The following table summarized the August sales of condos in Richmond:
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At the beginning of 2008, Richmond's housing market was strong, registering list/sale ratios at around 4 months. Since April, the collapse in the real estate market in B.C. had resulted in Richmond's list/sale ratio increasing to 12.8 months in August.
The housing market is now a Buyer's market. There were many media articles in the past few months that could have contributed to many home buyers staying on the sideline.
The above analysis showed that the fastest selling condos in Richmond were those priced under $300,000.
Affordability could be the main reason for these lower priced condos accounting for more than 50% of the total condo sales. Condos priced in the $400,001 to $500,000 registered the higherst list/sale ratio. These condo sellers will have to price their condos accordingly to attract buyers.
Sales By Age Group
When the age group was analyzed, the following interesting data emerged:
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The data showed that there was a large supply of new condos under 2 years old - around 33% of the total condo listings.
The sales for condos under 3, 5 and 10 years old all were exceeding 16 months. For a condo seller, this is as good as facing a 6% chance of selling his or her condo! The alternative for condo owners who are not prepared to reduce their prices to sell, is to rent out their condos until sales pick up.
Will condos in Richmond return to a balance market?
A balanced market is when the list/sale ratio is around 6 months. This will only happen when sales pick up and double the present sales from 77 to 164 units a month. This may only happen when more buyers are getting back into the market. This may not happen unless condo prices declined significantly.
during the height of the housing boom in Richmond, the average sales for condos in 2006 and 2007 were 167 and 171 units per month. Not only prices have to be more affordable, the minimum 5% down payment requirement for CMHC hig-ratio financing effectively eliminated many first time home buyers from getting into the market.
Over Supply Of New Condos
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Based on the current new developments coming on stream, and the large over-hang of condos for sale, the market is flooded with too many condos and not enough buyers. It is inevitable that condo prices will be under a lot of pressure to come down.
How far prices will decline is anybody's guess.
The collapse in condo prices has not happened yet in Richmond in spite of the past 4 months huge drop in unit sales. The prospect is not looking good as financial problems in the US and elsewhere will likely spill over, dampening consumer confidence in Canada.
Multi-family high-rise and low rise projects in Richmond
Click here to view the various new condo projects under construction in Richmond. Currently Prado is reported to be offering 5% discount to limited number of buyers. The offer is for 10 condos on first come first serve basis, and buyers can select their own condos at the published selling prices for the units.
The Flo by Onni are entertaining buyers' making their offers on the selling prices for the remaining units. The MLS sales over the past few weeks showed that some of the remaining condos at Garden City Residences On a Park that were "competitively priced" were selling well.
What to expect when developers are clearing their condos?
The time will come when developers are forced to sell off the remaining condos they own. There will be incentives, discounts or the GST being absorbed in the selling prices for new condos as happened in the last housing downturn in 1995.
This will obviously pose a problem for buyers who bought at the developer's prices. Effectively, some of them are already losing 5% of their condo values while these condos are still under construction.
We will continue to monitor and post our findings on Richmond's housing sales and pricing trends in the coming months.
NOTE: This representation is based in whole or in part on data generated by the Real Estate Boards of Greater Vancouver
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