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Market Analysis, August 2016, Salt Spring Island

Summer on the great Pacific Northwest Coast is a superb season…and the micro-climate enjoyed by Salt Spring Island and the Southern Gulf Islands is delectable.

Salt Spring Island

Salt Spring Island

It’s a short season…and here we are at a mid-point. Time to get out there and enjoy all of the amazing opportunities offered in our special Islands region.

A time for Inspiration

Lakefront swimming, ocean kayaking, sailing between alluring anchorages, savouring produce from farm gate stands, being inspired by artists and crafts artisans in galleries and on studio tours, enjoying live music venues, theatre productions, and a hiking/walking experience that re-introduces one to the natural world preserved on the Gulf Islands.

The real estate market has recovered on the Gulf Islands in what I call the residential entry-level property segment. On Salt Spring, that would be 350,000 to 750,000 price range.

It does appear that the Spring market in the Gulf Islands is about sales in that entry level residential category.

Between mid-July and end of November, upper tier priced residential properties begin to find their buyers.

Some years back (and who knows why), the Gulf Islands became a late summer/fall real estate marketplace.

This market analysis is always written at the beginning of a month. For market updates, reflecting the rest of the month’s outcomes, check out my blog. Also check back to my June and July “reports”…this is a very new recovery (just 10 weeks old? After an 8 year downturn.).

So, the first half of the year saw the following breakdown of sales (January first to July 18th):

  • 19 sales up to 200,000.
  • 26 sales between 200 and 300,000
  • 40 sales between 300 and 400,000
  • 43 sales between 400 and 500,000
  • 37 sales between 500 and 600,000
  • 24 sales between 600 and 700,000
  • 9 sales between 700 and 800,000
  • 5 sales between 800 and 900,000
  • 5 sales between 900 and one million
  • 12 sales between 1 and 2 million. (most below 1.7)
  • 1 sale between 2 and 3 million
  • 1 sale between 3 and 4 million

You can see, then, that the Spring market is about the beginning stirrings of the authentic recovery. From mid-July to end of November it’s the upper tier time.

An outcome of thinning inventory is price increase…for the moment, a buyer may have to meet the benchmark set by the seller, as listings diminish. Sales volume may have tripled, and prices may have stabilized…but price increases have not yet been strongly evident. As we ease into the Fall market, we may start to see prices escalate.

Why Should you Purchase on Salt Spring>

Why consider a purchase on Salt Spring Island or a Gulf Island? One thought: the Islands Trust (created in 1974) effectively capped growth on the Gulf Islands. A limited inventory, combined with a strong buyer demand, creates a higher price point for all purchases. It’s the economic axiom that low supply plus high demand equals price escalation. A property purchase on a Gulf Island is perhaps a protected investment.

Perhaps a more important reason for a Salt Spring Island or Gulf Islands purchase: to enjoy a softer, gentler lifestyle, with an emphasis on the natural world and the impact of an artists voice.

Salt Spring and the Southern Gulf Islands are an easy commute to Vancouver, to Victoria, and to Seattle. Whether by ferry (3 different regular scheduled ferries service Salt Spring) or by floatplane (regular sked flights to downtown Vancouver, to Vancouver Airport, from Salt Spring), it’s very easy to come and to go…and yet these Island gems swim enticingly apart in the Salish Sea.

Proximity to major centres, yet serenely apart. All opportunities in the 21st Century available, yet an alluring yesteryear ambiance. A thoughtful and caring community, yet strong opinions. Definitely an interesting place to reside!

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.

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”.

Feb 2016, Market Analysis

Welcoming in an Early Spring

February welcomes very early Spring on the great Pacific Northwest coast. Depending where one finds oneself, there are snowdrops, crocus, early rhododendrons, early flowering ornamental cherry trees, all whispering the promise of real Spring to come.

Salt Spring Island and the Gulf Islands are nestled in the rain shadow of the much larger Vancouver Island, and this positioning in the Salish Sea (the historic name for Georgia Strait) delivers a temperate micro-climate to the Gulf Islands.

