Li Read's Market Analysis

Market Analysis

Copyright, Li Read, 2005 & 2006

Current Entries

As of December, 2005

At the close of a year, it's often standard practice to look back on the past, and to consider how to forecast (if that's possible!) the "future". A human need, perhaps, to "interpret" events, and to try to make sense of things.

It's also a time to make contact with family members, who may live far away from us, in most cases, as the "global environment" we call the Twenty First Century, creates distance between family and friends.

It's a time, too, to remember to count one's blessings, and to look for ways to provide something "better" in the lives of those less fortunate than we might be.

There are many aid agencies requiring extra help, at this time of year, and the message of sharing is something that we can all relate to, regardless of belief systems.

There are many serious things facing us all, in today's more chaotic times (people kidnapped & threatened with imminent death, as they volunteer to "help", in areas around the world that are reflecting division and stress, for example). It's still important, though, to remember that life is also regional, and, here at home, in our own communities, there are people needing our help.

Put up the lights, decorate the home, bake those traditional goodies, and spare some time and energy and funds to be a light of cheer for someone nearby, who will benefit in so many ways from your time and your thoughtfulness.

What goes around, comes around...remember the "spirit of the season".

As of November, 2005

It remains a "hard asset" investment time, with most owners preferring not to be sellers. This keeps the inventory "low", from a buyer's perspective. Although there are good choices, out there, there aren't "huge" choices!

Along with this continuing classic Seller's Market trend of low inventory/high demand, we have the outcome of those Islands Trust bylaws, set in place in the 1970s, to "preserve & protect" the Islands, for the benefit of all B.C. On Salt Spring Island, in particular, we are very close to what I term the "wall of no more". The Trust's mandate is to control growth, through strict density/zoning controls, and so, as one drives around the Island, today, one is seeing it as it will essentially be, "forever".

The Trust created, then, a marketplace that will always have a low inventory of available properties, in any particular price or property type category.

Along with this "attrition" in listing inventory, we have seen a predominantly out of province purchaser profile, on the Gulf Islands, including on Salt Spring Island. This has the effect of momentarily creating a secondary home marketplace; most of these buyers can't necessarily move here, full time, right away.

All of these dynamics create both time lags in the sales pattern and a "later and longer" scenario for actual transactions. It takes significant time periods for this out of province purchaser to choose "for" an Island, and then to choose an actual property on that Island.

Patience, then, is required of both sellers and realtors!

The bottom line, though, is that recreational areas are seeing stability in both pricing and in demand. The "baby boomer" move to such areas is really just beginning, now.

Prices may remain stable, for some time, with projections for further increases, as demand escalates and inventory remains low.

If only there were a crystal ball, nearby.....

As of August, 2005

The "briskness" of the early Spring marketplace has seen an interest in all types of properties (residential, waterfront, undeveloped lots and acreages, commercial) & in all price ranges. From March Break to end of May sees a "first sales window" on Salt Spring & the Southern Gulf Islands. June is often a quiet month, and then the "summer season" begins. Although there can be a good showings pattern in July, the main (second) selling season seems to be August through the Canadian Thanksgiving Weekend (first Monday in October). This pattern has been "traditional" on the Islands, and it appears that 2005 is a "traditional" year.

A continuing interest in the "high end" marketplace has seen consistent showings, too, of luxury waterfront and oceanview options.

The main buyer still appears to be from Alberta, if a Canadian, with some increase in Ontario potential purchasers. A high proportion of U.S. buyers remains in evidence, too, with such buyers coming from all over the U.S., and not just from the west coast States. The U.K. is also a factor, in the buyer profile on the Islands. Lately, the Gulf Islands have been catching the attention of Lower Mainland potential purchasers, too, who might have "forgotten" this treasure right at their doorstep!

Looking to purchase on Salt Spring and the Southern Gulf Islands? Contact Li Read for a full information package! Email Li at: islands@liread.com

As of April, 2005

Throughout the coastal region (Vancouver/Lower Mainland, Sunshine Coast, Vancouver Island, Victoria & environs, & the Gulf Islands), in 2004, there were significant "plateau" or "pause" times. This is considered "normal", in the middle of market cycles, and such "flat" moments also occur in the stock market side of investments. The time frame for this "pause" was different in each of the coastal communities; on Salt Spring Island, it appeared to be in evidence between the end of April and the middle of November, in 2004.

This "pause", then, occurred at the time of year when the seasonality of this resort based area should have seen its busiest time. The "plateau moment", which wasn't a "dipping", but simply a lack of activity, affected retaurants, B & Bs, gifts/gallery locations, kayak/bike rentals, marina related activity, etc., and, of course, real estate.

