November, 2009.
Although the calendar says that Winter officially begins on December 20th, most of us would agree that it's "here", already!
In the last weeks of the year, one tends to look both back and also forward.
The meltdowns that characterized most of 2008, unleashing economic duress and fear, folded into 2009.
Perhaps, looking back, one could decide that the worst / most fearful months were September 2008 to February 2009.
Locally, on Salt Spring Island, we saw an upsurge in real estate sales around mid-February, but only in the "low end residential" category.
There was no interest in higher end residential options (on Salt Spring, that would be anything over 800,000), and no interest in undeveloped land opportunities. Commercial options were also ignored.
The buyer was either a "first time" person, or an investor looking for a rental investment.
With continuing low interest rates, coupled with sellers in a mood to consider offers, post credit crunch/meltdowns, it appeared a time to buy.
Along with that perception, underneath the slow/consistent sales, the listing inventory remained stable. Most owners preferred not to be sellers, unless they "had to".
Between February and April, there was a further substantial price reduction delivered to a seller at the point of an offer.
Then, between May and August, as the low inventory cleared out, and little new inventory came onstream, sellers were slowly able to get closer to their list price.
In city markets, in the same low end residential category, bidding wars developed due to this low inventory issue. On a Gulf Island, which is a discretionary area, bidding wars are very rare -- sellers getting list price might be a Gulf Island route!
Prices, though, according to appraisers, had reduced between 12 and 20 percent, between 2008 and 2009, depending upon type of property involved.
The Tourist office in Ganges reported that the majority of visitors to the Island, in the summer months, were "day trippers".
That meant they weren't staying at B and Bs, at resorts, renting kayaks, or scooters, or cars, weren't eating dinner in restaurants, or looking at real estate. Yes, they may have picked up information, for a later date, but they weren't viewing. Most of the daytrippers were from Vancouver/Lower Mainland.
Then, around third week in September, there began a flurry of action in the very categories that had been so "flat" -- higher end residential, commercial, and undeveloped land options. This was as sudden an emergence of activity as had been the early Spring flurry.
In spite of time of year/uncertainty of weather, it has become busy. Is this the beginning of the move out of cash positions and into safer hard asset investments? Weather is irrelevant; economics may be the driver.
During the past two years, the arguments for deflation and inflation were evenly balanced.
With the consistent printing of paper currency, as bailouts continued, with nothing backing the paper, is the fear of inflation scenario winning out? Are the whispers of interest rate increases a sign of this worry?
The lack of sales action in the higher end properties has resulted in many huge price reductions, in an effort to bring forth buyers.
If those resting heavily in cash decide to return to hard assets, then there are attractive "deals" out there.
Is this what's creating activity right now, so late in the year? The concern over inflation? Fear creates hesitation, but it also propels -- if this is what's underway, a flight to safe havens, to preserve capital, then this activity will continue into early Spring, and beyond.
It is interesting to note that all categories of properties/price points are now finding activity, even though so late in the year.
The other Southern Gulf Islands have noted slower sales activity than has been experienced on Salt Spring.
Vancouver Island, Sunshine Coast, Gulf Islands have not experienced the briskness seen in Vancouver or in Victoria. They are primary residence/city markets.
Secondary home/discretionary markets, such as the Gulf Islands, can be put "on hold", in uncertain times.
The Islands Trust, in place since the mid-1970s, capped growth on every Gulf Island. No matter the real estate trend in play, then, there will always be a low inventory of available properties, as a result of the government's Trust zoning restrictions, to cap growth.
Already, Salt Spring Island and the Southern Gulf Islands are pretty close to "max", re development.
The Islands offer a wonderful lifestyle, with privacy but not isolation. It is buyers that set markets, not sellers or realtors.
In creating an enclave area, with their government mandated growth controls, via the Islands Trust, a recipe for price escalation, over time, was set in place in 1974.
The economic meltdown created a small moment in time for a buyer to maintain a modicum of control over the sales process.
If the inflationary scenario is the one that comes forth, then that "buyer's market" moment may be evaporating. The Islands Trust cap on growth created a protected investment area, with their "no more" policy.
The next three to four months will be interesting, indeed, as we seem to be balancing on a rocking/rolling ball, again.
More info about opportunities on Salt Spring Island and the Southern Gulf Islands? I welcome your call!
How may I help you to discover your Island dream?
There is always opportunity!
