Tag Archives: market

Market Analysis, October 2016, Salt Spring Island

A Market Surge & A Different Buyer

Markets, markets…never at equilibrium…driven by unforeseen events. The Black Swan image.

After an 8 year downturn in our secondary home market coastal region, a resurgence in sales volume finally took place in entry level residential options, between early March and late July.

Salt Spring Island

Salt Spring Island

The buyers, however, were not the traditional purchasers for Gulf Islands properties.

For some substantial time, Alberta and the U.S. had been the main buyers on Salt Spring and the Gulf Islands. In the heart of some of the best protected boating waters in the world, and with a temperate climate, these Islands did appeal to boaters.

The driver of the activity between March and July was very different…almost all sales were to people from Vancouver who had sold to offshore buyers and were thus seeking new places & new lifestyles.

In late June, & into July, a very few upper tier priced residential properties began to sell…some had been listed an appreciable time & had reduced in price point over that time.

A buyer’s market simply means lots of inventory and no buyers. A seller’s market means lots of buyers and little inventory. Again, most of these new higher end residential purchasers were from Vancouver.

Affordable housing, whether rental or purchase opportunities, is a serious issue everywhere. Vancouver’s affordability lack is not just a Vancouver issue. This is also a problem on Salt Spring Island.

The 15% purchase tax in Metro Vancouver, for offshore buyers, may have been brought in by the provincial government to address affordability concerns/criticisms, but there were unexpected consequences to the immediate faltering of Vancouver’s “hot market”.

Salt Spring, A Recipient Marketplace & the Vancouver Tax

Salt Spring, like all secondary home/recreational regions, is a recipient marketplace. Buyers often start as visitors…they fall in love with the Island, call a realtor, and then everyone else gets busy (trades, restaurants, shops, etc).

If real estate purchases falter, then the community as a whole suffers attrition. Shop Local is a serious community item.

The Vancouver buyers planned to live in the areas they were choosing for relocation…including on Salt Spring.

In creating a tax, from outside a market pattern, with little warning, the government created trickle down outcomes for all recipient / by choice markets…it resulted in a pause in activity.

On Salt Spring, most sales had been below 750,000, with latterly a smattering between one & four million. The Vancouver buyers wanted step-in ready residential, were mainly buying down and putting money in the bank…they were seeking new lifestyles. The Vancouver tax immediately halted new activity in other regions.

Change does often momentarily stop action. It has to be digested. The Vancouver buyer profile has stopped for the moment, and that has created a pause in Salt Spring Island and Gulf Islands real estate outcomes. Will the rhythm return?

People do digest change. The unknown? The speed of digestion.

Where is Inventory going in to the Fall 2016?

What we do know, entering October: inventory remains very thin. Prices stabilized between March and July. In a few cases, post-tax and possibly reacting to the sudden pause in action, some realtors locally have reduced prices (by as much as 100,000). Is this too fast a response to the tax pause? Although the hot market in Vancouver has cooled, prices there have not come down.

As we enter October, we also know that Salt Spring has recovered its tourist/visitor experience vibe. A successful visitor encounter often leads to a real estate outcome. Will we start to see the return of our more traditional and often seasonal buyers?

A recovery in a secondary home/recreational market is never quick. A choice to purchase on a Gulf Island is not a fast decision either.

Buyers are from elsewhere, they respond to promotional marketing, they turn up, they view, they decide to buy…but not usually on the same trip. Very often, it takes two to three visits for that purchase connection to take place. A buyer also has to choose “for” Salt Spring or another Gulf Island…then they will choose a property. It’s always a two-step dance, regardless of market trend in play.

At the end of September, the sales stats are as follows:

  • 26 sales up to 200,000.
  • 32 sales between 200,000 & 300,000.
  • 49 sales between 300,000 and 400,000.
  • 51 sales between 400 and 500,000.
  • 46 sales between 500,000 & 600,000.
  • 29 sales between 600 and 700,000.
  • 12 sales between 700 and 800,000.
  • 10 sales between 800,000 and 900,000.
  • 7 sales between 900,000 & one million.
  • 17 sales between one and two million.
  • 3 sales between 2 and 3 million.
  • 2 sales between 3 and 4 million.
  • 1 sale at 4 million even.

