Richmond "definitely a buyer's market"

Been a busy weekend, so a quick late night Sunday post for you.

It's midway through the month of November and we have some nteresting statistics from yet another Richmond real estate agent, Arnold Shurchat:

Over the last week in Richmond, there has been 75 new listings for real estate for sale, 74 price changes and 28 sold properties. All 74 prices changes were declines. The total number of listings for both detached singled family homes, condos and townhouses was 2,252 excluding multi-family units. In essence then, excluding new listings that keep hitting the market, it wold take almost 1.5 years to sell just what is out there right now for sale, at the rate things were last week. It is still definitely a buyer's market.

1.5 years of inventory for all real estate in Richmond right now and 74 price changes last week, all of which were declines.

In short... those that hoped the increase in sales in October over September were a sign the market was improving are about to be sorely disappointed. It's shaping up to be another brutal month in Richmond.

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You can almost smell the desperation. In Richmond the new reality is $1 million homes which only fetch $750,000.

As you read the various real estate board press releases that have come out this month, the consistent theme has been 'sales are down, but prices holding firm.'

But if you read this blog on a regular basis, you know that simply isn't true in the Vancouver suburb of Richmond, a community that was once the darling of HAM (Hot Asian Money).

About three weeks ago we told you about 7920 Shackleton Drive.

That was the Richmond house assessed at $1,010,000, had it's listing price reduced several times until it reached $799,000, and then finally sold for $765,000.

Richmond realtors have been telling you for months now that if you want to sell in Richmond, you must not only list your property below the current assessed value - but you must aggressively price it as much as 15% less than what other listings are going for if you hope to sell.

And lest you think 7920 Shackleton Drive was a one-off example, let me introduce you to 3900 Francis Road (pictured above).

This 3 bedroom, 3600 square foot home with an attached two car garage is assessed at $1,020,000.

The property was listed for sale for $988,000.

On September 29th, 2012 this craigslist ad appeared (click on image to enlarge):

Proclaiming that their new asking price of $898,000 (for a house with an assessed value of $1,020,000) was a price that had just been reduced by $90,000; the property is promoted as the 3rd lowest of 37 properties available in the Seafair neighbourhood in Richmond.

Such a deal, eh?

Apparently, though, that wasn't enough.

Because today 3900 Francis Road has an even newer reduced price.

Yep... merely a week later and another $99,000 has been slashed from the asking price.

So here you have yet another $1 million Richmond home which will probably sell - if at all - for around $750,000... or maybe even less, now.

In Richmond it appears the new reality is that homes assessed at $1 million can only reasonably be expected to fetch you $750,000 today.

What will it be like in a few months?

I wonder how many will have the foresight to get out while they can?

(hat tip RB)

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Richmond: "No signs of market getting better. A real estate down cycle is in motion" - Realtor James Wong

Richmond, once the darling of the Hot Asian Money (HAM) crowd now seems to be ground zero the for the real estate crash in the Lower Mainland.

Richmond Realtor James Wong is out with his September 2012 report on sales in Richmond and it seems to get worse with each passing month.

Wong's September Report offers a veritable cornucopia of quotes...

August home sales in Richmond turned out to be worst than in July and the month before in June. The number of homes sold for the month was 179 which was 17% lower than the previous month sales of 216 homes. Active listings for detached homes, townhomes and condos/apartments in Richmond at the end of July, 2012 totalled 2,677 units, was marginally lower than the previous month’s listings at 2,700 homes.

August was another disappointment for many home sellers who were hopeful of selling their homes. Homes that were sold were mostly found to have aggressively cut their prices, or sellers accepting low-ball offers.

The real estate market in Richmond deteriorated further in August. The supply of homes in Richmond reached 12.51 months compared to the previous month of 11.02 months of supply. The lack of buying activities and large number of listings continued to exert pressure on home sellers to cut their prices in order to sell their homes. There are many more homes listed at or below their city assessment values.

There are no signs of the market in Richmond getting better. With the onset of the seasonally slower months in the fall, it is unlikely the last 3 months of 2012 will bring any relief to home sellers who are desperate to sell. Many homes that were priced according to the market, failed to generate much interest from buyers. Many of the homes that were sold were homes that offer better values, or priced significantly lower than comparable sales in the past 3 months.

Market sentiment is now working to reverse the gains in home prices. Condo prices in Richmond had stagnant for more than two years. Similarly, townhome prices remained at about the same level a year ago. For sellers who have to sell, the only way out is to cut prices… not just 5%, a much deeper cut of 10% to 15% is required.

A prolonged period of low sales, and declining home prices could take many years to play out. Declining home prices will erode seller confidence, resulting in more motivated home sellers to cut prices to sell before home prices drop further.

A real estate down cycle is already in motion, and just like from 1995 to 2001, the real estate market in Richmond will have a persistent high level or homes for sale, and few buyers willing or able to buy due to tighter lending rules.

Richmond detached homes over $1,000,000 are not seeing much buying interest. With total active listings of 721 and average sale around 26 homes the past 3 months, there are 26 months supply of homes. For detached homes over $1,500,000, there are currently 366 homes for sale. With an average past 3 months sale of 12 homes, this translates into 30 months supply of homes.

Even a small percentage of these sellers having to slash prices to sell, it will result in prices cascading downward. Early sellers would consider themselves the smart ones, cashing out long before others!

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How excessive are the number of properties for sale on Vancouver's West Side and Richmond right now?

Yesterday I came across the above chart (click on image to enlarge) courtesy of Makaya on VCI.

The chart is produced by Canadian Watchdog and puts the growth of listings for newly/recently built Single Family Houses in Richmond and Vancouver West in astonishing perspective.

Never before in history have so many properties been on the market for sale.

Should the housing correction pick up speed, the rush for the exits may truly become epic.

(Hat tip Makaya)

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