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Copyright, Li Read, 2009 December, 2009. The closing month of the year brings with it a casting backwards, over 2009, to see what occurred in real estate sales, on Salt Spring Island and on the Southern Gulf Islands. Such "looking back" is an attempt to see if there's a "trend" building that will help to forecast the immediate future. The catastrophes in financial sectors, combined with the collapse of the housing bubble, delivered a blow of fear, plus significant losses for many people, in September/October, 2008. This was a global event, and it may be that the internet's shrinking of the world has erased the old axiom that real estate is regional. No one was immune to the outcomes, in Fall 2008, no matter where in the world they lived. Although Vancouver and Victoria (primary residence markets) saw some continuing business in real estate sales earlier in 2008, pre-"crash", the secondary home/discretionary markets had cooled off in buyer activity by mid-2006. The recent past: Discretionary areas on the Coast, including on the Gulf Islands, had attracted a non-local buyer profile, starting in 1999/2000. The internet erased time and geography, and opened up this relatively undiscovered area to an international buyer. This was true for Uclulet/Tofino, Whistler, and other secondary home areas, so not just about the Gulf Islands. At the same time, a low Canadian dollar (varying between 68 and 73 cents, against the U.S. Dollar, at one point, and hugely undervalued against the then much stronger pound and euro), delivered a buyer who was purchasing second and third homes, in all price ranges, around the world. The Islands Trust, the provincial government body that is the form of "government" on all Gulf Islands, had capped growth on every Gulf Island back in 1974. The Trust document controls growth to a predetermined amount, on each Gulf Island, through severe zoning restrictions/non-growth bylaws. The Trust's mandate is: to "preserve and protect" the environmental beauties of the Gulf Islands, for the benefit of all B.C. residents. The Trust bylaws ensured, then, that there would always be a limited inventory on any Gulf Island, regardless of market trend in play. The Trust created an enclave area, thus. So, there it was...a "perfect storm" of confluence: low dollar, internet shrinking of the world, a form of government that limited inventory, thus escalating price points over time, a buyer discovering the Pacific Northwest Coast, and especially the beautiful Gulf Islands, in the heart of the best protected boating waters in the world...it doesn't take a rocket scientist to figure out what happened next! Buyers set markets, not sellers or realtors. Buyers appeared in droves/prices went up. Between 2000 and 2002, sales volume on Salt Spring rose 60 percent. Between 2003 and 2005, prices doubled, no matter the property type. These were conditions noted by appraisers. Then, for the Islands, we experienced a "pause" in the dramatic sales rhythm that had occurred between 2000 and 2005. The Wall Street Journal noted that all of 2006 was termed "stable/inactive", and they also noted it was a global housing market description. What this description meant was that prices and inventory remained stable, and the buyer was "inactive". In 2007 and in 2008, some sellers here delivered significant price reductions; the reductions did not deliver a corresponding increase in showings nor in offers. When the buyer doesn't want to "act", nothing happens. Buyers, remember, set markets -- not sellers or realtors. Secondary markets are affected by events in the home areas of the non-local buyer profile, and the "hesitation" on the part of that buyer, from 2006 to 2008, was finally explained by the financial meltdowns of Fall, 2008. The "present": Much to everyone's surprise, post-economic meltdown/housing crisis, the low end residential category erupted into activity, around mid-February, 2009. It did this throughout North America, both U.S./Canada. The actual price point might vary, area to area, as entry level prices reflect location, but the increase in purchases came with the first time buyers and the investor looking for good rental property. Prices reduced between 12 and 30 percent, depending on property type and location, between late 2008 and late 2009. It went from a seller's market to a buyer's market. Inventory in entry level options remained very "thin", however, with most owners not wanting to be sellers, unless they "had to". As sales occurred and inventory cleared out, some areas experienced multiple offers (mainly city markets) or else the buyer had to come up in price to meet the seller's desire. The close of 2009, then, in that entry level property category, has seen a solidifying of prices. The saavy buyers who acted between Sept 2008 and April 2009 did the "best" in buying at their offered price point. There did not seem to be a "trickle up" effect in sales, this time. The higher end residential, the luxury segment, plus undeveloped land, plus commercial options all remained sluggish. Every now and again a specific "niche" parcel would sell, but this was not sustained, and on the whole, on the Gulf Islands, as in all other coastal areas, the business was done in residential/entry level properties. The future: The media, which reported horrendous gloom in Fall, 2008, suddenly switched to euphoric reporting by Summer, 2009. The reporting made it sound like all real estate had suddenly bounced back. Not so. It was only busy in that "beginner" segment/or investor-rental category. This still appears to be the case. It remains slow in the upper end properties, and few raw land sales take place. Commercial sales are also very slow. Meantime, gold and commodities are the flavour of the month in the equity markets. Interest rates remain low. Government bailouts continue. A fear that currencies are under attack, and that hyperinflation is on its way, may encourage further real estate purchasing -- hard asset investment simply as a means to preserve capital. With significant price reductions continuing to somersault through the upper end properties, and continuing worry about preserving capital if cash is the next bubble, and with continuing low interest rates, we may see buyers deciding to get off the sidelines, out of cash positions, and into purchases in the upper end residential and in the raw land segments. This may now be seen as "where the bargains are". Certainly, all properties are more affordable, and buyers may deliver a significant further price reduction at the point of the offer. If the seller is seriously for sale, they will have to accept. It does appear that an international buyer may be back, looking to pick up estate style holdings, at prices that might be half what they were valued at, two years ago. This is a feature of all areas in North America, so there it is again -- real estate trends are increasingly global and regionality seems to have been erased by the indefatigable search engines. As the "real" 21st Century continues to evolve under our feet, with its on/off, act/react instantaneous world, we are getting more nimble at living with uncertainty. So important to keep practicing peripheral vision, though, and to fight against tunnel vision. Just stepping back a few paces allows that more panoramic view, and thus the creative solution can spring forward. In times of shift/change, there is enormous opportunity. As humans, we have a creative sense that is both entrepreneurial and positive. Fear inhibits. A cautious optimism can reinvent. As we float into 2010, with all its challenges (early days of societal shift are always challenging!), let's meet it with an open-handedness and a willingness to explore new ways of dealing with change. I always like that Buddhist challenge: "start where you are". Looking for excellence in knowledge of Gulf Islands properties, both of inventory and of market trends? I look forward to connecting you with your special Salt Spring Island or Southern Gulf Islands property. How may I help you to buy your Salt Spring Island dream property? With access to all listings, I will make certain that you "see it all", so that you will be in a position to make that all important "informed decision". The Islands Trust has created a "protected investment" area, by having capped growth on the Gulf Islands. Call me, and find out what that means for you. Looking forward to your call! liread33@gmail.com 
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