The sales over one million were mainly waterfronts.

I do this “market thoughts” report at the beginning of a month. As things progress/change throughout that month, I update via my blog.

In change, lies opportunity. There are always good options out there for a buyer, regardless of market trend in play. I look forward to helping buyers to connect with sellers on Salt Spring Island and the Gulf Islands.

Market Analysis, July 2016, Salt Spring Island

‘Tis The Season!

July is the mid-point in our year and is also the beginning of our “real season” in real estate showings and subsequent sales. Salt Spring and the Gulf Islands, and many of the Vancouver Island communities, are secondary home markets. They are busiest between July and October.

salt

Secondary home/recreational areas do not follow the sales rhythms of primary residence/city regions. Thus, although eventually propelling activity in discretionary areas, Vancouver and Victoria real estate outcomes are quite different from those on Salt Spring or Mayne or Gabriola or in Parksville.

The huge sales volume in Vancouver, with resulting price increases, appears to now be mirrored in some parts of Victoria. That kind of sales frenzy is never the outcome on a Gulf Island or on Vancouver Island…the Islands are “by choice”/discretionary areas. By choice, I will buy on Salt Spring…by choice, I’m moving to Pender…by choice, I’m considering Qualicum…and so on.

What does this mean for a seller in these secondary home regions?

It’s become essential to have maintained one’s property.

It may be that all those popular HGTV style home shows have created a buyer who expects things to be “done”. Buyers do not want to call in a contractor…they are not looking for a fixer upper or a handyman special. If one has that kind of deferred maintenance property to sell, it may be necessary to come to market with a severely below market price tag. It’s interesting, this lack of buyer desire for a property needing “work”.

A new roof, a new deck, a septic system in good order, a well with water treatment system in place…these are now considered essentials. Interior items? Kitchens and bathrooms remain the two key components that will attract a buyer’s interest. Next would be flooring choices. Home ownership does bring with it consistent maintenance care. Renovations to update an older more dated home are often required.

Stiff Competition Remains

In our global post-Internet world, all secondary home areas are in competition with each other. It’s not just about a Salt Spring property being in competition with another Salt Spring home. A Salt Spring property is now competing for a buyer’s attention with a home on Galiano or on Thetis or in South Cowichan or in Parksville or in Courtenay/Comox…and also in Sidney or in Victoria. That means that a buyer also has to choose for the community itself, and not just a house in that location.

One thing that is of interest for any purchase on any Gulf Island: the form of governance has “capped” growth via strict zoning/density controls. The Islands Trust’s mandate (in place since 1974) is to preserve and protect the Gulf Islands. There is no opportunity then to see an explosion of growth on any Gulf Island.

On Salt Spring, as one drives about the Island, one is pretty well looking at “what is”. This retained beauty is important, but a cap on growth also leads to an escalation of prices, over time. Buyer interest coupled with low inventory of properties does lead to price stability and price rises.

The past downturn in all secondary home markets, and globally so, has eased or ended. It was a long eight year downturn. That lack of buyer interest did lead to lots of inventory and to lower prices. This is apparently now over.

Sales volume has dramatically increased on Salt Spring and inventory has returned to low levels.

The same dynamic is in play on other Gulf Islands and on Vancouver Island.

The difference from previous times? That competition factor. A house in Qualicum is competing with one on Salt Spring which is competing with a property in Sidney…the playing field between locations has broadened.

This means that one has to sell Salt Spring itself, not just the property located there. Hmmm….another reason to shop local and so to ensure the continuing allure of Salt Spring Island? Interested in how to help to do this? Connect with the Chamber of Commerce and become a supporter of the entire community.

At this mid-point moment: between $300,000 and $750,000 price range, there are very few residential options left. Spring sales volume doubled and little new inventory came onstream. Low inventory plus renewed buyer interest leads to price increases.

Now, we are seeing interest in undeveloped land…with a view to putting up a modular or packaged home…or building a cottage and then the house. This scenario might allow one to remain at budget.

