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Current Market Conditions
Copyright, Li Read, 2007
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I noted, in the latter days of 2005, a "cooling" period. This "resting phase" translated
into most of 2006.
It's normal, in the middle of a market cycle, whether it's in the stock market side of
investment or in the "hard asset" (i.e. real estate) side of capital growth & protection,
to find these "treading water" moments.
I called it the "plateau period". It was stable, but inactive, and yet there was no sense
of "dipping". Listing inventory remained "thin". In the main, listings came onto the
market through death, divorce, or moves to assisted living. Most owners preferred not to
be sellers, unless they "had to", then.
A static moment in sales, however, doesn't make sellers who must sell very happy, as it's
human to wish for a desired result, as soon as we make that decision for a particular
outcome. It doesn't make real estate companies very happy, either, as they need sales to
keep their businesses running smoothly. This also filters down to individual realtors, who
are under pressure, by their companies, to bring in those sales. A formerly standard
practice, in real estate, was to drop prices, in an effort to jumpstart activity.
If, however, there is a reluctance on the part of a buyer, to perform a transaction,
nothing will occur. On Salt Spring Island, and the Southern Gulf Islands, which have
evolved into a secondary home marketplace, where the decision to buy a second or third
home is totally at the discretion of the buyer, nothing will take place anymore quickly
than what that buyer will decide.
In a secondary home market, where no one "has to" do anything, the decision to purchase is
always at the discretion of the buyer -- they are in charge of the "where" and the "when".
There is no propeller to action, either. They have a lot of choice, they look in many
places, including on the Coast, generally, and so one has to sell the Island first, before
one can sell a property on it. Why here? Why not there? Profound questions!
Time, then, is a component in such a marketplace, regardless of market cycle, in any
transaction. In having evolved into a mainly out of province buyer profile, the Islands
have become recipient marketplaces, and one has to wait for the buyer's decision as to
this "where" and this "when". The seller and the realtor are not in control of the end
result of the process, at all.
Artificial price reductions, then, will not aid this kind of a buyer profile, in this kind
of a marketplace, to make a decision. The decisions are to do with lifestyle issues, and
so traditional real estate marketing methods no longer appear to "work", particularly in a
non- primary residence area.
In the "resting period" from end of 2005 to end of 2006, it may have been misunderstood,by
some local realtors, as a dipping in the market. Not so. Markets follow rhythms, and
middle periods are characterized by inaction. It's a push/pull/push/pull pattern, and it's
normal, as people, to stop for a moment, after a superlative rise up. It doesn't mean that
the market has stopped, or is in decline, but simply that it's quietly breathing, in
place. After such a breathing space, there is usually another brisk rise.
This may be what we are going into, then, in 2007. It may be that 2007, in retrospect,
will be the year of substantial price rises. Locally, if it hadn't been for the 16 severe
storms that affected our area, between Nov. 20th, 2006 and January 18, 2007, which
prohibited travel, we may have seen more sales transactions at the close of the year.
What we do know, now, is that there is a surge of interest, once more, in good properties
in protected investment areas.
On Salt Spring Island, and the Southern Gulf Islands, we enjoy that protected investment,
as a result of the Islands Trust's preserve & protect mandate, that is our form of
government, here. Growth is strictly controlled by severe zoning/density controls. This is
also a recipe for "high ending" an area. It's simple economics -- place a restriction on
development, in an area that people want to live in, and you have high price points.
Limited supply and continuing high demand are the reality.
It is not appraisers, or tax assessors, or realtors who set prices. It is the buyer. In
the case of the Gulf Islands, it's also the outcome of these Islands Trust bylaws, which
have been in place since the mid-70s.
Buyers create markets, not sellers or realtors.
It appears, then, that we may be just entering the third portion of a market cycle, and
may see, to begin with, a continuing "thin" inventory, plus further price increases, due
to this lack of inventory coupled with high buyer demand.
No one knows how long a cycle will last. Perhaps there's another good two to three years
of "worthiness" to this current "hard asset" investment cycle. Perhaps it will last a
little longer, as no one truly understands what the large sector of retiring boomers will
create. In past segments of their passage through society, they completely rewrote all the
rules, based solely on the volume of their presence. This may occur again, and we may find
the final third of this market cycle will last longer, as their presence is felt.
It's a new year, though, and a different feel to it. It is very buoyant, in this area,
with many people arriving, on a daily basis, to view available properties, and offers are
being written. There are few new listings coming onstream, to replace these consistent
The "inaction" of 2006, then, appears to have been totally erased, and a more proactive
buyer is in our midst.
For more information on the current Salt Spring Island and Southern Gulf Islands market,
contact Li Read for the details! Your full time and full service representative, Li's
award winning sales record, for the past 18 years, and her strong negotiating skills, can
be put to work for you. "See Li for Successful Solutions!"
Call Li today, at: 1-800-731-7131. Email at: firstname.lastname@example.org
Li works for you!
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, Toll-Free 1-800-731-7131