Richmond Market Report - October
Metro Vancouver House and Condo apartment prices both dropped in July but that’s predominantly the influence of the City of Vancouver. Richmond home prices were still risking steadily, but the tide has turned.
Condo sales in October 2018 are down 39% compared to the same time in 2017. This is consistent with the broader Metro Vancouver area where condo sales are down 36% compared to October one year ago. On a month to month basis, October has seen 29% more condo sales in Richmond than September, which slightly surpassed condo sales in the Metro Vancouver area which are up 21%. Price trends aside, Richmond has seen a 67% drop in the volume of detached home sales since 2016! In 2016, a benchmark Richmond house could be bought for $1.6 million so the decrease in house purchases could be explained by federal government policies that make it harder to finance homes valued over $1 million.
No housing types are are experiencing a great surge in late 2018, so this trend seems likely to continue into 2019.
In Richmond, condos have held their value best
At a benchmark price of $681,900, the market for condos in Richmond has hit peak and softened slightly. The market for Condos has outpaced surrounding areas, so a softening is to be expected.
To put this in perspective, East Vancouver condos have a benchmark price of $569,100. A further weakening in the East Vancouver condo market (which will soon receive the benefit of a Broadway Skytrain extension) could have an impact on Richmond condo prices. After all, why would an investor buy a condo rental for $681,900 in Richmond if a comparable one was available in East Vancouver for $569,100?
Richmond house prices look poised to drop further
Richmond house prices have been trending downward since March, while Richmond condo prices were rising. Benchmark detached home prices have slid 7.6% from their most recent high in March 2018, which is less extreme than on the Vancouver Westside, where they have slid 11.2% off their high in July of last year.
Buyer vs. Seller’s Advantage
Nevertheless, the condo market in Richmond is balanced with only enough condos available for sale to last about 5 months at the current rate of sales.
Those looking to purchase townhomes are also in a balanced market, where just over 7 months of inventory remain. The market in Richmond for townhomes has been favouring sellers the past few years, only recently entering a buyer’s market. Not coincidentally, benchmark prices for Townhomes in Richmond reached their peak in July. As prices rose, inventory also rose, but actual sales have tapered off significantly. In October there were only 46 sales of townhomes, down 59% from the same time in 2017. Fewer buyers are willing to pay the higher prices, and a benchmark townhome in Richmond is $851,700.
In the real estate industry, there are metrics used to indicate when buyers and sellers have more negotiating power. As a rule-of-thumb, less than 5 months of inventory (i.e., homes for sale) means it is a “Sellers Market” and the seller has the upper hand in a price negotiation. When there’s more than 9 months of inventory for sale, it’s a “Buyers Market” and buyers have more negotiating power. The theory is that buyers know that it could take over 9 months to sell the home, so the seller should probably drop the price to make sure the buyer in front of them purchases the home, or they could potentially be having open houses and showings for 9 more months.
There is still a lot of uncertainty in real estate these days. The markets for both houses and condos in Metro Vancouver are trending toward a position where buyers can ask more from sellers, and this is true for Richmond as well. If you are going to try to time the market, then this is a time for sellers to pull the trigger before conditions soften further. For buyers, it seems prudent to wait and see. This market is most ideal for growing families looking to sell their condos and move to a larger detached home in Richmond.
If your family is growing and you need a larger space or if the time is right for you to jump into the market and you plan on taking a long term approach to your investment, then take advantage of these tips to reduce your risk from Mortgage Sandbox, and call me to discuss at