Slowly, we are seeing the upper tier priced residential offerings capturing interest. Inventory is also thin in that price point. There is renewed interest in commercial options.

Market Analysis, June 2016, Salt Spring Island

Seasonless Investment Opportunities

Here we are, entering what might be seen as the mid-point of our year.

Although in a way seasonless, with people visiting the Island and also seeking property investments, at any time throughout the year, the main grid of real estate sales action does fall between May 2016, Salt Spring Market Analysis and October 2015, Market Analysis.

Salt Spring Island

Salt Spring Island

Here we are, entering what might be seen as the mid-point of our year.

Although in a way seasonless, with people visiting the Island and also seeking property investments, at any time throughout the year, the main grid of real estate sales action does fall between May and October.

June can be a quieter month, at least in the first weeks. Perhaps it’s because of the school “year end” activities, graduations, weddings, planning for summer vacations…there is often a brief “pause” in the first days of this month. By the last week, though, summer-summer is with us.

Salt Spring Family

This is the Year

This is the year of an authentic market recovery (after an eight year downturn of huge proportions). It began, on Salt Spring & the Gulf Islands, about 9 weeks ago. Very new, then.

At the moment, the main sales have been in residential…and on Salt Spring mainly between 400,000 and 750,000. There are some few sales between 900,000 and 1.8 million.

Salt Spring Island

Salt Spring Island

Slowly, slowly we are seeing an improving trend in Skywater Acres, Undeveloped Land Salt Spring Island, in upper tier priced residential, and in commercial options. The brisk sales in that 400 to 700,000 residential range have mainly been to buyers from Vancouver…most of them have sold to off-shore buyers, and are thus seeking their new lifestyle alternatives. Last Fall, they were buying on Sunshine Coast and in Okanagan. Then, their attention turned to this side of Georgia Strait. First, into Victoria…and now throughout Vancouver Island and the Gulf Islands.

Vancouver Residents Now Call Salt Spring Home!

The traditional buyer profile on Salt Spring and the Gulf Islands had been from Alberta, Canada and the U.S. Some few buyers from the U.K. and Europe…plus from Asia…and some retirees from Ontario. The Alberta and U.S. buyers have not currently been in evidence. This influx from Vancouver buyers is something new.

Things about our Trust You Should Know

The Gulf Islands form of governance is managed by the provincial government (Islands Trust). Two elected trustees every civic election. The Trust documents were put in place in 1974. Growth is strictly controlled by strong zoning/density bylaws. The CRD (Capital Regional District) also has an elected representative on Salt Spring.

The Trust’s mandate is “to preserve and protect” the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents. These restrictions effectively capped growth, and so there is always a thin inventory of properties for sale on the Gulf Islands, regardless of market trend in place. Finite inventory creates price escalation, over time.

Opportunities to Give Back

I notice that there is a strong volunteer spirit alive and well on Salt Spring Island. Volunteers have been behind: ArtSpring, Library, indoor pool, the pathways for pedestrians on main roads, trails in parks for hikers/walkers, etc. Lately, it’s been a fundraising effort to add a squash court to the indoor tennis building on the golf course property.

Kathy Reimer’s work to bring the fish back to spawn in the creeks on Salt Spring is an amazing example of the spirit of volunteerism. So many similar stories….

I think, when the boardwalk (sea walk? Harbour walk?) is completed, we should have a lovely curving stone wall there, one that would allow for “thank you plaques”…so many volunteers over the years who have contributed to the Salt Spring community. Time for a commemoration feature to thank them? Long overdue!

So, a pleasing and thoughtful and energetic community, in a scenically beautiful region, with a stellar marine environment, and with a limited amount of developable land (the rest is preserved in natural state)…hmmm…a recipe for property investment of a unique kind?

Markets have a rhythm. After that 8 year downturn, the local real estate market is on the uptick. Couple market action with the non-growth governance model and one can see why a Salt Spring or Gulf Island property purchase is at a higher price point than in some other areas.

There is always opportunity, regardless of market trend.

With low inventory, and high buyer demand, the result is always higher prices. In some price segments, we are already noting seller’s market conditions. Perhaps by late Fall, we will see this in all property categories.

