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What affects the Salt Spring Island BC Real Estate?
- Canadian dollar vs United States dollar
- demographic shifts
- Salt Spring Island zoning restrictions
- overall global economy
- interest rates
- supply and demand
Lets look at each of these in depth and their effect on the Salt Spring Island Real Estate.
Canadian versus U.S. dollar
The Par Canadian dollar $1CAD to $1US has stopped the influx of US buyers. When the Canadian dollar was much lower in the $.70 range (2001) it made buying property here a deal for U.S. buyers. In 2001 if a US buyer bought a place for $700,000 US, it would get them a $1,000,000 house. At the height of the market in 2005 that same property would be worth $2,000,000 CAN it would get the customer $1,800,000 US. The US buyers made money on the run up of the property prices and the Canadian dollar. This had a huge effect on the Salt Spring Island BC real estate.
Local zoning restrictions
Salt Spring Island zoning has one of the biggest effects on Salt Spring real estate. There is no shortage of land on Salt Spring. Salt Spring could have a population of 100,000 but it will never happen. The zoning bylaws and Island's Trust are in place to control development. I fully back this concept of preserve and protect. However, when something is made to be in short supply then over the long term only one thing can happen - the prices will go up. The drawback is that it makes it difficult for some families and service providers to live here. The community is actively looking for solutions to this problem.
The zoning classification (see zoning maps) of each piece of real estate makes a huge difference on its worth. Some zoning issues have hurt the market lately such as the Vacation Rental issue. The Trust has clamped down on the illegal practice of people renting their houses out in the summer as vacation homes. I know people who bought here thinking they could do this legally and have found out it has always been against the local zoning and it has change their financial position enough that they are leaving the island. Some people don't like the Agriculture Land Reserve (ALC) classification but there are hidden values to be found.
The New OCP (official community plan) has been formulated and is going to make development more expensive and harder to do read the new Salt Spring Island OCP here.
Demographics
Demographical shifts in Canada as explained in Boom Bust Echo by David K. Foot are making a difference on the entire Canadian west coast. Retirees, semi retiring and mobile actively working boomer's who crave a warm temperate climate are flocking to Salt Spring and British Columbia. Our perfect year round climate lets people enjoy themselves to the maximum and to stay healthy and active.
In 2006, the first of the boomers turned 60. It is just starting and will go until about 2022. This is not a place of inactive retirement. Salt Spring is a vibrant community that thrives on diversity and positive energy. It also has doctors and a hospital which are important to an aging population.
Global Economy
The global economy has a huge impact on Salt Spring real estate because it is an international destination. The rise in the Canadian dollar has affected some of this market. In addition many people sell their house before they move here and if their market slows down then this market slows down. In the US the Sub prime problem has caused a domino effect and is affecting the hole housing market. This may be a long video clip but this is very interesting if not a little scary. It may take a few seconds to load and it is an hour long but this is the best insight as to what is really happening and what might happen.
This excellent skit really sums up the Sub Prime situation.
Interest rates
I think most people know the effect low interest rates have had on property prices so I won't go into it. You can see more on it here.
Supply and demand
There are a lots of Salt Spring listings (salt spring home for sale) right now - about 250-300 listings to a population of about 10,000. If you compare that to Calgary when it was really booming(06) with about 3,000 listings to a population of about 1,000,000, it works out to about 10 times the listings to population. So for Calgary to have a similar ratio Calgary would need about 30,000 listings. I f there were 30,000 listings in Calgary prices would go way down. In April 07 there are about 5000 listing in Calgary.
Some of the listings are the result of the strong market over the last few years and people are looking at taking their "profits".
Here is a little example of a neighborhood scenario: The 1st neighbour sold in 2005 (when the market was red hot on Salt Spring) and revived $700,000 and the 2nd neighbors house is nicer so they decide to list in 06 at $800,000. Then the 3rd neighbor lists in 06 at $800,000. 2 and 3 have decides to cash out at the same time after seeing what 1st neighbour received in 05. These extra listings flood the market drives the prices down. That is why some houses have been on the market for 2 years. They are overpriced and don't want to adjust there prices to the market conditions.
The truth is - a house is only worth what someone is willing to pay for it regardless of how much the neighbor received for their property. Make sure the house you are looking at is not Re-listed.
Winter 2008
Salt Spring Island in the winter/spring of 2008 is a buyers market. However only some sellers have lowered their prices to reflect the large number of listings. Properties that are priced to sell are bought quickly with competing offers.
- In the $1 million and up price range there is an abundance on the market and asking prices have fallen off. I have seen some listings start at 4 million range and sell at about 2 million. Although it may not look like this on the MLS® see Re-listing info.
- The middle market $500,000 to $800,000 the prices are relatively stable.
- The few houses from $400,000 to $500,000 tend to be some what overpriced for what you get and there are only few deals to be had because of limited number of homes available in this range. They have been selling very very fast if they are nice and priced right.
Here is some more information on the BC housing market .
Here is the monthly real estate sales from the Victoria Real estate board.
If you have any more questions please don't hesitate to call
Scott Simmons
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