Market Analysis

Current Market Conditions

November 2007.

It appears that our buyer profile may have digested the fear of "the unknown", that may
have created the strange "pause" in the summer months. The intense and constant media
reporting on the subprime issues, and the fear that there would be a ripple effect
throughout financial markets, in response to same, may have resulted in a continuing
inaction, in July/August/September.

There was a "middle market cycle" pause, from about end of October, 2005, which lasted all
through 2006, and was just beginning to emerge from this "plateau period" (called
"stable/inactive" by the Wall Street Journal, in early 2007), when the anxieties of the
subprime collapse hit the media. It possibly lengthened the timeframe of a normal market
cycle "flat time".

Concerns that the stock market side of investment might not be a "safe place" to put
capital, and a growing concern that paper money might not be "safe", either (how much is
being printed? what backs it?), with accompanying fears of inflation, has sent people back
to investigate cautious investment in hard asset investment vehicles. Real estate, in
protected areas, such as on Salt Spring Island and the Southern Gulf Islands, is garnering
good interest, once more. The timing in the year is certainly not the "norm", but then the
entire year has been anything but "normal".

Since approximately October 6th, we've seen consistent and almost daily arrivals, then, to
view property options. Between the Canadian Thanksgiving Weekend (early October), and
March Break, I would describe the business in the "off season" to be mainly a weekend
business, and not necessarily every weekend. Not the case, to date, though -- people are
popping onto the Island, some with appointments, some "just looking" and walking into a
real estate office, and they're doing it on a daily basis. Weather is clearly not
important (last week, was in my yellow slicker/yellow rain clogs, and it was a very heavy
rain -- the potential buyers came prepared, with umbrellas, and off we went).

The listing inventory of available properties is very "thin". Most owners prefer not to be
sellers, and it is the usual "big three" that propels a listing right now (death, divorce,
or moving to assisted living).

With a very limited amount of properties on the market, in any particular category or
price range, and with an increase in potential buyers "viewing", we may see the price
reductions, from some realtors/companies, cease. There did not appear to be a market
driven reason for these reductions, and the substantial drops did not result in a sale.
It's important, always, in a secondary home/resort based economy, to separate out local
market manipulations from larger market conditions.

We are a secondary home marketplace, and no one "has to" move here; it's all by choice.
The mainly "out of province" purchaser is often interviewing areas, on their first visit
to the coastal region. It usually takes two trips, and often three, before an offer will
come in. First of all, they have to decide "for" Salt Spring Island, or another Southern
Gulf Island, before they will seriously look at inventory. Sellers, realtors, and real
estate companies, then, need to be patient, and allow the dynamics of a secondary
home/discretionary market to take place. The buyer is in charge of both the "where" and
the "when" of all sales transactions, then.

Both sellers and buyers need to get good advice, in their property search. In business,
successfully connecting buyers and sellers, since 1989, I offer solutions to both the
promotion and marketing of property, in today's global marketplace, for a seller, and I
also offer unparalleled property market knowledge & negotiating expertise for the buyer.
For the past nine years, I've been the top selling realtor on Salt Spring Island & the
Southern Gulf Islands (verifiable statistics).

Whether buying or selling, please contact me, for the very best in real estate service.

May I help you?

Li Read,
Managing Broker,
RE/MAX Salt Spring

1-800-731-7131
FAX: 250-537-4287
Email: liread33@gmail.com



RE/MAX Housing Market Outlook 2008

"Slow and steady growth forecast for residential real estate in major Canadian markets in
2008, says RE/MAX Canadian home sales to top 500,000 in 2007.

After posting extraordinary gains in 2007, housing market performance will moderate in
most major Canadian centres in 2008, according to a report released today by RE/MAX. 

The RE/MAX Housing Market Outlook 2008 examined residential real estate trends in 18
markets across the country. The report found that while economic prospects will continue
to improve next year, few major markets are expected to exceed record sales levels set in
2007. Winnipeg, Hamilton-Burlington, Kitchener-Waterloo, London-St. Thomas, Ottawa,
Sudbury, Saint John, Halifax-Dartmouth, and St. John's are all predicted to buck the trend
in 2008, with appreciation ranging from one to seven per cent. Average price is forecast
to increase in 78 per cent of markets surveyed next year, with the lowest price increase
expected in Edmonton and the highest in St. John's.  

Nationally, the number of homes sold is expected to break through the half-million
threshold in 2007, climbing 13 per cent to an estimated 545,400 units, up from 483,770
units one year ago. Average price is projected to appreciate nine per cent to $303,000, up
about $25,000 over 2006 levels. In 2008, home sales are expected to retreat to 500,000
units while Canadian housing values are forecast to continue their ascent, rising six per
cent to $321,000. 

Clearly, economic prosperity has translated into increased housing sales and upward
pressure on prices across the board. The country's economic engine fired on all cylinders
throughout the year, despite dire conditions south of the border. As in 2007, inventory
will be the major wildcard next year-the ultimate variable most expected to influence
housing market conditions and performance. A return to tight market conditions could mean
all bets are off as buyers are forced to compete, creating increased market pressure. 

Major market frontrunners for price appreciation in 2008 include St. John's (12 per cent),
Regina and Kelowna - Central Okanagan (nine per cent), Hamilton-Burlington and Saint John
(eight per cent) and Greater Vancouver (seven per cent). Leading the country in sales
growth next year will be Kitchener-Waterloo (seven per cent), followed by
Hamilton-Burlington, London-St. Thomas, Sudbury and Halifax-Dartmouth, each forecasting a
five per cent gain.

Higher mortgage rates and increased inventory levels failed to materialize in most major
centres, making 2007 a record year for real estate activity in Canada. By year-end,
housing values across the country are expected to shatter existing records. Serious
double-digit increases in average price are forecasted for Saskatoon (49), Edmonton
(31.5), Regina (21), Calgary (20), Sudbury (20), Kelowna (19.5) Saint John (17), St.
John's (12), and Greater Vancouver (10).    

Saskatchewan dominated real estate news in 2007, reporting some of the highest percentage
increases in unit sales. The number of homes sold in Regina by year-end is expected to top
35 per cent, bringing sales to an estimated 4,000 units. Neighbouring Saskatoon is
forecast to climb 28 per cent to 4,400 units in 2007. Other centres expected to post
double-digit gains in activity include Saint John (19 per cent) Kitchener-Waterloo (13 per
cent), Halifax-Dartmouth (12 per cent), St. John's (11 per cent), and Toronto (10 per
cent).

Western markets were first out of the gate in 2007, but those in the East followed suit.
By year-end, some of the most impressive gains in home sales will be realized in Ontario
and Atlantic Canada. Solid economic fundamentals, including billions of dollars in capital
projects, a positive unemployment outlook, and solid consumer confidence levels will
propel markets forward. A slow and steady growth trajectory, minus the peaks and valleys
experienced in 2007, is forecast for next year."

RE/MAX of Western Canada (1998) Inc. Housing Market Outlook 2008 Report 
issued October 17th, 2007.