Market Analysis

Current Market Conditions

June 2008.

Salt Spring Island & the Southern Gulf Islands are secondary home markets.    

A lot of things occurred around the same time, and melded together, to create this
non-local marketplace.     

The Internet, which has been a strong factor in real estate sales, for several years,
erased geography. This allowed real estate listings to be viewed by a more global
audience, and ease of travel created the ability for someone to live in London, England
and to commute for the "summer season" on Salt Spring Island, say.    

The low Canadian Dollar against the much stronger U.S. currency, for so many years, also
made the Island a "good deal". When someone purchased an oceanfront estate style parcel,
in 2002, they might have been purchasing when a Canadian dollar was at 68 cents, against a
U.S. dollar. A euro or a pound went farther, too, when translated into a Canadian dollar.

The climate, here, which is known as "cool Mediterranean", is very appealing, as is the
location in some of the best boating waters in the world. Proximity to three major centres
(Vancouver, Victoria, and Seattle), with good ferry and floatplane year round scheduling
for access, is another alluring factor in a choice for Salt Spring or another Southern
Gulf Island.

The Islands Trust, a provincial government body, in place since 1974, with a "preserve &
protect" mandate, for all the Gulf Islands, means that growth is controlled or prohibited,
and this has made the Islands a pleasing park-like environment, with strong environmental
controls.    

It's also made the Islands a "protected investment" area, as a result of the stringent
zoning restrictions in place. With a cap on growth, a buyer appreciates the fact that a
purchase on a Gulf Island ensures that the Island "look" will remain pretty much as when
viewed/purchased. This is also an alluring factor behind the decision to purchase, in this
area.

Simple economics reminds us that limited supply coupled with strong desire to purchase
usually translates into higher price points. This is the case on the Gulf Islands, too.      

Initially summer places, for Vancouver or Victoria or perhaps even Washington State
residents, the Gulf Islands have become second and third home options for many seasonal
residents, and the price points for land on same have escalated over time.      

Although people do retire to their Island homes, many of them retain retirement venues in
other parts of the world, and might choose to live on their Gulf Island property between
May and October, and then go to a sunnier clime for the winter season.     

The Internet, which allows for a global buyer to discover this area, and the initial
suppression of the Can. dollar, from the 90s through to 2005/06, and the ease of travel to
allow for that global resident to arrive, without difficulty, combined with the beauty and
the mild climate, and the superb boating waters...one can see why the Islands have been
discovered. The "sweetener" is that the Islands Trust, this provincial government body,
retains the soft useage re development. This is not an area that can explode in growth.

A secondary home marketplace, however, means that one must look to events and conditions
in the home areas of the buyer profile, to understand the cycles of sales, here. Local
B.C. rhythms do not necessarily translate into a secondary home market area, and
conditions in a primary residence area, such as B.C. cities, do not apply to a secondary
market.    

It also takes time to achieve a sale, as that global buyer first has to hear about this
area, then make arrangements to travel here, to view, and, while here, they will also
check out other coastal communities, "just to be sure" that a Gulf Island decision is
right for them.    

It can take two trips, and often three, before a decision "for" a Gulf Island takes place,
and because the buyer comes from out of province/perhaps out of country, in the main,
these visits have several months between them. It can take one to three years, then, to
sell any property in this secondary home market, and it's not based on price or property
type. A secondary home market is a discretionary market, and the buyer is in control of
the "where" and the "when" of all sales transactions.

Patience is required, of both sellers and realtors. A realtor must guard against local
market manipulations, and make certain that their advice to their sellers is based on "big
picture" thinking, and on a serious understanding of the dynamics of a secondary home
market area.

More information? See Li!