Salt Spring Market Stays Strong Despite Ecomonic Fears

Hi Everyone,

This article appeared in this week's Driftwood - and I thought it would be of interest to many of you.

All the best - N

Salt Spring market strong despite continental jitters

January 23, 2008

Low-end values rise as high-end properties fall

As the world’s markets continue to fall and the U.S. economy contends with a looming recession, realtor Tom Navratil doubts Salt Spring’s real estate market will feel the pinch any time soon.

And if 2007 offers any indication, he may be right.

“The anticipation for 2008 is the continuing moderate sales price increase with good solid volume, despite the doom and gloom south of the border,” said Navratil, an island-based realtor who has kept a close watch on the local housing market for more than a decade.

While the island’s real estate prices may no longer be experiencing the phenomenal double-digit growth encountered as recently as 2005, the median price of all island properties sold last year still increased by nearly six per cent, from $412,000 to $435,000. The average selling price of a Salt Spring Island property in 2007 was $540,640, 20 per cent more than the average island property’s B.C. Assessment value.

The increase coincides with average assessment increases of 8.2 per cent for non-waterfront properties and 17.1 per cent for waterfront residences.

Though values may not be increasing as much as they have in past years, Navratil said, there is ample evidence the number of buyers is on the rise.

“The preliminary stats show that we indeed ended up the year 2007 with the anticipated high volume of sales,” he said.

“In 2007, we sold an all-time high record number of non-waterfront residential properties, 171, representing 57.6 per cent of all properties sold.”

Even the soaring Canadian dollar fails to darken Navratil’s forecast as an influx of buyers from Alberta and the Lower Mainland have helped pick up the slack from U.S. residents coping with higher exchange rates.

“We are getting fewer buyers from the U.S. as compared to before the 9-11 era when the Canadian dollar was in its low to the U.S. dollar,” Navratil said.

Yet the outlook still doesn’t bode well for first-time homebuyers looking to get their foot in the door without committing to a property valued at more than $300,000.

While the average median sale price of oceanfront properties was down 15 per cent in 2007, the average sale price for residential non-oceanfront properties rose by 7.36 per cent over the previous year.

The 2007 stats showed a rebound in the sale of vacant land under two acres, more than doubling to 23 sales from the previous year. Average price increases for properties in this category averaged 22.2 per cent.

Even if the price of higher-end and waterfront properties came down slightly, a continued rise in the price of entry-level properties has affordable housing advocates like the Salt Spring Island Land Bank’s Neddy Harris worried the dream of home ownership on Salt Spring is increasingly beyond the reach of many islanders.

Of the 171 non-oceanfront homes sold on the island in 2007, only four per cent were under $300,000.

Figures like that may be the reason Harris has had to field an increasing number of calls from would-be home owners looking for guidance.

As a follow-up to the Land Bank Society’s affordable rental project on Dean Road, Harris said, plans are in the works to develop a homeowner program sometime later this year. The new program would provide low-cost, market-controlled properties to Salt Spring residents for between $170,000 and $200,000.

Thanks to funding from the B.C. Real Estate Foundation, the Capital Regional District and the Islands Trust, Harris anticipates getting access to a housing needs assessment survey that will provide a clearer picture of the need for housing on the island.

For any project to work, she added, participation from multiple levels of government is required. For example, rezoning of properties to increase density may be needed to make any project financially sound.

“Once there is an indication of what is needed, then we can begin discussions putting the project together,” she said. “We can show there is a need for this.”