A market is a wave pattern…crest, trough, crest…we appear to be on the way to a crest moment again.

Market Analysis, May 2016, Salt Spring Island

Market Analysis, May 2016, Salt Spring Island

Market Recovery - Salt Spring Island

Salt Spring Island

Signs of a Seller’s Market Recovery

Yes, it’s really true…after an 8 year market downturn, we are finally seeing a resurgence of authentic activity in our secondary home/discretionary real estate market.

Many listings had followed the market down. Fine properties and well-marketed…but few buyers around. In a downmarket, buyers are scarce. In past five weeks, many of these long listed properties have now sold. Very few new listings are coming onstream to replace these steady “solds“…this is the sign of a seller’s market.

At the moment, it appears that sales volume has doubled over the same period as last year and that prices have stabilized (meaning that the buyers are having to offer close to or at list price to secure a property). Price rises and back-up offers may be next.

Salt Spring Island Ganges Harbour - Market Recovery

Salt Spring Island Ganges Harbour

Vancouver Origin

This authentic recovery is very new…began from one-day-to-the-next, approximately 5 weeks ago. Most buyers are from Vancouver. They have sold properties in Vancouver’s hot market, and are now seeking alternative places.

In late Fall of 2015, these property seekers were first looking on Sunshine Coast & in Okanagan communities.

Finally, it’s now the turn of Salt Spring, Gulf Islands, and Vancouver Island, to be considered as the new lifestyle choices.

The desire for a unique hard asset investment is strong again. The “safe haven” seeking may also be a part of sales in our beautiful coastal region. The natural rhythm of a market recovery…every 10 years there is an uptick?…is also a part of this return to a strong sales pattern. There is never just one reason for a market recovery.

Recoveries are never even-handed, especially when they first begin. There remain very pleasing properties at approachable prices. There are still opportunities for a buyer.

As residential offerings continue to thin out, it may be that an undeveloped land purchase will be in a buyer’s favour. Build a cottage, or barge on a home being saved from a city’s destruction, or consider a package home.

A renovation project on great land should always be considered.

Call me for ideas that work.

Creative financing can be a buyer’s friend in an upmarket trend.

April 2016, Market Analysis

April 2016 – Salt Spring & The Gulf Islands

Salt Spring Island

Salt Spring Island

I always think that the Salt Spring Island & Gulf Islands marketplace falls into thirds: January to April encompasses early Spring/”real Spring”. May to September could be seen as our “main season”. October to December can still be busy with actual sales, but viewings most likely took place between April and September.

Even in the 8 year downturn (late 2008 to late 2015), the scarce viewings/sales still followed this rough “third/third/third” timeline.

Solidly in a Market Shift

We are now solidly in a market shift, with a strong upward direction. In this first “third” of the overall market, inventory has been dramatically clearing out…especially in properties below $600,000. The spread between list & sale price points has narrowed appreciably in that same price segment. Between $600,000 & $900,000, the buyer is still momentarily in control of outcomes, re pricings. Fewer action in these early weeks in the “over a million” price range.

The key is always inventory…as it clears out, leaving very few options for a buyer to choose from, prices first stabilize and then rise.

For first time in 8 years, the secondary home/recreational/discretionary markets are on “the improve” side of the equation.

Previously, many buyers on Salt Spring/Gulf Islands came from Alberta. Post-commodities “crash”, this buyer profile has disappeared (for now).

Another strong buyer profile in the past has been a U.S. purchaser. In spite of our lower dollar, we are not seeing renewed interest (yet!) out of U.S.

So, where are these early responder buyers coming from?

At the moment, they are coming out of Vancouver. The six key neighbourhoods finding out-of-country buyers are propelling those sellers to other areas…buying down & putting $$ in the bank.

Salt Spring Island

Salt Spring Island


Initially (Fall/2015), these buyers were looking in the Okanagan (Kelowna) & on the Sunshine Coast. Now, they are looking on this side of Georgia Strait (Vancouver Island, Gulf Islands (particularly Salt Spring Island), & Victoria).

