If Bowen Island was a business we would be having some pretty serious meetings right now. The business climate is changing and we’re stuck with too much inventory. In last week’s real estate paper there were over 70 houses listed for sale. If you’re interested in a building lot, you have over 40 to choose from. For Bowen these are big numbers. It has become a buyer’s market and that usually means that prices are about to fall. Since most of us own houses and may want to sell at some time in the next decade it might be wise to look at the implications of these numbers and what we, as a community can do to avoid being caught in an economic downturn.
To put this in perspective we should look back at the real estate cycles and policies that have and could again start us on a roller coaster ride. Looking back it isn’t difficult to track the enormous changes on Bowen since 2001. House sales and then prices went through the roof, ferry overloads and then ferry fares skyrocketed and grandiose development schemes were considered and rejected.
Bowen has become an exurb. Exurbs are areas beyond the suburbs that are great places to raise kids. Houses are generally on large lots, there are natural areas nearby, the schools are good, crime rates are low and there is a warm small town feeling. Exurbs are not new, the term dates from 1955 and looking back I can see that Bowen has fit the definition since the mid 1980s. The problem with exurbs is that they are linked to a larger urban area and they rise and fall based on a cost/benefit ratio when compared with the suburbs of the metropolitan area. Typically exurbs simply become suburbs over time but exurbs can also fall out of favour if they get too expensive. The major negative factors in most areas are gasoline costs and commuting times but we also have the ferry to restrict our growth. BC Ferries has already decided that Bowen’s population isn’t going to grow very much and because of that they have no plans for increasing the size of our ferry which means that the population of Bowen can’t grow very much, funny how that works.
Historically islands such as ours have had a high percentage of recreational properties and the conventional wisdom is that second homes, like boats are the last things that you buy when times are good and the first things that you sell when times are bad. Traditionally property values in recreational areas rise and fall further than in the city. Back in the 1980s when we were being swept into greater Vancouver we thought that we had grown beyond that problem. But in the 1990s the NDP government of the day, faced with a financial meltdown, instituted massive ferry fare increases. Not only did they reduce ridership so much that they lost money but they also devastated real estate sales on Bowen. We had managed to reap the worst of both worlds; we were an exurb that people couldn’t afford to commute from and a recreational area with more sellers than buyers.
So much for looking back. Many would argue that today’s situation is different. The economy may be bad in the U.S. and Europe but it’s not too bad here. Our housing market may have flattened out but it’s holding up in Vancouver and we could again get some spill over. The central bank might be threatening to raise interest rates but only long term fixed mortgages have gone up so far. In short, things might still be fine but it would be prudent to plan for the worst while hoping for the best.
So how would we approach this if we were a business? The first thing would be to look for weaknesses in our product line. We have virtually no homes under $500,000 or building lots under $300,000. Then we would look at our target market. To date we have catered to upmarket young families and empty nesters who have sold family homes in the city. We know that there is a potential market for local service workers, first time home buyers and seniors wanting to downsize. We can cash in on the pent-up demand if we can hit the right price points. Fortunately for us we have a plan to create this product in Snug Cove. The necessary site servicing could be completed by this time next year and we can keep our local economy humming along through what could be quite challenging times.
If we were a business we would be concentrating our efforts on all the little things that will have to be done to bring our new product to market. It would be a shame if the procrastination that Bowen is so famous for killed the economy of Snug Cove the way it did in the 1990’s.
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