Real Estate Market Update: Roosters & Mother Nature
I just returned from a wonderful family vacation on the Hawaiian island of Kauai. We explored the entire island by car, foot, boat, and helicopter. What an amazing and beautiful place! Kauai is so stunning that Hollywood has filmed some of the biggest blockbuster movies here on the island: Jurassic Park, Pirates of the Caribbean: On Stranger Tides, Raiders of the Lost Ark, 6 Days/7 Nights, Soul Surfer, The Descendants, and many more. The locals love to share where these movies were filmed, as well as which actors they have bumped into while they were filming or holidaying on the lush island.
Something else that Kauai is known for other than movies, lush jungle, amazing beaches, and rugged cliffside coastlines, are the wild roosters and chickens. They are everywhere! You will find them on the beaches, roads, fields, parking lots, and hotel grounds. And if you cannot see them, you will hear them; “Cock-A-Doodle-Do” is heard all day long! My family quite enjoyed the sights and sounds of them. But, where did all these wild roosters and chickens come from? In 1992, a large hurricane named Hurricane Iniki ripped through Kauai destroying chicken coops and releasing domesticated hens and roosters being bred for cockfighting. Now, these brilliantly feathered fowl inhabit every part of Kauai.
Hurricane Iniki was the strongest and most powerful storm to ever hit Hawaii. The storm devastated the island of Kauai, destroying more than 1500 homes and interrupting the filming of the original Jurassic Park movie. As we have witnessed this past year from Hurricane Irma, nature’s power answers to no one. In a short period, it can change the landscape of an entire island, and in a heartbeat, impact the real estate values. But, what about the roosters of Kauai, a by-product of the hurricane? Can they affect the values? Well in the case of Kauai, probably not, even though the island residents find them a nuisance. But, the by-product of nature can have a profound effect on real estate markets, good and bad.
For example, we experienced April-like weather during the 2010 Winter Olympics, which brought much concern to scientists with the mild temperatures in the middle of February. Global warming was a hot topic and seen as a negative; however, I believe these warm and balmy days that forced Olympic officials to truck in snow for the skiing events affected the Vancouver real estate in a positive way. Olympic guests and onlookers from all over the globe were treated to Spring-like weather and scenes of Vancouver that were irresistible. As a result, the guests and onlookers that were in the market to buy vacation homes were most likely influenced by the Spring-like weather to buy.
Nature and global warming are playing quite the opposite effect in places like Miami, where non-waterfront homes are increasing in value quicker that waterfront homes because of rising waters. It is an accelerating trend not only in Miami but also in other coastal communities. We can also look to the fires in California; high-risk areas for future fires will likely lead to lower values. Is climate recalibrating land values? What forces of nature would it take to recalibrate land values in the Greater Vancouver area? Would it be a volcanic eruption of Mt. Baker causing the lowlands of the Fraser Valley to be impacted much like what happened by the eruption of Mt. St. Helens? Maybe forest fires above the British Properties threatening multi-million-dollar homes? Or, would it be “the big one” that we constantly are warned about, but never seem to take very seriously, that would see Richmond sink into the Pacific Ocean?
If an act of God happened, would we take the event seriously? Would it alter or recalibrate values? Or, like Hurricane Iniki, which is a distant memory, Kauai’s only memories at this time seems to be the wild roosters and chickens. I believe that Nature will always play a role in real estate values, and we as investors need to be wise with where and what we purchase and hope that Mother Nature is kind to us.
The 2017 real estate market produced another record-breaking year in the Fraser Valley and Greater Vancouver markets. The most significant change between 2016 and 2017 was the demand for strata properties. Single-family home sales lagged behind the supercharged, more affordable condo and townhomes. Reflecting on the Vancouver single-family market, it certainly took a step back on sales volume, average prices, and STR numbers, pushing many into the single digit or buyer market range for many of the communities. The Vancouver strata properties were on a tear, as their volume, prices, and STR numbers were up significantly, and throughout the year, Vancouver was in a strong sellers’ market.
Meanwhile, the majority of the Fraser Valley was in a strong sellers’ market, and 2017 was significantly stronger than the Fall market of 2016. The new mortgage stress test that took effect January 1st, 2018 pushed many buyers to put deals together before the end of the year to qualify under the previous rules. The single-family homes had a good year in the Valley; however, it was the condominiums and townhomes throughout the Valley that stole the show with many seeing values increase by more than 25-30%, and STR numbers reaching as high as a staggering 60%! Abbotsford is the perfect example of how hot the condominium market has been with only 37 condominiums on MLS as of December 31, 2017.
I believe the 2018 Vancouver and Fraser Valley markets will see little change from 2017. Strata properties will continue to be in a very active Seller’s market, while the single-family will be in a soft sellers’ market in the Valley. Vancouver’s single-family will continue to be in a balanced to Buyer’s market, while the strata properties will continue to be in a strong Seller’s market. Please feel free to reach out to me if you have any questions regarding the market or a specific property.
Personal Real Estate Corporation
604-807-4366 or firstname.lastname@example.org
STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales