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Pender Island’s current market explained

By Howard Sanders • May 23rd, 2011

Pender Island is currently deep into a buyer’s market, and has been since August 2008. What is a buyer’s market? Well, A real estate buyer’s market means that the economic principle of supply and demand make buying real estate more favorable than selling. In a buyer’s market, buyers have better bargaining power to get a good price on a property. This is because the supply of homes on the market exceeds demand from prospective buyers wanting them.

It’s a relatively simple principle but is sometimes hard to really grasp on a day to day or month to month basis. I could go on regarding the causes (the economy, a glut of properties in the US, the poor weather, ferry fares etc.), but the bottom line is that we have way more houses for sale than buyers, significantly so in fact, and this is clearly indicated by the two charts below.

 

The first chart shows month to month Pender Island residential sales (no vacant land or condo sales) as compared to Pender Island residental listings over a 10 year period. Look at that spike in the number of listings during August to Nov 2008 at exactly the same time as the recent Great Recession hit. And what do people do when a financial crisis like that happens? They shed assets, that’s what. One of the biggest assets most people own is property, either a principal residence or a secondary residence, and selling it is the easiest way of raising capital (as long as you have positive equity). The problem was, and still is, that a lot of sellers tried to do this at the same time and flooded the market. Unfortunately, it takes a while for sellers to understand that such a buyer’s market means that their expectation of a high sale price also takes a hit too. Understandably, these sellers are reluctant to price their homes below these expectations until it becomes clear that the market is as soft as it really is at the present time. You can see that this trend in a little more detail in the second chart, which covers the same criteria but over the last two years. I want to make it clear here that our market has not collapsed, you can see that the volume of sales has remained comparatively consistent over the years, but the gap between available listings and those sales has widened dramatically. This is why you see so many more ‘for sale’ signs all over the island and why many houses, particularly those that are aggressively priced, are taking longer to sell.

This situation is not great for sellers, but for buyers now is certainly the time to get that island property you’ve always dreamed of. There is a wide choice available, particularly in the depressed waterfront category, and the smart sellers are prepared to negotiate to make a sale particularly if the property has been on the market for a number of months.

So if you are a buyer, make the most of this opportunity and give me a call at 250-222-4663 or email me at howard@homesonpender.com. I’ll find you a perfect place to enjoy the island lifestyle which is always spectacular no matter what the economy or market is doing.

 

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