) houses, or very large farms (20 to 104 acres), or large ocean view acreages/houses. The majority of them were waterfronts.

The sales over two million were waterfronts (3 ocean & one lake), with houses.

These sale price ranges in November 2017, Salt Spring, do not include price reductions…they are the completed sale price points. In some cases, in the over a million category, there were substantial reductions at the point of a sale.

What is the main buyer profile around Salt Spring Island?

The main buyer profile is still out of Vancouver/Lower Mainland. Alberta & U.S. (used to be 50% of our buyers) are still not in evidence. A smattering appear from Ontario, U.K., Europe…but they do not always focus on Salt Spring as a final destination choice. Most Vancouver buyers are seeking to buy down, if they have achieved a good sale price at their end.

It takes time to sell any property in all the secondary home markets, and this is true of Salt Spring, too. The first step is to choose “for” the Island…and then to choose for a property. It usually takes 2 visits (often 3), before a buyer acts on a specific property.

A showings pattern is about the buyer…not about sellers, or properties, or realtors. It just takes the time it takes. Time is a very significant element in every secondary home market transaction.

Properties still remain on the market here for lengthy timeframes, before capturing a sale. Price can sometimes be an allure factor…though not always.

So…here we are…in the closing weeks of a calendar year. Low inventory in all property types and prices. Sellers often achieving list price or close to it. Back up offers in place, if not small bidding wars. A sense that 2018 will see the beginning of serious price escalation, based on that thin inventory/buyer demand scenario.

Hmmm…it does appear that in November 2017, Salt Spring and the Southern Gulf Islands have returned to the buoyant times between 2002 and 2005. A nine year downturn now being followed by a nine year uptick? Stay tuned.

Market Analysis, October 2017, Salt Spring Island

October, 2017

October is often seen as the divide between early Fall (with echoes of September charms) and late Fall (another word for early Winter, on the Pacific Northwest Coast).

On Salt Spring, the harvest season is with us: Apple Fest, Canadian Thanksgiving, Sip and Savour, Tuesday Farmers Market, Saturday Market-in-the-Park…plus the rediscovery of the softer season on this delectable Island.

Sunday afternoon sailing races, hiking/walking trails (Ruckle Park, Mt Maxwell, Mt Erskine, Burgoyne Bay Park, Channel Ridge trails), studio tours, craft fairs…these are all a part of the Fall Season on special Salt Spring Island.

Real estate discoveries and sales are a strong feature…the Fall Market can be one of the busiest of the year.

As we arrive at the beginning of October, we are noting a thin inventory of properties for sale, no matter the type or price point.

This does not mean the listings will all rush towards a buyer.

Secondary Home Markets

Salt Spring and the Gulf Islands are secondary home markets. This means they are “by choice”/discretionary regions. No one “has to” move to Salt Spring Island…or any Gulf Island.

The first visit from the mainly non-local buyer is always about the island itself…that first visit is about deciding if Salt Spring itself offers the buyer’s desired lifestyle option. If it does…then there will be a second visit to seriously look at available listings.

Often, it takes three visits before there is an offer. In a secondary home area, it simply takes the time it takes, to achieve a sale moment. Days on Market is not a relevant thing in any discretionary marketplace.

Buyers set prices and markets…not sellers or realtors.

If a buyer is not interested in achieving a property in a secondary home market, then it’s a flat sales picture.

The economic downturn (October 2008 to mid-March 2016, in our region) saw serious price reductions, few sales, and a slow recovery.

Interruptions by government (an offshore purchase tax in metro-Vancouver (where our main buyers were from) in August, 2016) and weather vagaries (a once-every-20-years La Niña “real winter”, that lasted from Dec 3, 2016 to May 15, 2017) conspired to hold up the general market recovery…there was a nine month pause in activity.

The Summer market was about six weeks late in arriving…took till July 15/16 to kick in. So…here we are…rushing into the shorter Fall Season.

In spite of hesitations, the inventory is historically small. Buyers are around. Yes, they are looking in many coastal communities…Salt Spring and the Gulf Islands have competition now, in decisions. Yes, one does have to sell the island first, before any buyer will look at listings. It remains the 2-step dance it’s always been: first, “decide for” the particular Island. Then: choose the property.

All that said, the combination of low inventory and price stabilization forecasts a market uptick in pricings. This may be with us by the early Spring 2018 market.

Add that to the Islands Trust cap on growth (the outcome of those 1974 bylaws/zoning restrictions), and the temperate “cool Mediterranean” micro-climate that encourages small holdings farming, plus the sense of safety and “apartness”, yet proximity to major centres…and one can see why there is an allure to the Salt Spring Island lifestyle.

More information? Call me. There is always opportunity for a buyer, regardless of market trends. A seller? It’s your moment. Still takes patience, though, while the buyer “considers”.