Salt Spring Island market up date 2010

Spring 2010
Salt Spring Island real estate in the spring 2010 is a TOTAL buyers market. However, only some Salt Spring Island home sellers have lowered their prices to reflect the large number of listings. Salt Spring Island Properties that are priced to sell are bought quickly with competing offers. One home we listed in June, at a realistic asking price, had an offer in just days. This is the exception to the rule on Salt Spring. At this time (April 2010) Salt Spring has about 390 properties on the Multiple Listing Service. Over that last month we have had approx 10 sales. This puts our Sales to Listing ratio at about 3%. If the sales to listing ratio hits 25% one can expect prices to go up, if it hits 10% or less prices will generally go down.

• In the $2 million plus price range there is virtually no liquidity. Last year there were approximately 25 listings and only one sale. One would think the sellers might have a higher chance of winning the 649 Lotto than selling. Overpricing seems to be the rage at the high end. There is this constant myth that to sell at this price range it's a "long sales cycle". A long time on the market tells me it's overpriced. We see little in the way of price support levels at this range. The trend line looks like it's going down and the support positions seems to be a lot lower and will probably end up at the 1 million mark. At this price point, replacement price is a valid comparison tool. There are few, if any, properties that cannot be duplicated for less than the unreal asking prices. It is a myth to think that a property is so unique it cannot be duplicated with your own new dream home. Why would you over pay for some-one's dated, old, dream home. The big myth is it's worth x million because it is so rare. That would be valid if there were only 1 or 2 listings in this range. Supply and Demand is very basic Economics theory but apparently it does not apply to Salt Spring Island real estate at this price range at this time.
  

• In the $1 million and up price range there is an abundance of Salt Spring Island homes on the market and some asking prices have fallen off. We have seen some listings start in the 4 million range and sell at about 1.8 million. Although it may not look like this on the MLS® see Re-listing info on my web site. There is very little market liquidity in this price range. At the 1 mil plus price range there is about a 7 year's supply of inventory, assuming no other homes come on the market and sales stay at the same level. Very few homes in this price range are of a high standard. We could probably count the Sub zero/Garland/high end kitchens on one hand. Most seem to have mid range at best kitchens and are rather dated homes. There are a few, good homes to be had by keen shoppers. Some of the sellers need to sell and have dropped their asking prices and made their home the value leader in this rather dead, high end market. With a good eye, one can find a real bargain in this range. It might need some updating but if it is priced right it may be a deal.
  

• In the middle of market $500,000 to $800,000 the prices are relatively stable but seem to be compressing down. There are lots of listings but steady sales at this price range. Some fine homes with nice views are available. If the home is in perfect shape, well located, with a sunny view lot and not overpriced it will sell fast. There are lots of buyers looking for quality homes in this range.
  

• The houses from $350,000 to $460,000 will continue to sell at a brisk pace. Renters are still moving up. There will continue to be a fast turn over of listings in this range. The homes may not be as well turned out but need to be well constructed, in a decent location and priced to sell. This end of the market is very price sensitive. If the house is in good shape and well price it will sell fast. This market segment has been hot in the April 2010 and over the next month we will see a fair number of homes posted as sold.
  

• The place to look this year might just be raw land acreage. With lumber selling in the 1970 price range and contractors looking for work, this might be a valid option this year. There was a steady price reduction of raw land last year and one can expect to pay in around the $40k - $50k per acre price. There has been a steady increase of new developments on the island in the last few years and most of the developers have lots that have not sold. Contrary to what some people think, Salt Spring Island is not a protected park, there is a fair amount of property development on the island. The island trust does not stop development. If you can get a contractor to build at a fixed price you might be ahead this way depending on the price range, location and size of home. The thing to remember is that developers only make a profit when they sell the last few lots in a development. This is a situation to look for and a way to find a real deal. We have had some clients buy 5 acre lots for less than 200k. I suspect prices will continue to come down on raw land before the HST kicks in.
  

Two big myths of Salt Spring Island real estate to look out for

Salt Spring Island is a "virtual protected park" or words like this; the island trust has created a "protected investment" area by capping growth. This is pure hype and fiction. It is totally untrue that there is no development and there is a shortage of land on Salt Spring Island. Here is the link to the local planning bylaw there is not one mention of the words "no development", "capped growth" or "protected investment". The bylaw tell how to develop land on the island not stop it. There is no shortage of land or shortage of development on the island. You are not buying in a "virtual protected park" with "capped growth". With the current zoning bylaw the amount of development on the island can approximately double. Yes you read that right there could be approximately double the number of homes on the island and all within the current zoning bylaw 355. As more and more people move here there will be more development. It's basic supply and demand. If demand grows and prices go up the developers will bring more lots on to the market.

The second big myth is Salt Spring has a "long sales cycle". There is no such thing as a "long sales cycle". If the home is overprice it will sit on the market for ever. New listings will come along and sell. Home sales are based on Value and if the home is not the value leader in it's price range, in this buyers market, it will not sell. Some people think there is this mythical "long sales cycle" and if they just hold firm on their price there time will come. It will not happen. Their estate will sell the home for the actual market price after they are gone. Market forces are not based on seniority. Selling is based on free market system. In most cases overpricing will almost guarantee the home will sell for less. I see this every day on this island. One home I visited, after the listing expired, was on the market for over 1000 day and had 3 showing. They had bought into the "long sales cycle" myth and were waiting. Buyers have to know that some sellers on Salt Spring believe in the "long sales cycle" and are waiting for you to be the one. With Re-Listing rampant on the island it might be hard to know how long the place has been on the market.

If you are going to buy in 2010 you need a agent who tells it like it is. One that want to make sure you do not make the fatal mistake of overpaying. My mission is to make sure you get a deal. If you just want to buy off the listing agent and do not care if you overpay that's fine it's your money. If the thought of someone saying "you bought that home! I thought it would never sell, it was on the market for x years, we had a bet it would never sell" horrifies you. You are in luck my forte is working with customers who are market savvy and determined to find the best property at the best price to suit their needs.

Cheers and have a great 2010

Scott Simmons