Richmond real estate agent's response to the latest wave of optimism?

One of the biggest frustrations from some market watchers has been the failure of the market to 'crash' in spectacular fashion.

But if you have followed this blog for any length of time you have watched the progression.

First it was the outlining areas of B.C. Then it was Vancouver Island.

All last year we charted the periphery of the Lower Mainland, particularly Whistler. And this year it started here with the Fraser Valley and Richmond.

And now, within the Lower Mainland, it is the less desirable properties getting hit the hardest.

Those in the real estate industry tell you there will be no 'crash', just a slight correction - a 'flat market'.  Most significantly, prices will not come down.

But if there is no danger of that happening... why is CAAMP going to Ottawa to lobby for a return to loose mortgage regulations?

The answer is simple... for the bubble to grow there has to be access to easy credit.  Without it, the market will continue to wither.

(And for those who are frustrated at the slow pace of the decline, tomorrow we will hi-light how the pace of that decline has been more significant than most realize)

Real estate agents know the reality of this situation.  And once again, it is Richmond agent James Wong who succinctly summarizes the situation.

As Wong notes, the decline in listings is not a sign the market is strengthening... it is expected at this time of year:

The improvement in the Months-of-inventory (MOI) in Richmond from 12 months to 10 months was due to the 10% reduction in total listings. Many sellers either pulled their listings off the market or allowed their homes expired. The decline in listings is expected to continue for December. Seasonally this is not the time for home sellers to list their homes for sale.

 Sales are still abysmal and any sales that occur, happened because sellers cut their prices:

Sales in Richmond for November at 207 homes were slightly lower than the previously month sales of 225 units. Price discounting continued as motivated sellers tried to attract buyers. 

Will sales improve in the new year?

Many people in the real estate industry are hopeful that home sales will improve after January, 2013. An up-stick in sales can be expected in spring next year, but the overall market sentiment will likely remain subdued.

And why will it be subdued?

There is a marked difference for 2013 and 2012 as the number of active listings at the beginning of 2012 was around 1,655. The supply in 2013 is expected to take off from a higher base at around 1,950 homes by January 01, 2013. Many more new listings are expected to be added to the market after the new year.

What will the flood of listings do to the market?

The large number of listings in Richmond will result in more sellers lowering their prices to sell their homes. Current market sentiment is not expected to change much. Buying activities are likely to remain subdued. Many homes in Richmond are expected to sell below their city assessment values.

More price erosion can be expected as many home buyers are expected to stay on the sideline. Majority of these buyers know that it is to their advantage to wait for the market to continue its correction. Buyers when making offers, typically test sellers’ motivation by making low ball offers.

Why all the low ball offers?

The market situation for Richmond detached homes remained depressed. There are currently 540 homes for sale at prices above $1,000,000. With average past 3 months sale around 33 homes, the MOI is at 16.36 months.

This is a slight improvement from 17.88 months in October, partly due to expiry and 10 homes reducing their prices to below $1,000,000. There are 293 homes over $1,500,000 in Richmond. At an average sale pace of 12 homes the past 3 months, this translates into 24.42 months of supply.

2013 will be another difficult year for Richmond.

Wong summarizes exactly what the problem is... a problem CAAMP is also worried about:

The absence of home buyers, dampened market sentiment, and tightened lending rules are expected to continue into 2013.

The current MOI though better than the past 2 months, will likely be reversed when more new listings hit the market the next few weeks.

There are no signs of the Government changing or relaxing the current lending directives to Canadian Banks. Richmond’s market for 2013 is expected to have persistently high number of homes for sale and below average buying interest.

All of which is adding up to create the perfect storm in 2013... a reality real estate insiders are privately very afraid of.

Speaking of dealing with the current market dynamics, have you seen real estate agent Owen Bigland's reality check for seller's when it comes to listing you home for sale in today's market?

(video posted 2 days ago):

"Let's talk about pricing. One of the biggest mistakes people make, or seller's make, is they price the home according to their needs as opposed to what the market is dictating.

In other words they say we paid $800,000 for the home 3 years ago, we need to net $800,000 today.

Well, unfortunately, the market doesn't work that way. A home is priced based on the current fundamentals."

And the current fundamentals say you need to lower your expectations. What a paradigm shift from only 12 months ago.

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