Li Read's Market Analysis for Salt Spring Island Real Estate & Gulf Islands Real Estate

Market Analysis

Copyright, Li Read, 2006 & 2007

Current Entries

As of December, 2006

For my December analysis of the real estate market, please read my four page newsletter.

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As of September / October 2006

The Real Estate Market by the Numbers: Page 1 | Page 2 | Chart | Graphs

As of August / September, 2006

For my August & September analysis of the real estate market, please read my two page newsletter.

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As of July, 2006

The Realtor's Code of Ethics as put out by the Victoria Real Estate Board.

CODE OF ETHICS

Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization.

Through the Member the land resource of the nation reaches its highest use and private land ownership its widest distribution. The Member is instrumental in moulding the form of his or her community and the living and working conditions of its people.

Such functions impose grave social responsibilities which the Member can meet only by diligent preparation, and considering it a civic duty to dedicate himself or herself to the fulfillment of the Member's obligations to society.

The Member therefore must be zealous to maintain, and continually strive to improve, the professional standards of his or her calling: By keeping informed as to developments and trends in real estate,

By endeavouring to protect the public against fraud, misrepresentation or unethical practice in connection with real estate transactions,

By rendering his or her services and opinions based only on the Member's knowledge, training, qualifications and experience in real estate,

By seeking no unfair advantage over, nor injuring directly or indirectly the reputation of, nor publicly disparaging the business practice of other Members, and By being loyal to the Member's Real Estate Board and Provincial Association and active in their work.

In the interpretation of his or her obligations, the Member can take no safer guide than that which has been embodied in the Golden Rule - "Do unto others as you would have them do unto you."

No inducement of profit and no instructions from clients or customers can ever justify departure from the ideals of fair dealing and high integrity resulting from adherence to a lofty standard of moral conduct in business relations.

Accepting this standard as the Member's own, every Member pledges to observe the spirit of the Code in all dealings and to conduct business in accordance with the Standards of Business Practice as adopted by the Canadian Real Estate Association.

As of June, 2006

The real estate industry, generally, continues to evolve from a previous business model to a new role for realtors. The advent of the internet changed several industries -- the car industry, the travel industry, the stock market side of investment, etc. -- and this redoing of a business format is now "with" the real estate industry, as a whole. More traditional company formats are having to change, significantly, or they may end up being replaced by new company structures.

The consumer does a lot of investigating of areas and prices, on their own, and internet oriented companies are popping up to service this growing desire to search out information, to become educated in an area's services and pricings, before seeking out a realtor to help with the actual process of the purchase.

The consumer is the key to successful business transactions, of course, and realty companies and realtors have to shift their style of business to answer the needs of today's customer. It's no longer "business as usual".

See Li for further thoughts on change, and how it can benefit you, as either a seller or a buyer. In change, lies opportunity!

As of May, 2006

The real estate market remains strong, all over the Coast, and this includes on special Salt Spring Island, and the Southern Gulf Islands, too.

On Salt Spring Island, in particular, though, we have two important factors in play. One, is the outcome of the Islands Trust mid-70s mandate of "to preserve & protect". The strong zoning/density controls, put in place on all of the Gulf Islands, to ensure that their park-like nature would not be changed, will eventually create high priced properties, on all the Islands. It's simple economics -- low inventory plus high demand equals high prices.

Perhaps because Salt Spring does offer a year round lifestyle, with all amenities on the Island (hospital, banks, services, shopping, etc.), so that one doesn't "have to" leave, unless one wishes to, this Island has attracted the most attention, to date. Although there are still a few areas that can be softly subdivided, Salt Spring is very close to what I call the "wall of no more", and, as we drive around it, today, it is pretty much as it will always be, as a result of those Trust bylaws, from the 1970s.

Along with this "cap on growth", created by the Trust, which ensures higher price points for all properties on Salt Spring, we also have the "hard asset" environment that is a part of this current market cycle. Real estate purchases, in protected areas, are very appealing to a global buyer. As a result of the Internet having blurred geographical restraints, and the continuing globalization of life, in the Twenty-First Century, we are now, on Salt Spring Island & the Southern Gulf Islands, a "destination venue", a secondary home marketplace, with a resort based economy. We are not a primary residence market.

This secondary home market, though, carries with it the need for patience, on the part of both sellers and realtors. First, the buyer has to find out about Salt Spring, for example (which means off Island advertising -- the Driftwood is only valuable when a buyer gets to the Islands). Then they look at their schedules (everyone's in "time famine"!), and then they turn up to view -- a couple of months might go by, though, between initial inquiry and actual physical presence, to view properties.

However, they've also been looking on the Internet, and this has made them aware of properties for sale in other nearby Coastal areas, and, when they do get here, they're going to look "everywhere", naturally, "to be sure". Thus, often, the first visit is simply a "viewing of the Island, and deciding if it works" for them. It's almost like an interview of the Island. It usually takes a second visit to the Island, then, if they've decided "for" the Island, and on this trip they look seriously at inventory. It may even take a third trip, before an offer will be written. However, trip two isn't the next weekend, as they live far away, and are busy people. Maybe 4 or 5 months go by, before they make it back.

