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Copyright, Li Read, 2009 July, 2009. Last October, which some might describe as a horrific bottom (stock market losses, bank instability/credit crunch, housing crash), with everyone in fear mode and panic, I began to blog that I thought we would see a return to real estate action by early Spring. We did. I didn't find many who agreed with me, at that time, and there were a lot of massive price reductions coming through from local companies. Panic was the scene! Yes, sales volume was down (in some areas by 54 percent!), but that just meant buyers were inactive. Listing inventory, on the other hand, remained relatively stable. Death, divorce, and moving to assisted living are always the key reasons for selling, and wanting to try a Plan B is a much smaller segment in our discretionary market area. Salt Spring Island and the Southern Gulf Islands have evolved, post-internet, into secondary home/discretionary markets, and so a purchase on a Gulf Island can be put on hold by a buyer. This is the case regardless of whether it's an up market or a down market moment. No one "has to" move to Salt Spring Island, or to another Gulf Island -- it's always by choice, and so, in a way, it's always a buyers market, regardless of market trend in play, at any given moment. In this area, a buyer sets the "where" and the "when" of all transactions. It usually takes three visits, with substantial time periods between visits (the buyer isn't local), before a purchaser will decide to make an offer, on a particular Island. This is why it can take two to three years to sell any property on any Gulf Island, regardless of property type or price. For a more expensive option, it can take much longer. The buyer for same has a lot of choice, in the entire world, for that second or third home option. Many sellers do not realize that their property is in competition with areas in other Coastal regions (Vancouver Island, Victoria environs, Sunshine Coast, other Gulf Islands, etc). One can understand a seller's wish to sell as quickly as possible, but the buyer is the other side of this equation, and it all takes time, in any discretionary market. This is why the "days on market" feature isn't relevant in a secondary home/non-local market region. It's also a reason why constant price reductions, during a "pause period", have no effect in a secondary home market. When the buyer doesn't want to act, nothing will happen. This recent constant reducing of prices effort, then, by some realtors, in a futile desire to jumpstart action during the "pause period", even when the buyer wasn't "around", had the sad result of erasing equity for the sellers. Since the buyer was too afraid to act, the reductions were of little consequence. Local market manipulation has little to do with a market trend. Appraisers feel that the market softened between 8 and 15 percent in our area, over the past two years, depending upon property type. Not, however, by 30 percent, as was the case in some U.S. areas, where speculative oversupply was a part of their problem. The media reporting throughout the Fall of 2008 was dire, and panic mode set in. No one was paying attention to the massive printing of paper money to fund all those bailouts. The media is always "out" by 90 to 120 days, of course, and their statistics are only "partial", as they only reflect mls sales. I thought we would see a return to good hard asset investment by early Spring, based on a concern about the validity of cash itself, and by February it was beginning. My thought was that cash would be the next bubble. In very early February, the low end residential market flowered into action. Apparently, this was experienced globally. Investor buyers were back. So much paper money being printed, nothing backing same but more paper and a government, and with the fear that the end result of this would be hyperinflation -- yes, fear can make people stop in their tracks, but it can also propel action. I thought we would see the resurgence of hard asset investment by early Spring, and it was a good sign that the beginning was in the lower end options -- it showed "health" to the turnaround. Interestingly enough, it was mirrored by a renewed interest in the art market -- there is a correlation of sales of art at auctions and the real estate sales pattern in discretionary markets, I think. I thought we would see a complete reversal of media reporting by May, and we did. I also thought we would see some very tiny steps into sales of the higher end/luxury properties by May, as well, and we did. The listing inventory remains "thin". Most owners do not want to be sellers, unless they "have to". Buyers are back. They do not trust paper money as the vehicle for preservation of capital. Interest rates remain at historic lows, but perhaps not for much longer. To stave off inflation, interest rates will have to rise. And hyperinflation? I read some newsletters where the expert thinks maybe three years from now. I think it will be here a lot faster -- by mid-2010? Perhaps. Time, in the 20th Century model, has been erased. Can't count on lengths of time anymore. It's a binary world now. On, off, on, off...no time, just always. We're in a societal shift, that's for sure, and no one has a roadmap in their backpack! Some things to consider: Salt Spring Island and the Southern Gulf Islands are under the jurisdiction of the provincial govenment mandated Islands Trust. It's been in place since 1974, and its purpose is to "preserve and protect", for the benefit of all B.C. residents, the environmental and ecological beauties of the Islands. Growth has been capped on all the Islands, by strict zoning/density controls. I call that "protected investment", and the Trust has created an "enclave area" on every Gulf Island, thus. Low inventory always, because of the Trust control of growth, current historically low interest rates, the inevitability of inflation at some point, based on the vast amounts of paper money being printed to cover the bailouts, the concern that banks may be shaky still, in the aftermath of the subprime fiasco/resulting credit crunch -- it is a moment for a saavy investor to consider a valid purchase on Salt Spring Island or on another Southern Gulf Island. Excellent climate, good schools, all amenities for a year round lifestyle, ability to be self-sufficient, in the heart of the best protected boating waters in the world, close to major centres and yet with a wonderful sense of "apartness"...practically perfect, I think! Timing is everything. It might not be a good time to sell, but it's definitely a good time to buy. More information? Call me! How may I help you to buy your special Salt Spring Island or Southern Gulf Island dream property? liread33@gmail.com 
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