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Current Market Conditions
Copyright, Li Read, 2008
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Very difficult, these days, to "call" a trend.
In primary residence marketplaces (a city market, or a large town, where a buyer is
looking for their principal residence, sending their children to school, working there,
etc.) is very different from a secondary home/discretionary marketplace (such as is found
on Salt Spring Island & on the Southern Gulf Islands).
The internet erased geography, back in 1998. The low Canadian dollar, in the 1999 to 2006
period, made us very appealing, as an investment buy, to that global buyer. The fact of
the Islands Trust as our form of government (which effectively controls growth) created a
"protected investment" area, too. The swing to hard asset investment, between 2000 and
2006, combined with easy credit, also had real estate investment on the increase.
These were heady days, indeed!
Around the close of October, 2005, there was a "hiccup". It wasn't immediately noticed,
Throughout 2006, inventory remained low and prices remained stable, but the buyer was
loathe to "act". The Wall Street Journal termed the entire year as "stable/inactive" in
real estate sales, & noted that it was so, globally. It's very unusual to have a real
estate trend be the same, around the world.
Perhaps the reason for this occuring was that the banks/financial institutions already
knew that the subprime mess was about to become a huge issue, and so they may have been
pulling in the easy credit. By May of 2007, the subprime fiasco and resulting credit
crunch was front page news, everywhere, and fear does create hesitation.
That inactive period, which clearly began, in retrospect, at the end of October, 2005, was
firmly entrenched by May of 2007. To try to jumpstart sales, some companies/some realtors
had huge price reductions. In a secondary home marketplace, though, where there is no
propeller to action (no one "has to" purchase in such a discretionary marketplace), a
price reduction does not have the same effect as it might have in a primary residence
On Salt Spring Island & the Southern Gulf Islands, and in similar destination venues on
Vancouver Island and on the Sunshine Coast, the buyer is in control of both the "where"
and the "when" of all purchases. Sellers and realtors do not set a market, either; it is
the buyer that creates the market.
When the buyer is not wanting to "act", then, nothing happens!
In mid-January to around mid-April, there were some quite "high end" sales on the Gulf
Islands. Suddenly, the general malaise and indecision around the subprime issues and the
resulting credit crunch had coalesced around the fear about the health of banks/financial
institutions. The concern over the validity of cash, how much was secure in a financial
institution, how much was being printed (& what was backing it!), what about inflation,
etc., continued. The stock market's volatility is a further worry. Suddenly, these early
Spring purchases seemed to be about preservation of capital -- "safe haven" investing, if
The low end remains quiet on the Islands (banks are not lending easily), and the midrange
priced properties also remain quiet (although such buyers "could" perhaps make a purchase,
they are concerned about debt, and they are not necessarily wanting to purchase that
second home, just at this moment. Again, fear does create hesitation).
There is no crystal ball, and there are many different media reports, with many opposing
points of view -- for the past 4 or so years, we've heard a stagflation argument and an
inflation premise, at the same time, and both are substantiated in valid ways.
I think, myself, that we are in the midst of a huge societal shift, and it reminds me of
the novels of Charles Dickens, where he was describing the falling away of the old
Agrarian lifestyle and the emergence of the Industrial Revolution. It's like two pieces of
sandpaper, grinding through past each other, and some things, definitely of the recent
20th Century, are being erased, and the 21st Century's information age is erupting &
flowering. Depends which side of the sandpaper mitt you're one, as to which scenario you
describe -- negative or positive.
It's definitely not "business as usual"!
There is a lot of discretionary money, seeking a safe haven, however, and Salt Spring
Island & the Southern Gulf Islands offer the protected environment of the Islands Trust's
jurisdiction, with its cap on growth, plus the wonderful climate ("cool Mediterranean"),
plus the sophisticated lifestyle in evidence, plus the proximity to major centres coupled
with a lovely feeling of being "apart"...it all adds up to an alluring potential for that
kind of an investor/buyer.
The Islands are no longer an entry level purchase area, though, and it is the very Islands
Trust which has created this enclave area. In 1974, when the Trust was created, there were
few residents and lots of land. Now, we're at the opposite end of that and there will
always be a limited inventory on the Islands, based on the Trusts bylaws and their
anti-growth policies. Low supply and high demand (it's a global buyer, now, because of the
effect of the internat, erasing geography) always equals higher prices, and that's what
has occurred on the Gulf Islands.
It's the inevitable outcome of the Islands Trust's mandate of "to preserve & protect".
For more details on the Salt Spring Island & Southern Gulf Islands marketplace, contact Li
directly! Maps, brochures, virtual tours, slide shows, videos -- all available, to
introduce you to this exceptional area, in the best boating waters in North America!
"See Li for Successful Solutions!"
Ask for Li by name, when you're on Salt Spring Island. Always quickly available, and
always working for you!
My Daily Blog
Entries for 2006
Entries for 2005 & Earlier
Contact Li Read at RE/MAX Salt Spring, 131 Lower Ganges
Road, Salt Spring Island, BC, V8K 2T2