Richmond real estate agent: Recent sales momentum 'not expected to turn market around'

As expected, October 2012 home sales were higher than those in September 2012. But October still came in as one of the worst months in the last 15 years.

Some might cling to that increase as a sign of upcoming market salvation.

Some... but not all.

Richmond Real Estate agent James Wong, who is out with his November 2012 market report makes no bones about his take on that uptick in sales last month:

The sale pace though improved, was not expected to have the momentum to turn the market around. There were some price discounting by motivated sellers, but most home buyers were reluctant to make their purchases.

Wong still see's dismal conditions in Richmond:

In spite of many homes in Richmond being listed at or below their city assessment values, many of these homes were not selling. Most home buyers prefer to wait and watch how the market will turn out the next few months. Buyers who were making offers, typically make low ball offers on homes they were interested to buy. 

Most homes sit on the market, and home sellers are reluctant to make drastic price cuts to sell their homes. 

Listings had dropped off gradually over the past 4 months as sellers either took their homes off the market or allowed them to expire.

In fact things continue to be so bad that:

the in-balance in supply and demand is putting pressure on Richmond home sellers to accept or reject offers that are far below their expectations.

And what is the status of that current "in-balance"?

The months-of-inventory improved from 14.09 last month to 12.38 months in October. Comparatively, Richmond has a large over-hang of resale condos competing for buyers with presale new condos under construction.

There are 588 Richmond detached homes for sale at prices over $1,000,000. With average past 3 months sale around 33 homes, there are 17.88 months supply of homes in the market. For detached homes over $1,500,000, there are currently 309 homes for sale. With an average past 3 months sale of 14 homes, this translates into 22.07 months supply of homes.

The in-balance in supply and demand is putting pressure on Richmond home sellers to accept or reject offers that are far below their expectations.

In this report, Wong takes a moment to share with his readers what they should expect of the Richmond housing market for 2013:

With the housing market sentiment dampened, absence of of home buyers and Canadian banks having to follow the new lending rules, 2013 will be a difficult year for home sellers, builders and housing developers. The decline in home prices will likely take many years to play out.

In a market with abundant supply of homes, sellers will lose out. The health of the housing market is best tracked by following the months-of-inventory (MOI) number presented on this site. At current MOI level around 14, it will take some time for the number to improve. This MOI number has to get down from 14 to 10, 8 and then 6 before the market stabilizes.

With the Canadian Government curtailing credit to deflate the real estate bubble, real estate prices can only decline. Unless the Government makes drastic changes to the new lending rules, home prices will continue to decline for some time.

If the housing down cycle from 1995 to 2001 downturn is repeated, we could experience home price decline and slow sales for many years. The market is expected to have persistently high number of homes for sale, and below average buying interest.

Once again we tip our hat to Mr. Wong for his honest, succinct assessment of today's real estate landscape.

It is a refreshing breath of consistent honesty.

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