2019 Salt Spring market review
Jan. 7, 2020
Low inventory spells fewer sales in 2019 but prices are stable and strong demand is expected to continue in 2020
If your shelves are bare, it’s pretty hard to sell anything. Bearing that in mind, 2019’s Salt Spring real estate statistics tell an appropriate story.
Total sales in all categories were down year over year, both in terms of dollars and transaction numbers, while average prices were fairly stable. In the different property categories, average sale prices were either on a par with 2018, slightly ahead of, or just slightly down from last year.
The market definitely reflected a slower pace than the previous two years, 2017 and 2018, both of which saw double digit average price increases, depending on the category.
If your shelves are bare, it’s pretty hard to sell anything.
Sellers (and their realtors) began the year believing (hoping?) the previous two-year trend of price increases would continue and they set their list prices accordingly. Prices, however, did not show the same rate of growth in 2019, so we saw some inevitable list price adjustments from mid-year onward as sellers adjusted to a slower market. Although some observers saw this as indicating that the market was weakening overall, in reality, the list prices were simply set too high for this market.
Interest in the island has not waned and demand for good quality and appropriately priced listings, I believe, remains high. The market weakened somewhat mid-year, but then exhibited resurgent strength in the latter two months, recording the same number of sales in 2019 as 2018 in November through December, typically a slower time of year for buying and listing activity. With not enough listings to choose from, and unable to find a property suitable for them, many buyers deferred their purchase decision until more properties are listed. Demand should carry forward into 2020.
Total real estate sales on Salt Spring*, accounting for a total of 162 transactions for both bare land and homes, totaled a little under $115 million, down from the previous year’s 222 transactions, when sales totaled $152 million. (Compare that to one of our busiest years on record, 2016, when 361 properties sold for a total over $200 million.)
Sales of bare land were down from 42 sales in 2018 to 24 sales this past year, a decrease of 43% in terms of number of transactions.
Non-waterfront (NWF) single family dwellings (SFD) accounted for 105 sales, for a total value of $81.6 million, with an average price of just under $778,000. This compares to 2018’s average in this category of $730,000. The combination of high demand and low inventory tends to push prices higher.
With waterfront inventory low throughout the year, only 12 waterfront homes sold in 2019, for a total value of $16 million and an average price of $1.329 million. This compares to 20 sales in 2018, with a slightly higher average price of $1.395 million. We can’t draw too many conclusions when the numbers in a category are this small.
Why did sellers hesitate to put their home on the market this year? One reason our inventory stayed low is that owners did not see buying opportunities elsewhere as prices for comparable properties on Vancouver Island and Victoria have increased as well. Other potential sellers took a wait and see attitude.
As it is, our entire market IS small, and there are many variations among homes listed and being sold, even at the same price, or with similar “features”.
As it is, our entire market IS small, and there are many variations among homes listed and being sold, even at the same price, or with similar “features”. As such, we have to be cautious about using the statistics for guidance when considering the value of any individual home.
For example, a total of 13 3-bedroom, 2-bathroom non-waterfront SFDs sold in 2019; the average sale price for a home with these characteristics was $634,000, but they sold in a wide range -- from $440,000 to $1,325,000.
10 townhouses sold on MLS in 2019, down from 15 the year before, averaging $496,000 this year compared to $532,000 the previous year. We are aware of a few private sales in the various townhouse complexes, which are not included in these stats.
We often don’t follow Vancouver real estate market trends …
The constant barrage of news reports about real estate values in Vancouver (and elsewhere in Canada) – often with headlines that can be easily misinterpreted or are flat out wrong -- can lead real estate watchers on Salt Spring to draw conclusions which are not always appropriate for our market. As a result, buyers from the Lower Mainland for example often arrive with the idea that Salt Spring’s real estate market is depressed and prices should be viewed accordingly. Not so!
Because of our unique characteristics and features, the island remains a strong draw for many city dwellers seeking a kinder gentler lifestyle and a community that embraces diversity, arts, music, and a love of nature.
Even with a correction in prices on the Lower Mainland (which now seem to be on the rebound), buyers remain intrigued by Salt Spring, and with a little tolerance for the vagaries of ferry services and life on an island, they are keen to see what’s on offer here. We also benefit from not being subject to the “speculation tax” imposed by the BC NDP government 18+ months ago. We are priced higher than many communities on Vancouver Island, but with good reason – we are Salt Spring! When viewed against the backdrop of Lower Mainland real estate, we remain affordable and highly desirable.
A word about Assessed Values (my opinion ….)
Lots of news reports have been written about the assessed value of BC real estate, and lots of discussion on the subject among property owners – Too high? Too low? Should appeal? Does it bear any relation to true market value?
The fact is that the notice we receive in January 2020 is based on what BC Assessment’s bureaucrats deem to be market values as of July 1, 2019 – 6 months ago. And these figures take into account transactions that have taken place the full year before, i.e. between July 1, 2018 and July 1, 2019. Some of the data is 18 months old already.
Does assessed value necessarily reflect what a property is actually worth if put on the market today? No, it doesn’t. Assessed values for properties in rural BC provide a notoriously inaccurate picture of market value. Nowhere is it more true than on Salt Spring.
If you looked at the 105 non-waterfront SFDs that sold on Salt Spring in 2019, you’d see that their assessed values ranged from 58% of the sale price, to 187% of the sale price. Using the July 2018 to July 2019 period, on which our Jan. 1 2020 assessments are based, you’ll see a range of between 58 and 165%.
Assessors often use sale values of nearby properties on which to base their numbers. Many of these are not comparable to your property, despite perhaps sharing some common features. Sometimes, if a transaction reflects an estate sale, where executors are highly motivated to settle the estate quickly, or a private sale, the sale price might be lower than it would otherwise be. Major interior renovations can be undertaken that don’t require a building permit, so assessors have no way of knowing the condition or marketability of a home. Assessments of relatively new homes are often highly inaccurate as assessors depend on building permit values, which do not necessarily reflect the cost of building that home, nor its market value.
If you are going to sell your home in the near future, you may not want to appeal your assessment if it’s higher than you think it should be.
Appeal or not? If you are contemplating putting your own home on the market this year or next, you may benefit from having a higher assessed value and therefore decide not to appeal the assessment. Many of our buyers are from urban centres, where assessed values bear a closer relationship to market value; they often look at a property’s assessed value when viewing real estate here. Although realtors do try to explain why it doesn’t provide a very accurate picture, many buyers still use it as a guide.
*Please note, these statistics reflect sales recorded on the Victoria Real Estate Board MLS system, to which most island realtors belong, as well as the Greater Vancouver RE Board. There were a number of private non-MLS sales throughout the year, but it is difficult to include in these statistics. I don’t believe they would significantly impact any of these conclusions. And of course, the views expressed here are mine alone, and do not reflect those of Macdonald Realty or any of my REALTOR® colleagues.