A seller's agenda is to sell, and as quickly as possible. About 5 years ago, though, Salt Spring Island, in particular, and many of the other Southern Gulf Islands as well, became these destination areas, and so time lags are involved in all sales, regardless of price point or property type. It's all about the buyer's agenda, then, as to when they'll come and view, and also to when they'll decide to offer. There is no propeller to action, either, as it's all at the buyer's discretion -- no one "has to" buy on Salt Spring or another Southern Gulf Island.

The underlying market conditions remain very buoyant in our regional marketplace. It may be that we are just ending a middle period of a market cycle, and this means further price escalations may be ahead.

It's very disturbing, then, when some realtors are recommending price reductions, to sellers, and promising that this will help them sell, "sooner". This is never the case. One still has to wait for the buyer to get here, to view. If the market trend is still a "seller's market", and there is still room for upward trend, then it becomes important for all sellers to investigate that realtor's motivation. Who does the realtor work for? You, the seller, or themselves? It's very important to have a realtor working for your best interests, and to make sure that their motivation is to bring you the best price for your property. This remains a seller's market, and no one gets to choose such a trend -- at any given time, things sell for less or more than intrinsic value, and it's a market dictated cycle. Right now, it is strongly "hard asset investment", for many global reasons.

See Li for more details on the changed marketing requirements that are necessary to attract today's "out of province" buyer profile market, on Salt Spring Island and the Southern Gulf Islands.

"See Li for Successful Solutions!" Top selling realtor for the past 8 years (verifiable statistics) on Salt Spring Island and the Southern Gulf Islands. Contact Li today!

As of April, 2006

Salt Spring Island & the Southern Gulf Islands had evolved into a "later and longer" sales scenario, in both 2004 & 2005. The buyers didn't really turn up, physically, to view what had attracted their earlier attention off the internet or print ads, until mid to late August. Their arrival on Island, then, went from August to February of the following year, and the early Spring was really just a continuation of the previous year's Fall marketplace trend.

Traditionally, the Gulf Islands saw a March Break to Canadian Thanksgiving Weekend (early October) sales pattern, and this would have been mirrored by the tourist related businesses, too. In both 2004 & 2005, then, the B & Bs, galleries, gift locales, marinas, boat/kayak rentals, car/scooter rentals, restaurants all saw a similar "later and longer" business pattern.

2006 seems to have started with a more traditional approach of March Break business & onwards. Or, perhaps it's just a continuation of what started last August/September, and there has been no "hiatus" between a yearly market? Too soon, in this "Spring market season", to make any judgment calls, here.

As usual, there have been sales in all price points, all categories of property, in 2006, to date, and, also as usual, no true comparables -- each sale is a bit of a "one off" -- which makes it difficult to point to a particular trend. It remains buoyant, in our area, however.

By June, the true trend for 2006, in our area, should be more evident to realtors, to appraisers, and to sellers, alike.

One thing that is very clear, right now, though, is the lack of affordable "entry level" properties, on Salt Spring Island. The weekly "driveby list, at the beginning of April, shows that the least expensive property is a home, on .22 of an acre, on the edge of Maliview, for a list price of $315,000. A property on Grantville, listed for $329,000, has an appraisal in place for $320,000. Someone looking in the price range of 299,000 to 399,000, then, will only be able to view about 6 listings, on the entire Island.

The reason for this continuing escalation of price point, on Salt Spring, which is the "stand alone community" Island, offering all amenities and a true year-round lifestyle, is pure and simple: it's the outcome of the Islands Trust "preserve & protect" mandate, put in place by the Provincial Government, in the early 1970s.

It's just basic economics, with the law of supply and demand creating a market reality. Realtors and appraisers are just interpreters of information, not the creators of same. The Trust's mandate, which was put in place to protect the park-like quality of the Islands, also created an area that has become a place that one has to be able to afford, to be able to live here. It was a natural outcome of those anti-development rules and regulations; the Trust was alerted, apparently, by urban planners that this would be the outcome of those density/zoning controls, to prohibit growth, and they chose to opt for the park, not people.

Markets have lives of their own, and, at any given time, things sell for more than their intrinsic worth and for less. Along with the outcome of the Trust's density controls (which have been narrowed and fine-tuned along the way, since the 70s), we have the beginning of the "baby boomer" pressure for recreational and secondary homes, in pristine environments, and a seeking for protected "hard asset" investment by a globally oriented purchaser profile. The entire Coast has been discovered, not just Salt Spring & the Southern Gulf Islands!

There are dips and dives, within market cycles, of course, but the long term picture for Salt Spring, in particular, but for all of the Gulf Islands, in reality, as all of them have zoning/density controls, due to the Trust's mandate, is for further price escalation, over time.