Vineyards, olive groves, orchards, cideries, craft breweries, small sustainable farms…the arable opportunities on Salt Spring and the Gulf Islands are a part of their allure. Trees and succulents grow here that are also found in California.

Connect this temperate climate to a form of governance that controls growth & limits development (Islands Trust), & in a region that attracts a strong artistic base (Salt Spring is renowned as an artists community), and you have a very alluring place to visit…and to live. In the heart of some of the best protected boating waters in the world, the scenic beauty and serenity are further reasons to discover yourself here.

Market Trends

February also brings, for market trends, the beginning signature of this still New Year.

Real estate in secondary home/discretionary regions, & globally so, experienced a severe downturn between late 2008 & late 2014. No one has to buy a second home or a recreational choice, in disturbing economic times.

Salt Spring Island

For Salt Spring & the Gulf Islands, in Fall of 2014, a slow recovery began. This rhythm slowly and consistently continued throughout 2015. As inventory thinned out, prices began to stabilize and the spread between list and sale pricings began to narrow.

Let the Season Begin

Now, here we are, poised at the beginning of 2016’s trend-line, for our seasonal marketplace. For our discretionary area, it often takes until April to catch the real tone of the year.

In our authentic global village, no place is immune to global economic and societal pressures and outcomes. Salt Spring and the Gulf Islands are not protected from issues affecting both Canada and the international community.

Huge population shifts in Europe, continuing suppression of oil and commodity prices, a stock market with a richochet pattern, currency stresses world-wide, an argument between deflation and inflation that brings brief stale-mate, a tech based world that has almost erased all vestiges of late 20th Century models…and is now delivering societal outcomes post-tech (think Uber, Airbnb). Still no road-map for easy decisions and an erosion of capital. Hmmm….

Canada On Sale

Canada is on sale. Our dollar has reduced 30% against U.S. currency, for example. It may be tracking to a 40% spread. For a buyer from U.S., U.K., Europe, & China, our real estate is hugely affordable.

In difficult economic times, without a blueprint for action, investors often turn to unique real estate purchases as a way to preserve capital. Will that be the outcome in 2016? Will real estate purchases solidly return to rural and recreational regions? If so, locally we should see the very beginnings of this return to specialty real estate by March/April. Stay tuned.

Meantime, we need to take the image of this Chinese Lunar New Year (starts on February 8th) to heart: the Year of the Monkey. An image of playful activity? Apparently a time of exciting discoveries/inventions…but also a time of turbulence/revolutionary zeal. Hmmm…a time to be nimble, perhaps. Sounds like more change, in any case.

Every good story has a beginning/middle/end…this transition market, between a down & an up market trend, appears to be drawing to a close. It may take until May, in our specific Gulf Islands region, to see the uptrend fully in place. A seller’s market is noted as having lots of buyers & very little inventory. We appear to be on the way to this eventuality.

No matter the market trend in play, at any given moment, there is always opportunity. Whether selling or buying, I look forward to bringing my knowledge, experience, expertise to your benefit.

January 2016, Market Analysis

January 2016, Market Analysis – Salt Spring Island

Salt Spring Island

Salt Spring Island


A New Year…a new adventure.

2016 may turn out to be the authentic first post-meltdown year, for discretionary real estate sales.

Salt Spring Sales – Between 2008 & 2014

In the secondary home markets, between end of 2008 and end of 2014, there was scant activity. Although most sales in 2015 occurred under the label “entry level residential”, such sales volume may have doubled and listing inventory dramatically thinned. This is a marker of an authentic recovery. In the end, all property types/price points find their buyer.

Hard Asset Investing

It’s called hard asset investing, and is perhaps the antidote to years of quantitative easing. When currency uncertainties are a factor, ownership of a good real estate option is a solid route to safe haven investing.

This is an excellent opportunity for many to consider amplifying their property portfolio: to consider a recreational purchase as a means to grow their asset base. Undeveloped land opportunities may be the “best buy” venue.

