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Pender Island Real Estate Market still sound

By Howard Sanders • November 17th, 2011

The current market is tough, but the local fundamentals are holding steady.

Yes, I know it seems as if the whole of Pender Island is for sale at present, but the historical stats for the current real estate market since the financial meltdown in 2008 show that the fundamentals of our local market have remained remarkably stable. The numbers of sales have held, the average cost of residential property has dipped slightly but over time is firm, and the sale price to original list price has also firmed up since sellers have started to list closer to the recommended price as advised by their realtors. The number of current listing are definitely up but the volume of sales are not, leading to the proliferation of For Sale signs that one sees driving around Pender. In other words it is the individual circumstances of sellers that have changed, causing them to shed asset such as property, not a market collapse where there are no buyers. The buyers are still there but their numbers remain stable and have not increased sufficiently to control what is essentially a flood of new listings.

Fear and panic still rule the financial and most real estate markets at present, except for Vancouver where the luxury market is driven by foreign ownership, mostly either from mainland China or from the Canadian – Chinese population. I heard a stat from CMHC this morning where they had looked at the names of buyers in the million dollar plus Vancouver market and deduced that 74% were of Chinese origin. Not very scientific I know, but I think it is safe to say that without the Chinese the Vancouver market would look very different.

On a personal note, I have noticed a few more enquiries in the last month so buyers are still coming to Pender to look at property. Showings are up, but there is still nervousness in the market that leads buyers to be cautious. The price has to be right for the market, and buyers are becoming much more detail oriented when it comes to things such as permits, and water and waste systems. Sales are taking longer to complete and some have collapsed on minor details that weren’t an issue before.

If you’re a buyer there are some great prices on our island at present, particularly for waterfront. If you’re a seller, listen to the realtor when they give you a list price range in the evaluation and try to stay within it. Make sure your property is well maintained, or priced accordingly if it is not. If you have a septic system for example, keep your maintenance records and pump out receipts for a potential buyer.  Small details such as these can make the difference between a sale and a collapsed deal in today’s nervous buyer’s market.

However, things may be looking up for us in the long term. The most recent report from Landcor – a real estate data company states the following — “It’s early days but Landcor Data numbers suggest the ‘outer’ regions (of ‘hot’ urban markets) could be bottoming out. The big question: Does this signal the waning of the drought, the first trembles up from market trough — and the signal for the canny and the quick to move in, buy wisely, prudently and longer-term? In uncertain times, nothing can be said with certainty but it seems, maybe, the rains are finally coming.”

To read the full report Click HERE.

Below are some charts to illustrate my points about the essential robustness of our current local market over the last two years.

The first is Active Residential listings to Sales on Pender Island for the last two year period. The green bars are current listings which you can see have been on a general upward curve since Jan 2010, but sales (blue bars) have remained generally consistent

The next chart shows the eventual sale price to the original list price on Pender for the same period. It shows that the difference between the two has firmed up since April with the sale price being on average about 95% of the original list. This is compared by the wild fluctuations month to month prior to this time as shown on the chart. This is encouraging as it seems that newer list prices are more reflective of the market and are therefore getting sales closer to the original list price.

 

Finally, we have a chart that shows the average residential property prices, based on sales, on Pender Island. It shows that the average price took a dip in the middle of the year, but has rebounded back to average of approx. $500-$600,000 for the last two years. The dip in the middle of 2011 could be accounted for by the fact that a lot of houses in the $250,000-$350,000 were sold as revenue generating, speculative investments by buyers taking advantages of lower prices.

 

So there you have it. The sky is not falling on our heads, the local market is relatively stable and interest rates remain low. On the downside, buyers are more nervous than usual and there are a lot of listings out there in what is still a strong buyers market. It’s all about confidence, confidence that an investment now will return a profit later, the principle at the heart of the real estate and financial markets. I have faith that this current cycle, while bad, is still a cycle and like all the others in past it will eventually change for the better. The skill is to recognise that change before everyone else and capiltalise on it.

 

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