By the middle of November, however, a more buoyant time re-emerged, and it was quite active over the Christmas/New Year holiday time, too. January, on Salt Spring, saw an unexpected and severe winter snowstorm, and this did cause some "hesitations" in arrival patterns. February, though, saw very brisk activity, and potential buyers had begun to arrive on Island, in substantial numbers, a pattern almost as brisk as one usually expects to see in August / September time periods!

February's weather, sunny and crisp, and very definitely "early Spring", may have had some bearing on this "action". March Break, which begins, here, on March 17th, promises to be a buoyant time for the Island, both in tourism, and in potential property viewings. For more details, please see Li!

As of early January, 2005

The end of December, 2004 / beginning of January, 2005 found a global humanitarian response to the disaster in South East Asia, caused by the earthquake off Sumatra, and the resulting tidal waves it created. The devastation was quick and horrendous, and the losses were enormous, in both life and property. First, in such times, there is shock, and shock leaves one momentarily numb. Then came the huge outpouring of help from around the world. Underneath this, the usual destructive issues that have afflicted the 20th century and the beginning of the 21st, continued, unabated, in their small corners of the world. Above, though, was this huge outpouring of shared grief, shared concern, shared largesse through donations of money, materials, time, energy. The relief efforts are from all over the world; divisions of religion, race, finance blurred, and everyone came together, to create this rush to solution. Empathy and generosity were the watchwords, here. If this can happen in a time of huge destruction and loss, both personal and national, can it also be created as a model of action, a blueprint model for the 21st Century? Some thoughts....

As of December, 2004

It remains a "hard asset" investment moment in Coastal British Columbia, generally, and on the Southern Gulf Islands, in particular.

This means that most owners don't want to be sellers, at this time, and listing inventory remains "thin". It also continues to be a "seller's market", which simply means low inventory and high buyer demand. Although there are not huge choices for a buyer, in any particular price point/property category, there are still some "good" options, and it is still a good time to purchase on a Gulf Island.

The beginning of 2004 saw a carry-over of activity from 2003; the bulk of the sales were in the low to mid-ranged priced residential properties, and, in the main, the out of province purchaser did not want to entertain a building project, and so "raw land" parcels remained on the market for substantial periods of time.

Usually, there is a flurry of activity during March Break/Easter vacation period, but that did not occur in 2004. Instead, there was an interesting "plateau period", which lasted, on Salt Spring & the Southern Gulf Islands, from around the end of April to almost the end of October. There were small "fits and starts" of activity at the close of August/early September, but not consistent activity. This "pause" turned out to be coastal wide, and not just specific to the Gulf Islands. Then, by the beginning to middle of November, there was daily real estate activity, once more, and in the "high end"/luxury options, which was a total shift from the beginning of 2004. Large and spectacular oceanview acreages, and waterfront options, whether undeveloped or with fixer upper cottage homes or with extravagant homes, recently completed, all found their "seekers".

On Salt Spring Island, three properties sold over 2 million, in 2004, and two over three million (they were all waterfront, whether ocean or lake options). This was something "new" for the Islands.

Some non-view opportunities, again whether residential or undeveloped, were overlooked in 2004, and it may be that the buoyancy that came back into the marketplace, after the "lull" or "pause" from end of April to end of October, will help attract a buyer to these very pleasing choices, too.

It's important, always, to have full information and current information -- a quick email or a call to Li will ensure this!
Li does not post lists of what is available, as the market is not "static" in these seller's market moments, and Li does not want to have "old information" displayed. Contact Li for immediate and totally current information!

The top selling realtor on the Southern Gulf Islands, for the past 6 years (mls statistics), Li offers experience, skill, unparalleled market knowledge (successfully selling in the Southern Gulf Islands for the past 16 years), and offers impartial and current knowledge. Li will make certain that you "see it all", so that you can make that all important "informed decision".

"See Li for Successful Solutions!"

Market Background

As of December, 2003

The real estate market on Salt Spring Island has remained consistently "buoyant" since mid-2001. During that time, properties sold slowly and steadily, and there were very few new listings coming onstream to replace these steady "solds". The busyness began with residential properties, in the low to mid-priced ranges. By late 2002, all property categories, including "raw" or undeveloped land, and "high end" properties, had begun to move consistently, too.

The other Southern Gulf Islands did not see the same activity in sales, as did the Salt Spring marketplace, until late 2002/early 2003, and, again, it began with low to mid-range residential options on these islands, too.

Now, however, all Southern Gulf Islands are finding their interested buyer, and all property categories are selling. Even "water access only" options are finding a buyer more easily than at any time in the past six years.

