February 15, 2009.
What's happening in the market? It's a question that realtors hear quite frequently, throughout the year, but especially in the beginning weeks of a new year.
On Salt Spring Island and on the Southern Gulf Islands, we are a secondary home/discretionary marketplace, so we do have a "seasonality" to our property viewings and transactions. Our main grid of activity, as I like to call it, basically falls between March Break and the Canadian Thanksgiving Weekend (early October).
I suppose the main action takes place from early July to end of September, as boaters would also be more apparent in our waters, during these months. Holiday weekends/breaks also attract more people visiting the Island, some tying a tourist trip with property viewings.
Over time, as the Southern Gulf Islands, including Salt Spring Island (the largest and best serviced of same, and the one with the year round lifestyle), evolved into this secondary home marketplace, it also became apparent that the Islands were in competition with similar coastal communities, all vying for that retirement/recreational buyer. This means that the mainly out of province, if not out of country, buyer also views all coastal areas, as the first choice for the buyer is the "where".
Will it be Salt Spring? Another Gulf Island? Maybe Galiano, or Mayne, or Penders, or Saturna? Possibly even a water access only option, such as Wise, Parker, Gossip, Secret, Prevost, or Piers? There are even private islands to consider! Or, will a recreational community on Vancouver Island attract (such as Parksville/Qualicum, Courtenay/Comox, Yellowpoint & Maple Bay in the Cowichan Valley, or Tofino/Uclulet on the West Coast)? What about the Sunshine Coast, on the Mainland side of Georgia Strait (Pender Harbour, Sechelt, Gibson's Landing)?
That almost totally non-local buyer profile, who only wants to move once when they arrive on B.C.'s southern coast, does take his/her time to consider all the areas, all the options, before they get serious about a particular property in a specific place. The first visit, then, to all of these areas, is usually a "let me check it out/and then I'll think about it" visit.
I alert all sellers to the time lags in all sales, regardless of property type or price, in the Gulf Islands. The buyers are not "local", and there are substantial pauses between visits. It takes at least two visits, and often three, before a decision is made "for" an area. Then there will be an offer on a property in that chosen place.
Important, when a seller, to remember the perspective of a buyer. They have to "choose for" Salt Spring, or Mayne, or Pender Islands, or Galiano, or...and until that choice takes place, they are simply keeping an eye on possibilities. The buyrer, then, regardless of where they decide to purchase, is always in control of the "where" and the "when" of all sales transactions, in any secondary home marketplace, and this is the case regardless of what type of market trend is in play, at any given moment.
When it's a sellers market (which simply means low inventory, higher prices, lots of buyers/fewer sellers) or a buyers market (it's the reverse: more inventory, lower prices, less buyers/more sellers), it always takes time to sell any property on any Gulf Island, because no one "has to" come to them; it's always by choice, and every property on any Island is in competition with equivalent properties in other coastal communities. That first decision is the key one...it's the decision "for" a particular place.
That said, though, there's still the eager question: "what's happening in the market"?
It is most definitely, everywhere in the world, a buyers market. No one is exempt. It may have begun two years ago, in the U.S., and one year ago in the U.K., but it's definitely "everywhere", now. Sales volume is noted, on the coast, has having plummeted by about 54%. This means fewer buyers are acting. Prices appear, at this point, to have reduced by around 14% to almost 30%, depending upon where the property is located/type of property involved. There is a sense that further reductions could be coming, between now and May.
Remember, along with more inventory (that means larger choice) and lower prices (more properties in competition with each other, and lower demand for same), we also have a world in total turmoil. The meltdown of the banks/financial sector, at the same time as the bottoming of the housing markets, at the same time as the decline in the stock market side of investment (unheard of to have all three sectors down, globally, all at the same time), comes a fear factor.
In a fear market, the buyer is loathe to "act". There are many people sitting in cash, right now, who might be attracted to buy good real estate in protected investment areas (there's that Islands Trust, with its cap on growth), but they wonder if things have gone to the bottom, yet. They are hesitant to act, even though interest rates are very low, the Can. Dollar is low compared to the U.S. and Euro Dollars, and the Gulf Islands have a form of government control that prohibits growth.
There seems, though, in my opinion, to be another fear just beginning to show itself. It's the worry over the validity of cash itself. With so much being printed, globally, and only a government backing all this paper money, it might be that cash will become the next "bubble".
And, what about hyperinflation? There is a deflationary/deleveraging going on, right now, that's true. At a recent investment conference, words like "demand destruction" were used, and reference made to a "cleansing process", both in individual and in corporate portfolios. Lurking behind that "plunge" in values, though, we have an inflationary threat. This may be why the surge in gold prices, in the past days.
This concern over the validity of cash may see some people returning to real estate purchases, and the Southern Gulf Islands / Salt Spring Island are well positioned to attract this kind of "preservation of capital" buyer.
More info. on this? Give me a call! (liread33@gmail.com)
How may I help you to discover special Salt Spring Island & the Southern Gulf Islands? Call me!
