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.
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?
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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The slide to lower prices seems slow for anyone who has looked at bubble markets and knows what's next. The slide will be fast and seem like an overnight correction to those who don't follow the data while operating on the established social narrative.
ReplyDelete"admit that the waters around you have grown"
How many will get out? Very few.
ReplyDeleteMy neighbour is one of those who will get burned. Has the house on the market for just under $1 million in Richmond. Refuses to lower price because he "won't sell the house for less than it's worth".
I tell him it's 'worth' what someone will pay for it.
Heh heh, that's quite a discount. If this trend continues into next year maybe it'll finally be affordable enough for me to get back into the housing market again :)
ReplyDeleteAnd even at $750K it is still ridiculously overpriced.
ReplyDeleteYep, even with the Vancouver/Lower Mainland premium I sure as hell wouldn't pay more than $400k ish.
DeleteI'd be willing to pay a quarter to a third more to live in the lower mainland compared to elsewhere in Canada. But double or triple? Yeah fucking right, Vancouver's nice, but not that nice. Seattle just to the South has many of the same things that make Vancouver great, but without the financial ruination.
The vast majority of Vancouver mortgage holders who still hold some paper equity got there by dumb luck, not by intelligent, informed market research. However, if you talk with them, almost all of them will be glad to tell you how smart they were and how much they know about the housing market in general.
ReplyDeleteIt is this uninformed, overly bullish attitude that prevents them from selling to take a profit (and then rent for a couple of years) when the market is obviously at its peak. It is also this attitude that prevents them from lowering their price to the level where it has a chance to sell when the market turns south. They end up chasing the market down and when they do sell, it is generally many months later at a much lower price than they would have had if they had priced competitively and intelligently in the first place.
It will be nice not to have to listen to all of these housing market know-it-alls (who had no money in the first place) as they get their education the hard way. Savers and renters will finally be rewarded and that will certainly be nice to see.
Well said.
DeleteSpeaking of it being dead in Richmond...
ReplyDeleteI just got "ambushed" in my condo-building front foyer as I was walking back from taking-out the garbage.
Seems like an agent for an open house was so desperate to talk to someone that she asked me out of the blue if I want to go see it. (After all, I might have some "friends or relatives" who would be interested).
Feeling pity, I said "sure...why not?" Went upstairs to see it...complete mess; absolutely NO prep work or cleaning effort made on behalf of the sellers.
I thanked the agent for her time. When she asked me what I thought, it then dawned on her that I have been tracking sales activity/listings in my building for the past 6 months. You should have seen the look on her face when I mentioned: "...I wouldn't touch it with a 10-foot pole. There's a unit 2 stories higher ["above" the neighbouring townhomes] with 75 extra square feet selling for $17K less. You might want to pass that info along to your client. Oh...and by the way...it wouldn't hurt to actually CLEAN the place before a showing".
...looks like I'll have to take the garbage out during weekday hours only...
I just returned from Chicago and there is no talk of RE there, other than the occasional mention of the housing market and overall economy still being in the tank. The first thing when I get off the plane at YVR is smacked in the face with RE ads... on the side of the Canada Line cars, at the transit stations, on billboards... all over.
ReplyDeleteWhen people find out I'm an American I am typically asked what I find different living up here. The RE advertising everywhere has to be one of the biggest. Even at the height of the bubble in the US I never saw the amount of advertising I see in the lower mainland.
DeleteDrove through Canmore last week and the number of complexes that are marked down is pretty staggering. Looks like they are doing everything they can do sell those places.