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Current Market Conditions
Copyright, Li Read, 2008
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Real estate markets are not uniform entities; things are "up" in one area, and "down" in
another. While larger & national or international overall economic trends are important to
understand, there is still this "regional" or "local" component to a real estate market.
This is why it seemed very odd, to me, that uniformly, globally, it was noted that there
was a sudden "stop" to a buoyant market trend, around the end of October, 2005.
In January of 2007, when looking back at the process of 2006, the Wall Street Journal
termed that entire 2006 year as having been "stable/inactive", world-wide.
The description of all realty markets for that year suggested that listing inventory and
pricing remained stable, and buyers were inactive. Again, most odd to find uniformity
The banks/financial institutions may have known, well before the public was aware of same,
of the impending meltdown/credit crunch. Was this the underlying reason for the
"flat/inactive" period of late 2005 & all of 2006?
In our local area, at the very beginning of 2007, there was a flurry of activity in what
might be termed the low to midrange priced properties. By mid-May, however, the strident
reporting on the subprime crisis and ensuing credit crunch, beginning in the U.S., caused
another standstill/pause period.
Fear does breed hesitation, and the constant "bad news" in the housing market, from south
of the border, did create a concern that stopped activity in real estate purchases,
especially in a secondary home/discretionary market, such as that found on Salt Spring
Island & the Southern Gulf Islands.
Some investor buyers, who might have acted, decided to wait -- their thought was that
prices would drop substantially within 6 months. This did not happen, though, in this
The currency in Canada, however, began to reach the range of par with the U.S. Dollar, and
this encouraged some of the Gulf Islands/Salt Spring Island buyer profiles to consider a
purchase in some southwest U.S. states, where there was an apparent oversupply of
construction, suddenly, and a lack of buyer interest.
Since the two main Canadian buyer profiles for the Southern Gulf Islands are from Alberta
and from Ontario, Salt Spring and the other Islands did feel this absence of that
traditional second home purchaser.
In Canada, the outcome of the credit crunch is a reluctance on the part of the
banks/financial institutions to "lend". Level entry buyers, then, in this specialized Gulf
Island area, cannot get financing, and so there is a spillout of inventory in this price
category, and a lack of buyer interest.
The midrange priced properties on Salt Spring & the Southern Gulf Islands are not active
at the moment -- again, this property category buyer doesn't "have to" choose a purchase
in a secondary home marketplace, right at this moment, and there is a lot of concern
surrounding the larger economic issues. They will "pause" , then, and think things through
before they will take on further debt, and buy that retirement option "now".
Oddly enough, in the very high end (for the Islands, the "luxury" category), there was a
brief flurry at the beginning of 2008. This may have been "safe haven" investment.
The fear of rampant inflation, the worry over the validity of cash (how much is being
printed? what's backing same?), the concern over the stability of banks/financial
institutions, in the wake of the credit crunch, and the sense that the stock market side
of investment isn't secure, has all melded to create an interest in unique properties, in
areas that could be seen as "protected investment". The purchase, then, is more about
preservation of capital than about short-term appreciation.
Salt Spring Island & the Southern Gulf Islands are "protected investment" areas, due to
the form of government, here. The Islands are a part of the Provincial Government's
Islands Trust, with a "preserve & protect" mandate, to preserve the park-like ambiance of
all of the Islands, for the benefit of all B.C. residents. This is accomplished through
very strict zoning/density bylaws, and growth is capped on all of the Islands. This means
that there will always be a limited inventory, due to a cap on growth, regardless of
market trend in play at any particular time.
The Internet erased geography, and so the buyer for various areas in the world became a
"global purchaser". The main buyer profile on Salt Spring Island & the Southern Gulf
Islands is not "local", and is usually from out of province, if not from out of country.
This is now a "destination venue". As such, it's more important to be looking at market
indicators in the areas where this international and national buyer lives, as the B.C.
economic picture doesn't drive the trends on the Gulf Islands.
It can take anywhere from one to five years to sell any property on a Gulf Island -- it's
not about property type or price. Every decision to buy is a discretionary one. No one
"has to" move to a Gulf Island. In being by choice, and having become a non-local market,
it's essential for a seller and a realtor to practice patience.
That buyer from elsewhere will look everywhere re the coastal communities, when they
finally visit, "just to be sure", and it's important that they "buy the Island, itself, or
they will not purchase property here. It's always a two step dance, then, and always
involves two if not three visits, before a decision to buy is made. There can be several
months between visits, too, as the buyer isn't local, and this is why time lags are
invovled in all sales, in these kinds of discretionary and non-local markets.
This is a wonderful place to own property, and to live year round, if one can do so. It
enjoys a microclimate known as cool Mediterranean, it is close to all major centres, and
has the benefits of all things required for a pleasing lifestyle, in the 21st Century, yet
it also is a pristine and beautiful environment, and it is like living in a park!
Islanders are lucky, indeed!
Markets go up and go down. In change lies opportunity. A real estate investment, in an
area with a premiere location and lifestyle component, can prove to be a judicious
investment choice, over time.
For more thoughts on market trends, and where we might be heading, re inventory and price
point, call Li today. Full info. package on the Island and its real estate choices
"See Li for Successful Solutions!"
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