July 19, 2009.
I was very surprised to see very dramatic price reductions come in, this past week, from two different companies, four different realtors. In one case, the reductions were of a quite substantial amount, in one "go".
We are just entering our main "grid of activity", for the summer season (last week in July, all of August, most of September). Traditionally, this has always been a very short and intense time for viewings of property. Sometimes the buyer doesn't make an offer until October/November, but the viewing will have inevitably taken place in this truncated time of action. Late July, August, September are, of course, key months for boaters to visit in our waters, and also for tourism to take place. The weather is usually guaranteed to be great, and people who like to travel when children are back in school would turn up in late August and in Sept. Perhaps this is the reason for choosing this past week to bring in such expansive price reductions.
Odd timing, though. Vancouver and Victoria are reporting multiple offer moments, and although these are primary residence areas, where people actually live on a year round basis, and would be buying principal residences, we do get the effect of this kind of activity, although perhaps a good 3 to 4 months after Vancouver and about 6 to 8 weeks after Victoria. The corporate office of Re/Max was quoted this past Monday as saying "the buyer's market is over". They also noted that inventory remained very low.
I realize that for many sellers on the Gulf Islands, their patience wears thin. Little can be done about this. We are a secondary home/discretionary marketplace, and it is not a "local" market, at all. It still takes between one and three years to sell any property on this year round lifestyle Island, and on the other Southern Gulf Islands (sometimes longer, there, as they are more "summer oriented"). The buyer is from "elsewhere", and they comparison shop for their ultimate retirement property, and for their "short term" recreational needs.
Salt Spring and the other Southern Gulf Islands are in competition, then, with Vancouver Island communities and with the Sunshine Coast options. The buyer visits them all, before shortlisting areas. There are wide time gaps between their visits, too. If a property seems to sell quickly, it's usually because a buyer who has been here at least twice, most likely three times, and who has chosen "for" the Island, turns up again when a property that would interest them goes on the market. Time is a component of all sales transactions in all secondary home/discretionary areas, and that's the case, here, too.
After a sluggish two years (2006 and 2007), as we were affected by events in the home areas of our main buyer profiles, and a total absence of action in 2008 (which was a global effect), we are now seeing a resurgence of activity in real estate sales. It could be a result of people wanting to get out of cash positions, and into some sort of stable investment. This also might be the reason why most owners don't want to be sellers, unless they "have to". In any case, inventory remains low, everywhere.
This upsurge in action is very recent. I would say, just since April. It began in the low end residential. Undeveloped land options and "high end" property categories remain sluggish/nonexistent. There is, however, a slowly gathering "trickle up" effect in play, and just at the beginning of our traditional activity moment, for higher end opportunities.
The recent spate of dramatic price reductions, though, even if just a local market manipulation event, to try to jumpstart action, and to have "incoming", not just "outgoing" appearing in a real estate office, has an effect on all sellers. It is essential to remain competitive, so that a property is seen "equally" by a buyer, when that buyer finally turns up.
Market value has nothing to do with "intrinsic value", of course. Things sell for more or for less than they are actually worth, depending on "the market" in play. Markets are cyclical. If we are steadily moving into better times, in real estate sales, perhaps because of a fear of hyperinflation or the valuelessness of cash positions, which drives investors back to hard asset investment vehicles, then it seems sad that sellers are choosing such massive price reductions.
When the buyer doesn't want to act (which was the case, for our region, throughout 06, 07, and most definitely 08), nothing will propel them into activity, and price reductions do not "bring them" to the table. Now that the buyer is wanting to act, and inventory is very low, further reductions don't make sense. It's the buyer who sets a market, not a seller. The buyer will deliver the offer that they think is "fair", and the seller will then know where they should "be", if they want a sale.
Realtors and appraisers are only "interpreters", and they do not create a market. Only a buyer does that.
By September, we should have some sales that point the way to a "current market" call. At the moment, it's too soon.
By the way, if you drop by the office, and are working with me, please ask for the weekly "driveby lists" of all currently listed properties, and for the weekly "solds to date" information. This is a service that I offer for my client base.
More info on the current market conditions? Call anytime!
liread33@gmail.com