Such a buyer coming to look at Salt Spring is also looking at Vancouver Island & in Victoria. Salt Spring has competition, then, for that buyer. They are ready to buy, as they have sold their homes in those 6 busy neighbourhoods in Vancouver.

Many properties on Salt Spring followed the market down. No one’s fault…it was just “the market”. Now, after that 8 year downturn, the market says: we’re on the way back up. The difference? The buyer is back.

One always has to sell a Gulf Island itself first…before one can sell a property on that Island. A secondary home/discretionary market is about choice. If someone likes a property, but doesn’t like the Island it’s located on, then they will not buy. It’s always a 2-step dance on any Gulf Island.

Salt Spring Island

Salt Spring Island


Right now, then, Salt Spring is benefitting from a return of a buyer…willing to act, & not just to look. That said, it’s important to treat these qualified (they have sold their Vancouver property) buyers with respect. They do not “have to” move to Salt Spring. Competing areas are part of the current buyer decision process.

Even in the very busy time on the Gulf Islands (2002 to 2005), sales were not automatic…one still had to “choose for” the Island before “deciding for” a property on it.

Sellers and buyers may change places on any given market trend, but both of them are a part of a successful transaction. A buyer’s market is characterized by lots of listings & few buyers…the scant number of buyers acting are in control of outcomes re prices. A seller’s market is characterized by few listings & lots of buyers. As inventory cleans out, sellers are in control of prices. However, it takes a willing seller & a willing buyer to have a successful transaction take place, regardless of market trend. In the end, there has to be “agreement”.

March 2016, Market Analysis

Market Recovery

Yes…it’s true…the Salt Spring Island and Gulf Islands real estate markets are on the move!

The severe downturn that afflicted all secondary home/discretionary markets (and globally so), has finally erased in our particular coastal region.

The recovery here (after an eight year downturn) is authentic.

A recovery is never even-handed…some areas saw a serious uptick in 2015 (Sunshine Coast)…now it has arrived on Vancouver Island and the Gulf Islands.
Salt Spring Island
Again, some areas/islands have seen uptick sooner than some others, but it’s still early days.

I have always seen a link between a pleasing visitor experience and a real estate sale, in discretionary markets. The January article in the New York Times about their list of “the 52 best places to visit in 2016” will bring increased tourism to this region. Only two places in Canada were featured: Toronto and the Southern Gulf Islands.

The season in this Pacific Northwest Coast region is really March Break to (Canadian) Thanksgiving Weekend, in mid-October…with the busier months occurring between late May & late September.

It may take until May/June to have this dramatic improvement in real estate sales be seen “everywhere”, in this coastal environment, and to reach media reports. Late April/early May often start the busier tourism times.

Signs of an upward trending market?

  • – thinning inventory (means more buyers than listings).
  • – sale of raw land (to remain on budget, buyers will buy land and build a cottage).
  • – prices stabilizing (spread between list and sale prices narrowing…some small bidding wars).
  • – renewed interest in upper tier priced properties.

Along with renewed buyer desire to own a property on a Gulf Island or on Vancouver Island, there is the added allure of the low Canadian Dollar against the U.S. currency. There is also a strong desire on the part of buyers to be able to be self-sufficient…a societal “safe haven” seeking, perhaps?
salt-spring-island-35-Alex-Beattie
Fewer listings and more buyers. In the end, this leads to price escalation.

The Islands Trust form of governance on the Gulf Islands essentially capped growth (in 1974) via strict zoning/density controls re development. Limited inventory always, combined with a renewed desire to own recreational property, spells a coming sellers market.

When? Perhaps by late Summer, 2016? Hmmm…the signals are all in place. Meantime, there remain good deals and good properties to consider.

This may be the end of the transitional period between a sellers and a buyers market trend line.

No matter the trend in place, at any time, there are always opportunities.

For a buyer, the time available to consider a property, once viewed, may be shortening. As we see further thinning of available inventory for sale, it’s important to “act”, if one likes a property. Sales volume remains on the increase.

If you are looking for your special Salt Spring Island, Gulf Islands, Vancouver Island property, please call me. Your best interests are my motivation, always. Let’s work together and discover your Best Buy opportunity.