Interest rates still remain at almost historic lows. Sellers might agree to hold a mortgage in order to facilitate a sale. Prices reduced over the past eight year downturn; recreational options are affordable. Vacation rentals can help to offset costs. And, there is the enjoyment aspect in this “always on” post-Internet world. A ferry to a retreat…hmmm…a recipe for a pleasing lifestyle?

BC Ferries

BC Ferries

A Time For Action

A cottage. A garden. A kayak at a dock. A deck to invite one to ponder a view. A beach to stroll. A mountain trail to hike. A decompression chamber? Plus an appreciation component that makes the enjoyment also a good investment.

Timing is all. January reminds us of the message of the double faced Roman god who left his name on this beginning month: one face looked back to past days, and one viewed forward. A quick glance back shows a market finally in recovery. A glimpse forward sees a moment in time that invites participation.

A new year, a new adventure…will you answer the call? Time for that recreational purchase? Time to turn that daydream into reality? Time for action.

December 2015, Market Analysis

December 2015

Around Salt Spring Island This Holiday Season

This month is a time of celebration, and Salt Spring offers many opportunities to enjoy this season: Wintercraft at Mahon Hall, Village Light-Up with Chili Cook-off and Shop Late & Social, the Beaver Point and Fulford Hall craft fairs, Glowtini contest & Shop Late & Social, Saturday Market opens for Christmas, Sunday Family Shopping Day, and Merry Monday in Fulford Village (thank you, Valdy). Plus, Santa arrives on a carol ship. It’s an authentic taste of a country village Christmas…enjoy!

December Snow - Salt Spring Island

Snow – Salt Spring Island

About Real Estate…

Real Estate sales in that entry level priced category, whether undeveloped land or residential options, have continued to drive our market outcomes. Some upper tier priced residential sales have strengthened, too, between August and now. Thinning inventory, renewed buyer interest in a secondary home/recreational/discretionary marketplace, a safe haven seeking aspect to this interest, a return to hard asset investment opportunities…it all spells a market recovery.

Markets are cyclic in nature…there are also beginnings/middles/ends in transition periods. I think the “end” is occurring right now. We may see a fast return to sellers conditions by Spring, 2016. The traditional market “window” on Salt Spring and the Gulf Islands is March Break to the Canadian Thanksgiving Weekend. It is never without activity, but the bulk of viewings do take place within this timeline. Sales take place at any time.

Sales volume appears to have doubled over last year, and the inventory up to a certain price range has also thinned dramatically. These are two items that underscore a move upward, in a market trend. Plus, undeveloped land sales are finally slowly starting, and that’s the third item one looks for, if seeking corroboration that the recovery is authentic.

In 2014, the sales pricing for a buyer seemed to hit a ceiling at around 550,000. This year, it’s around 750,000…again, a sign of a strong improving trend.

As of November 30th, there were 235 sales this year.

  • The first 14 (between 100,000 and 225,000) were undeveloped lots.
  • 26 residential options sold between 230,000 and 299,500.
  • 42 residential sales fell between 300,000 and 395,000.
  • 41 sold between 400,000 and 495,000.
  • 37 sold between 500,000 and 599,000.
  • 19 sold between 604,000 and 669,500.
  • 16 sold between 700,000 and 799,000.
  • 10 sold between 800,000 and 896,000.
  • 6 sold between 900,000 and 960,000.
  • 19 sold between 1,000,000 and 1,900,000.
  • one sold at 2,450,000.
  • one sold at 3,600,000.

Most of the sales over one million took place from July on.

When inventory starts to thin out, sales volume drops as the number of properties for sale is less…this is already happening in Victoria. This is when we see price stabilization and then increases.

I often think that the first two months of a year reflect the patterns of the last two months of the previous year. November/December have been busy. It appears that this rhythm will continue into January/February. It may take until March to truly see the tenor of the 2016 market.

There is always opportunity for a buyer at any point in time…there are properties available in all price ranges/types. More information on how the changing market trend can benefit you? Call me!

Whether selling or buying, your best interests are my motivation.

Wishing you a Merry Christmas this December and a very Happy New Year! Enjoy your special traditions.