Owners, unless they "have to", for personal reasons, are loathe to list and sell right now. It continues to be "hard asset" investment time. Real estate in protected areas, such as the Gulf Islands, which are "governed" by the provincial government body known as the Islands Trust, with its "preserve & protect" mandate, & its subsequent control of growth through zoning/density controls, makes Salt Spring & the Southern Gulf Islands, in particular, a premiere "hard asset" investment choice.

Post 9/11, also, there has been a searching for a less intense attitude to living, and areas such as Salt Spring & the Southern Gulf Islands also offer this special "apartness". Close to major centres (Vancouver, Victoria, & Seattle) and to the larger, more developed Vancouver Island communities, yet with a sense of "yesteryear" about them, the Southern Gulf Islands have immense appeal. Salt Spring, being the largest and best serviced, does offer the advantages of a "stand alone" community, yet all of the Islands have their special appeal. Interestingly, the Victoria Board noted, in the buyer profile for 2002, that 81% of the sales on Salt Spring were to "out of province" buyers. This appears to mean, then, that there is no true "local market" on Salt Spring.

See Li for more details on the seller's market conditions now in play, and find out how to make same "work" for you!

As of December, 2002

Stable ownership appears to be the market trend, at the moment, on the Southern Gulf Islands. If one doesn't have to sell, for personal reasons, one is "hanging onto" the real estate investment on the Islands. Along with this reluctance to sell, on the part of many potential listers, we have the final outcome of the Islands Trust's "preserve & protect" mandate, which was put in place in the mid-1970s -- most of the available land for development has been put in place, and thus the selection of available properties, whether resale residential or undeveloped land coming onto the marketplace, remains very "thin".

Along with this lack of inventory comes increasing buyer demand -- British Columbia generally is seeing an increase in interest from out of province buyers, and coastal areas, including the lovely Gulf Islands, are receiving huge interest. Low inventory coupled with buyer demand usually equals price increases.

At the moment, there are still some "spreads" between list and sale pricing, depending upon the property involved, and in other cases sellers are getting their price. In the case of exceptional oceanfronts, there may even be some "bidding war" situations. Buyers are also purchasing oceanfront options, and removing existing 1970s/80s houses, to rebuild something with the 21st Century "look". Projections seem to be calling for price increases by the next season; the early Spring market begins on the Islands in early January. August/September is often the busiest sales moment in the Gulf Islands, and this has been the case to date, this year.

The Victoria Real Estate Board sent around a bulletin to realtors in February, 2002, pointing out that 2001 had ended at the same point as 1993, which was the last "high" in this area. In June, 2002, a Vancouver newspaper printed that four key areas in B.C. had seen a 60% increase in values since the previous year, and Salt Spring was one of these areas.

Hard asset investment time, a recognition of the Pacific Northwest Coast, generally, as an enviable place to live, and the Southern Gulf Islands/Salt Spring Island especially valued, plus a seeking of a "kinder, gentler lifestyle", and it adds up to a recipe for a very buoyant real estate market.

See Li for further details on what this Seller's Market means to you! The top selling real estate agent on Salt Spring & the Southern Gulf Islands, for the past 5 years, Li offers "successful solutions" to her clients, whether Buyers or Sellers.

As of January, 2002

The horrific events of Sept. 11th, in New York and in Washington, D.C., have affected us all, whether we know someone personally involved or not. The individual stories of heroism and compassion remind us of the essential humanity of most people. These are days that will test us all, and remind us of what is important in life -- our families, our friends.

On a more mundane level, these events also affected some people materially. Those with businesses in the international travel/tourism areas, for example, found themselves with non-functioning businesses, overnight. Thus, if they were involved in a property purchase, they may not have been in a position to complete same.

In other cases, people have reacted with understandable fear of the unknown, and are perhaps looking for areas that are seemingly "apart" from areas of "tension" (i.e. city environments). This might be termed "refuge investing", which could suddenly be a factor in marketplaces that offer a more "rural" yet not isolated lifestyle. Salt Spring Island and the Southern Gulf Islands may be perceived to be such an area.

Locally, before Sept. 11th., the Southern Gulf Islands, and Salt Spring Island in particular, seemed to be on an upward track re sales activity. The listing inventory in residential housing had become very "thin", and there were few new listings coming onstream, reflecting, perhaps, "stable ownership" on the Islands, generally. Since Sept. 11th., though, it is no longer "clear" what is happening, and it may take until the early Spring market of 2002 to see a pattern.

The following analysis was written before Sept. 11, 2001, and gives some recent "historical" background to the local marketplace, which may be of interest to a prospective buyer. However, it is not clear what is occurring right now, although at this exact moment there are many prospective buyers on Island, and consistent sales taking place (with continuing lack of interest from potential sellers in listing right now -- thus that "thin" inventory is just getting "thinner"!) -- usually business on the Island goes to a "weekend only" situation from the Canadian Thanksgiving weekend (first Monday in October) to March Break (a mid-March date, usually), but this is not the case to date. It remains busy, on an almost daily basis, and shows no sign of letting up. The bulk of the potential buyers are from the U.S., at this moment in time. It would be presumptuous to assume a "stance" at this moment, re a market projection, however. Updates to come!

