The Salt Spring island real estate market is in a state of "price compression".

Price compression is when the bottom end houses do not go down in price (they are in the 400k range and they are selling fast) but the top end houses over 2 million are dropping asking prices and are still not selling.

This real estate price compression goes all the way through the market and makes all the houses, over that bottom price, drop in price.

The market is like a slinky that is fixed at the bottom and stretched. At the top end the slinky is very stretched out but at the bottom end the links are very close. This is what happens when the market takes off; the high end soars and the bottom end is fixed in place or rises a little. When the market turns into a buyers market and there are lots of listings, the slinky retracts and the high end starts to snap back.

I have seen BC real estate listed at 4 + million and not sell, drop to 3 million and not sell, drop to 2 million and not sell, dropped to 1.5 + million and sell............ What is the house that was listed for at 1.5 million worth when a supposed 4 + million dollar house is listed at 1.5 million? Way less.

Sellers need to be the value leader in their price range to sell. The buyers are looking for deals. If sellers are really not into dropping their prices to reflect the current market conditions they should take it off the market. It would make it easier for the buyers to sort through the listings if the houses with unrealistic prices were off the market.

It is just basic supply and demand. Right now  (December 2007) there is very little demand for high end homes.