Contact Li Read (1-800-731-7131) for further thoughts on the "future" of a Gulf Islands investment.

As of March 2006

The only thing constant is change, as Thales reminded us in long ago Ancient Greece.

Since November, however, there has been a slow and consistent sales picture on Salt Spring & the Southern Gulf Islands. This "later and longer" syndrome has resulted in a continuing "thin" listing database, when one separates out property categories into residential, waterfront residential, acreages, lots, waterfront lots, townhomes, and commercial entities.

This lack of listings is still a hallmark of a hard asset investment environment. The regional aspects of real estate will have some areas (the U.S. northeast, for example) showing a slowing trend, while others continue to "boom", and to attract a buyer profile.

As long as art and antique auctions continue to bring in large payments for quality goods, and gold and commodities continue to show strength, and people are concerned to preserve capital (with a corresponding lack of confidence in the equity markets, still), we will find real estate in preferred areas continuing to "hold" value.

Put the beginnings of the "baby boomer" retirement cycle into the mix, and one realizes that older models may no longer apply -- the one thing the baby boomers did, as they bulged their way through their decades, was to completely change society. It may be, then, that areas that promise the "penturbia" mystique, those smaller and gentler locations, wherever they may be, will be the areas to show sustained growth in the future.

The Gulf Islands, including Salt Spring Island, are secondary home markets and not primary residence marketplaces. As such, sales, though steady, are not as "brisk" as would be the case, perhaps, in a larger urban area. Many sales on the Gulf Islands are to an "out of province" purchaser, and this means there are time lags involved in all sales. With a destination venue/resort based economy, and a non-local buyer, a seller has to wait for this buyer to arrive on Island. The time spread, then, between an initial listing and an actual sale can be substantial, in most cases, regardless of property type or price point. One has to wait for the buyer to arrive, to choose "for" the Island, and then to choose a property on that Island. It usually takes two visits, and sometimes three, before this decision to "act", on the part of the purchaser, takes place.

See Li for more thoughts on real estate, on Salt Spring & the Southern Gulf Islands, as a prime investment choice.

As of February 2006

It remains a "hard asset" investment time.

Real Estate is always a regional issue, although it is affected by national and international aspects.

On the Pacific Northwest Coast, which includes Salt Spring Island and the Southern Gulf Islands, it remains a buoyant market. One symptom of a Seller's Market is a lack of inventory (most owners prefer not to be sellers in a "hard asset" investment environment) coupled with a strong buyer interest.

Several things might be at the root of this continuing interest in a hard asset investment choice, but one of the most serious might be a continuing lack of trust in currencies. A continuing interest in purchasing good real estate in appealing areas, plus adding fine art, antiques, gold and other "hard asset" securities, classic car purchases, etc., to one's investment portfolio, only points out the issue of securing one's capital.

Countries have been printing money, in past years, and this is encouraging inflation and a lack of confidence in paper currencies. This might be one of the biggest propellers to action in the real estate marketplace.

For a full report on Salt Spring Island and the Southern Gulf Islands marketplace, as a venue for real estate investment, contact your full service realtor: Li Read. The top selling realtor for the eighth consecutive year, Li's expertise can benefit you in your property search.

"See Li for Successful Solutions!"

As of January 2006

Happy New Year!

The pattern of "busyness" continues on the Islands. The main business was done in the latter part of 2005, a sales rhythm that also was evident in 2004, and even 2003. It seems, then, that buyers arrive "later" and are looking "longer", in this area.

A spill-over from December into mid-January is a feature of this "later and longer" syndrome.

The buyers remain an "out of province" purchaser profile, and Salt Spring Island and the Southern Gulf Islands remain a secondary home marketplace, not a primary residence market. This means that sellers have to wait for the buyer to physically turn up, on the Island, then to view properties while also deciding "for" that Island, and then, on either a second or third visit, decide "for" a particular property on a particular Island.

There are significant time lags involved, then, in all sales, regardless of price point or property type, and this is reflective of the Southern Gulf Islands, including Salt Spring Island, having become a "destination venue".

Underneath all of that, the seller's market conditions of "low inventory/high buyer demand" remain in place.

Also, the Islands Trust's "preserve & protect" mandate ensures that the zoning/density controls will prohibit over-development, and this also ensures that there will always be a limited inventory available for sale, on any Gulf Island.

We begin 2006, then, with many of the same features in place that were evident in the latter part of 2005.

The listing inventory remains very "thin" in all property categories/pricings, and the least expensive property, in residential offerings, at the moment, is listed at $219,000 (a cottage, without an oceanview). The most expensive offering, in a residential listing, is a B & B, with oceanview, at $1,700,000. In waterfront residential, it begins at $450,000 for a cottage on tidal oceanfront, and goes all the way to 9 acres, at $5,990,000 (Can. $$).

For details on all listed properties, please call Li at 1-800-731-7131 or email Li at: islands@liread.com

"See Li for Successful Solutions!"

Entries for 2005 & Earlier

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