The media continues to paint a portrait of despair and gloom. It's interesting to remember that the statistics that the media relies upon are always based on information from 90 to 120 days previously, and so are not ever "snapshots of the now".
Realtors are always in the moment of the now, and are the interpreters of a market trend. Sellers and realtors do not set markets. Buyers do that.
When a buyer doesn't wish to "act", then sales volume goes down. This is what happened, throughout 2006 and 2007, in our discretionary/secondary home marketplace, and it is what occurred in the primary residence areas of Vancouver and Victoria, by April of 2008.
Prices, over 2007 and 2008, slowly suppressed, in an effort to create some action. However, when a buyer doesn't want to act, nothing will happen, especially in a secondary home market, where no one "has to" do anything, in any particular timeframe. The buyer is always in charge of the "where" and the "when" of any sales transaction, in a discretionary marketplace/destination venue, such as that found on Salt Spring and on the Southern Gulf Islands.
All of 2008 was a difficult year, and it affected tourism, not just real estate sales. It might have been the high oil prices/gas costs at the pump. It might have been the Canadian Dollar hovering around par, with the U.S. Dollar. It might simply have been the outcome of the subprime mess/credit crunch having finally arrived in our more remote corner of the world. Whatever the reason, it was a "pause period" of huge proportions, and there was absolutely no propeller to action.
On Salt Spring and on the Southern Gulf Islands, we may have felt the downturn before the other Coastal communities or the cities, as our buyer profile has been an out of province/out of country purchaser for the past several years. We are affected, then, by events in the home areas of our buyer, and not so much by B.C. economic indicators.
Throughout the bulk of 2008, however, all areas were in the same static moment, and everyone was in the same boat. There was little business. If there was a random sale, it was a one off, and therefore was not useful to an appraiser, either. They need a track of business, to be able to give a market response for an appraisal. One sale does not make a trend. However, when that random encounter sale did take place, a further price reduction occurred at the point of the offer.
It is suggested that sales volume, up to end of January, 2009, was around 54% down, from the previous year's statistics. Prices had come down between 12% and 25%, depending on location and type of property involved. These ranges would apply to both cities and to rural areas. I call 2008 the Fear Year, and when consumers are afraid, they do not act.
By the close of 2008, we'd seen a faltering of the housing market, and in some areas of the U.S., prices had come down by half. Low interest rates continued. Financial institutions did not easily lend, however, as the credit crunch continued. The stock market was in total disarray, and huge losses were incurred. People close to retirement were suddenly confronted with their savings having been lost or dramatically reduced, and so would have to consider working longer. Banks/financial institutions were failing, merging, faltering...they were not lending. Credit was in short supply, even to "good investors". Small businesses suffered.
Last October, I began to be concerned about impending hyperinflation. So much money was being printed, around the globe, to bailout the faltering "pins" of our society. With all that paper money being printed, and little to back it up, it seemed a recipe for runaway inflation. I wondered if this would propel saavy investors, resting in cash, thinking that the old adage of "cash is king" might still hold, into a return to hard asset investments.
Areas such as Salt Spring Island and the Southern Gulf Islands are really protected investment areas, due to the Islands Trust's "preserve and protect" mandate. A purchase in this area, then, could be seen to be a "preservation of capital" decision, and would not be about short term appreciation. If cash is the next bubble, then one doesn't want to have all one's eggs in that basket.
Since the last week in January/first of February, locally, we have seen a renewed interest in a real estate purchase. Busyness usually happens on Salt Spring before it occurs on the other Southern Gulf Islands. This has always been the case. However, the usual "grid of activity" for us, on the Gulf Islands, falls between March Break and the Canadian Thanksgiving Weekend (early October), and to have a buoyancy occur in early February was interesting, indeed.
The activity was in the low end options, and that's also a good sign. The foundation has to be strong, and that is usually an indicator of improving conditions. Sales, only at the high end, are not a good sign.
A demand destruction is still underway. There is a deleveraging/deflationary spiral still afoot. It may be that the inflationary result of all this paper money being printed won't be "seen" until the latter part of 2009.
There is no road map right now, and that is very anxiety producing for most people. No one, not the people supposedly "in charge", and not the person on the street, knows what to do. Such total collapses, and on a global scale, of everything that one counted on, means a societal shift. Everyone is in the same boat, although some are more immediately affected than others.
China warns that they are concerned about social unrest, in the wake of job losses. Japan is in a grave moment, economically. Eastern European countries, and Russia, are also concerned about social unrest, if the economic engine continues to idle. Job losses in the U.S. have people tightening their belts, and not rushing to consume. No place is immune from this societal shift. Entire lives are in flux. Painful!
Very important to keep a cool head, to keep a positive attitude, to get out and walk, to enjoy pre-Spring's early flowering, a sunset feathering the horizon, to take a vitamin supplement to combat stress, to eat "healthy" (yes to soups and salads and no to dessert and fried food), to enjoy some yoga stretches to combat tight muscles, to have the treat of some massage therapy on especially gruelling days, and to remember, always, that nothing last forever.
We are larger than our jobs, and it's important to allow ourselves to "decompress", to think about our essential natures, and to be kind to our nearest and dearest, including the four-footed kind!
A smile can make the difference to so many people....remember to share one with your world.
No, we can't control the big picture, but a lot of small pictures can link up into a powerful network, and that's something to consider, too.
Looking for wise real estate advice, on Salt Spring Island and on the Southern Gulf Islands? It is a good time to consider a purchase, with low interest rates, with sellers seriously considering offers, and with the allure of the Island awaiting one -- it's possible to grow one's food here, and to have enough water, and to be able to rely on the strong community support offered by one's fellow islanders. It's a great place to live, and the result of the recent downturns has made it the most affordable moment in the past 8 years.
How may I help you to buy your Salt Spring Island or Southern Gulf Islands property?
Looking forward to your call.
Sea to Sky Premier Properties
How may I help you to discover special Salt Spring Island & the Southern Gulf Islands? Call me!