Now's the Time to Buy That Island

The recession has apparently put a real dent in the market for islands, The Seattle Times reports. There are about 500 islands currently for sale around the world, 20 percent more than a few years ago. A recent auction of Vendovi Island, one of the San Juan Islands near Seattle, failed to draw a bidder willing to meet the asking price or the seller’s reserve price, and only one island has sold at auction in the last five years. “In the high days there was so much surplus cash around, people just didn’t care,” says Farhad Vladi, who owns an island brokerage. “Auctions like this show very clearly where markets are. We are back in the years 2003-2004. Everything was in balance, normal.” [%comments]

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  1. Drill-Baby-Drill Drill Team says:

    I can imagine a Utopian society founded on an island, using coconut based technology, bamboo bicycle generators, and all you can eat banana buffet run by the Skipper and Gilligan.

    Living on a desert island is overated. I’ll take the Isle of Manhattan or Paris.

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  2. CantuCMS says:

    This is a very clear demonstration of the effect that shifts in the demand curve can have in the price and quantity demanded of a good. Two factors affect the demand curve in this case: change in income and customer expectations. Harder economic times means people have less money to spend on buying islands, causing the demand curve to shift to the left, and lowering the equilibrium price and quantity of islands sold on the market. Also, since potential buyers expect prices to keep falling, they keep off from buying right now, causing the demand curve to shift further left. Island owners have to either wait for the curve to shift right again or to lower their asking prices if they want to sell their islands. What is interesting is that apparently the supply of islands increased from previous years, but that is probably the result of the housing bubble from a few years ago (those islands ain’t going anywhere so the supply stay high).

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  3. Damian says:

    So would increased volcanism change the supply curve? And if so, is there any way to legislate it? Some sort of magma tax or ocean subsidy? Or will sea level rise actually balance things out (for every island created, another one sinks beneath the waves). Food for though. Possibly marshmallows.

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  4. assumo says:

    Too bad we can’t just “discover” islands then wrench control from the local population like in the old days…

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  5. annaCMS says:

    There is now a surplus of islands available for sale because the demand for these islands is too low. The amount of people that are willing and able to buy these islands at such high prices is almost none. Those who are willing and able to buy the islands at the price being asked expect the price to lower since there is a surplus amount of islands. This all causes the demand curve to shift to the left so much that there are no islands being sold at the moment. In order to have some islands sold it is necessary for the price to be lowered unless there is some kind of event that causes people to demand islands.

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  6. Eric M. Jones says:

    Google Earth the Isla de Guadalupe, Mexico, 150 miles off Baja and 500 miles south of Los Angeles.

    Fifteen lobster/abalone fishermen live there. 250 sq. miles, Peppered with extinct volcanoes, 10,000 goats that need removal. It would be a paradise without those invasive goats.

    Mexico would sell it on conditions, I bet.

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  7. Mom says:

    I know you guys have been waiting for this sale – let me know which island

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  8. JC says:

    Market economists sure are dumb. If the market still isn’t selling any of these islands, then now is NOT the time to buy.

    Anyone who thinks 2003-2004 were years of “balance” and “normal” is clueless as to just how long this market had been pushing toward a bubble.

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