Richmond real estate prices finally succumb to the market slowdown
Metro Vancouver House and Condo apartment prices have been dropping for some time but that was predominantly the influence of the City of Vancouver. Richmond home prices were still rising steadily, but recently the tide has turned.
Market conditions
Condo sales in October 2018 are down 35% compared to the same time in 2016. This is consistent with the broader Metro Vancouver area where condo sales are down 32% 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 detached home sales since 2015!
No housing types are experiencing an activity 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 Richmond condos appears to have weakened, and we can see a downward trend the last three months. In perspective, East Vancouver condos have a benchmark price of $569,100. An increase in activity in the East Vancouver condo market (which will soon receive the benefit of a Broadway Skytrain extension) could attract investors away from other areas of Metro Vancouver and 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. This drop is less extreme than on the Vancouver Westside, where prices slid 11.2% off their high in July of 2017.
Buyer vs. Seller’s Advantage
With over 15 months of inventory for sale, the Richmond house market is in deep buyer’s market territory. With the power to negotiate prices down and ask for concessions, this is a great time to be a buyer of a house in Richmond.
The condo market in Richmond has become balanced with only enough condos available for sale to last about 5 months at the current level of buyer interest.
Those looking to purchase townhomes will also be looking at a balanced market with just over 7 months of inventory on the market. The market for Richmond townhomes has been favouring sellers the past few years and only recently entered a buyer’s market. Not coincidentally, benchmark prices for Townhomes in Richmond reached their peak in July. As prices rose, 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 now $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.
Conclusion
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 condo and move to a larger detached home in Richmond.
If your family is growing and you need a larger space or simply a place to call your own, or you believe timing the market is pointless, then take advantage of these tips to reduce your risk.
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