Traditionally, the bulk of the Buyers on the Gulf Islands, have come from Alberta & Ontario, in Canada, and from the U.S.(predominantly from California, Oregon, and Washington State). However, since the recent British Columbia election, there have been more calls from the Lower Mainland, and this is good news! It has been a long time since we've seen that British Columbia buyer on the Islands, and it shows a welcome shift in the real estate markets that this is happening.

Although not ever totally unaffected by the British Columbia economic picture, Salt Spring in particular, and all the Gulf Islands generally, are not as impacted as Vancouver Island communities, for example, when British Columbia's economy lags behind the rest of Canada. The projected "better times", however, in the wake of the British Columbia election results, with the "free enterprise" party's election landslide, seems to foretell more buoyant times for British Columbia generally, and this will also impact the business community on the Southern Gulf Islands!

After a very buoyant real estate market on the Gulf Islands in 92/93, the natural "suppression" after such quick upward pricing, coupled with British Columbia's beginning economic slide in 1995, caused a serious market downturn. Buyers began to reappear on the Islands, though, in small numbers by late 1997, and prices began to stabilize by late 1998/early 1999. Sales volume was down by approximately 13% in 1998 from 1997 statistics, however.

1999 saw continuing increases in buyers "looking" activity, but the bulk of the sales activity took place in waterfront options. At the close of 1998, there were 215 sales on Salt Spring. By the end of 1999, the sales volume was in the low 240s. The year 2000 saw similar sales pattern to 1999. Although there was a definite increase in buyers physically turning up on Island to "view", as opposed to merely replying via email or fax or phone to property advertisements, in 2000, actual sales were down slightly from 1999.

Clearly, although still a "Buyers Market", in late 2000 & very early 2001, there had been a soft move "upward" in real estate "expectations". The stock market, which had been an aggressive competitor to secondary real estate purchases,in the mid to late 90s, is still embroiled in continuing volatility. In the past, such dips and dives in the equity markets have turned some potential buyers onto "hard assets" again, thus making real estate purchases a serious contender for investment portfolios. This appears to be the case, again, at this moment.

The current inventory on the Gulf Islands remains very "thin". This, coupled with continuing low interest rates plus stable pricing, and increasing "looking activity" by prospective buyers, could presage a shift into Sellers Market conditions by the early Spring 2002 marketplace. Traditionally, the first "selling window" on the Islands is this early Spring moment (mid-Jan. to late April), with the second "window" occurring from mid-August to the Canadian Thanksgiving weekend (early October). However, in 2000, it remained busy, right through to the end of the year, which implies a "tracking upward", and this "interest" on the part of buyers continued into early 2001. The marketplace on the Southern Gulf Islands, though, is really "seasonless".

At this moment in time, things no longer necessarily favour the Buyer. When inventory is extremely low, when no one is rushing to list to replace the steady sales, then it seems that we are almost at the point where we will bump into Sellers Market conditions again. Although markets are not "static", this is still an excellent time to buy a property in the Gulf Islands. Price increases have not occurred yet. This "hiatus point" moment may not last, as there have been some sales close to list price, and very little choice for a buyer to view, in residential options. Perhaps this is the moment to consider "raw land" again, either to keep as a "holding property", or to develop & build now. There is a greater selection of "interesting" properties right now, in undeveloped land choices, whether lots or acreages.

Appraisers have to wait for completed sales to get a full picture of a market. Realtors know when things are in a "subject free" mode, awaiting completion. I expected to see write-ups in Vancouver & Victoria newspapers by mid-July, talking about the buoyant real estate market, as, by then, the statistics would have been "out there" -- right on cue, in the third week in July, there were headlines in the local papers, talking about the "hot real estate market". It really began, though, by end of March/beginning of April, and active realtors saw this, as they're in the middle of it all, & know that "firm deal" moment!

This "flux mode" is a difficult space to inhabit, though -- some properties may suddenly be "undervalued", and thus sell extremely quickly, as buyer's perceive the shift now underway. In other cases, buyers who have been checking the market for some time, awaiting the "bottom moment", before acting, are disappointed to have missed it, as they are now having to meet the Seller's expectations! See Li Read for further details on the above.

Contact Li Read at RE/MAX Salt Spring, 131 Lower Ganges Road, Salt Spring Island, BC, V8K 2T2, Toll-Free 1-800-731-7131