Richmond Detached Homes - Sale price Versus City Assessment value
January 20, 2013
A stand-off between home buyers and sellers
A sample data extracted from the Real Estate Board of Greater Vancouver’s home sale for detached homes in Richmond recently revealed a fast deteriorating housing market. During the period from Dec 01, 2012 to Jan 15, 2013, detached homes in Richmond between 5 to 30 years old with lot sizes between 5,000 to 8,000 sq ft showed that nine out of ten of these homes were sold below their city assessment values:
|1.||Property Address||Sold Price ($)||Assessment Value ($)||% Below City Assessment|
|1.||5320 Francis Rd||650,000||775,000||-11%|
|2.||10151 No 1 Rd||877,500||916,000||-14%|
|3.||10100 St. Vincent Pl||945,000||1,005,000||-6%|
|4.||3571 Pleasant St||1,145,000||1,109,000||+3%|
These homes were on average selling 11.7% below their city assessment values.
- list price from $689,000 to $1,388,000 with average price of $1,193,200
- sale price from $650,000 to $1,350,000 with average price of $1,120,900
- the average sale price was 6% lower than the average list price
- the average sale price was 11.7% below the average city value
- the average number of days these homes were sold was 81 days
When compared to early 2011, Richmond home prices were selling at around 10% to 15% above their city assessment values. The extend of the price drop in home prices for Richmond detached homes is estimated to be 21.7% to 26.7% below the peak prices of homes in the middle part of 2011.
Prior to May 2011, the MOI for Richmond detached homes were under 6 months of supply. The tight supply and rapid gain in detached home prices in Richmond from December 2010 to April 2011 was reflected in the MOI for the period at 2.50, 2.70, 2.84, 3.13, 4.08 and 5.03 for December, January, February, March, April respectively. Today’s MOI for Richmond detached homes is over 12 months… a very different picture compared to 2 years ago.
A typical neighborhood like The Hollys is expected to continue to experience price decline for a few years. As cited earlier, there are just not that many home buyers available and capable of buying homes at today’s lofty prices.
A buyer for a $767,000 entry level home in the Hollys, needs to provide proof that the family has earned income of $120,000 for a loan of $613,000 (80% financing). The borrower has to provide $154,000 (20%) down payment to get the above loan, at 3% 5-year fixed term mortgage with 25 years amortization. The borrower’s monthly payment is $2,900, with an additional annual outlay of $3,500 for property tax and utilities.
Home buyers are fast learners, and they know that today’s homes can be bought at 10% to 15% below their city assessment values. If they are not getting that type of discount, they walk. The Richmond detached home market now is created by sellers who need to sell. As shown above, sellers who are hoping to sell their homes at their city assessment values would be disappointed. There was only one out of 10 homes that was sold close to its city value! On average home sellers have to brace for more than 10% discount from their city assessment values to sell their homes.