Are We Heading For a Housing Market Downturn?

October 14, 2012

marta.jpgThere are strong signs for a prolong market downturn. Read more

Richmond Housing Report For September, 2012

October 14, 2012

Housing Report for Richmond, September 2012

Data Source: RealtyLink Online

Housing Type Active Listings Sept Sales Av. 3 mth No. Months Average Price
Detached 1175 54 58 20.25 $1,125,000
Townhouse 508 46 52 9.77 $525,000
Condominiums 980 73 80 12.25 $325,000
Total Sales 2663 173 189 14.09

Richmond detached homesRichmond condos sale

September home sales in Richmond did not reverse the low sales the preceding months in July and August. With total sales of 173 homes, September home sales in Richmond turned out to be worst than the previous month sales of 179 homes.   Active listings for detached homes, townhomes and condos/apartments in Richmond at the end of September, 2012 totalled 2,663 units, was at about the same level in August, 2012.

September was a disappointment for many anxious home sellers. The lack of buying interest was the main cause for slumping home sales in Richmond. In spite of some aggressive discounting by home sellers, buyers were not motivated to make their purchases. View Richmond homes for sale here.

The supply and demand for homes in Richmond deteriorated further in September, reaching 14.09 months compared to the previous month’s ratio of 12.51 months of supply. The lack of buying activities and large number of listings on the market continued to exert pressure on home sellers to cut their prices in order to sell their homes.

Many of the single family detached homes are now listed at or below their city assessment values.

Richmond real estate market outlook
Market sentiment has deteriorated further. Buyers prefer to stay on the sideline, waiting for home prices to fall further.  The only way out for sellers who are determined to sell was to price their home more aggressively. Sellers who are taking deep cuts in reducing their selling prices are likely to sell their homes.

Many homes that were priced according to the market, failed to generate much interest from buyers. In the next 3 months, home sellers are likely to either pull their listings or allow them to go expired.

Richmond detached homes are expected to suffer the most in price erosion.

Richmond detached homes over $1,000,000 are not seeing much buying interest. With total active listings of 686 and average sale around 28 homes the past 3 months, there are 24.5 months supply of homes in the market. For detached homes over $1,500,000, there are currently 353 homes for sale. With an average past 3 months sale of 12 homes, this translates into 29 months supply of homes. The decline in housing sales and home prices in Richmond will take many years to play out.

Charting the future 

The housing market experienced it’s first decline way back in 2006, when housing affordability resulted in home sales topping out in 2005. Home prices kept raising with a brief set-back in 2008, and continued its ascent until late 2011. Now with the housing market experiencing a huge drop in sales, large over-hang of supply and poor market sentiment, home price decline is inevitable. The real estate downturn in Greater Vancouver is in motion. The market will eventually adjust, and buyers confidence return after a prolonged price decline. During the 1995 to 2001 downturn, not only employment in the construction industry contracted, thousands of real estate agents quit the business. 

The market is expected to have persistently high number of homes for sale, and below average buying interest for a long period. For more information on Richmond real estate, you are welcome to contact James Wong at 604-721-4817 or send James an email.

months of inventory (MOI) is a ratio based on total supply against the average 3 months sale. A ratio of 6 MOI is considered a “market in balance”. A ratio much higher than 6 will result in home prices under pressure to go lower and a ratio much under 6 will result in home prices under pressure to go up.

Disclaimer: The writer assumes no liability whatsoever, for errors and/or omissions and any consequences arising either directly or indirectly from the use of information provided by this website. Any data provided are strictly for guidance and planning purposes only and may not be applicable due to ever changing market dynamics.

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