Richmond, BC

Any home owner who is keen on selling his home will be interested to find out how long it will take for his home to sell. In today's market, there are far more homes listed for sale than there are buyers out there keen to buy these properties.

Home sales are subject to seasonal fluctuation in sale activities. The list/sale ratio or absorption rate (months of inventory), can be used quantitatively to gauge the health of the housing market.

Current Sales Activities

The table below summarized the past 6 months (June 01, 2008 to to-date) sales of Richmond detached homes under various price categories. The active listing figures were number of homes listed for sale as of December 25, 2008.

It is generally accepted that an absorption rate (list/sale ratio) around 6 months inventory represents a neutral or balanced market. The absorption rates as shown below confirmed that detached homes in Richmond are under pressure to go down further.

Currently, the lowest price range homes, those below $500,000 took the shortest time to sell. This could be attributed to these homes were more affordable and there were more buyers for lower priced homes. Homes in the $800,001 to $900,000 range were found to take up to 21 months to sell. Similarly, sellers of million dollar homes over $1,500,000 had a tough time sellig their homes - over 24 months supply.

For these home sellers, they will have to price their homes well to attract the interest of home buyers. Those who are prepared to take bold action to slash their prices, may get more buyer showing activities.

If you like to have more information on the current real estate market in Richmond, South Vancouver of Burnaby, kindly contact me at 604-721-4817 or email me.

Writing has truly been a great avenue for one to express thoughts on certain issues and relate in a special way to readers. Activerain, being a medium to people involved in the real estate world
(who may be REALTOR, Mortgage Broker, Appraiser, Lawyer, Home Inspector, Home Stager, Home Buyer or Seller, or simply a Reader), has brought a significant mark on almost every one of us as contributor or industry supporter.

I am so pleased to have been part of it and certainly proud to be an active writer since the
time I joined this group (in the year 2006). Indeed, I have had readers and visitors on this site
who have expressed interest and opinion on topic or issue relevant to their situation.

Activerain! What a good place to learn; and surely, we are all yearning and looking forward to be
able to share more...

As an activerainer ready to welcome a positive, bright year ahead (amidst the present
global economic uncertainties), I wish everyone a pleasant and peaceful season!

Merry Christmas everyone!!!

The Globe And Mail published an article today "Federal officials told CMHC it could burden borrowers" that may have more far reaching consequences on home owners.

"Canada Mortgage and Housing Corp. officials ignored warnings from senior Finance Department and Bank of Canada officials during the past two years that its active business in high-risk mortgage insurance could overburden consumers.

According to sources familiar with the discussions, CMHC executives did not heed the warnings and continued to underwrite larger volumes of insurance policies for risky home loans with 40-year amortizations and minimal down payments.

The sources said the federal agency's executives disagreed about the potential risks and defended the creditworthiness of borrowers who were granted insurance for the riskier mortgage products".

Many critics cautioned the danger of the 40 years and 0% down payment mortgage that may hurt home owners in the event of home prices dropping significantly. These concerns are now a reality when home prices have dropped 12% to 15% in major Canadian city centers, especially places like Greater Vancouver, Victoria, Calgary and Edmonton.

Some home owners are in trouble

With home prices projecting to decline further over the next 12 months, home owners who bought with little equities will need to cover their losses if they sell their homes now. Those who could not keep up with their mortgage payments will lose their homes. When defaults start to show up, the losses suffered by Canadian banks will end up with CMHC and other mortgage insureres. CMHC will end up taking on huge mortgage default losses as over 70% of these 40 years mortgages were under-witten by CMHC the past 2 years.

Canada is now reported to be in recession with negative GDP growth. If the economy tank in Canada, many people will lose their jobs due to cut-backs and lay-offs. It is inevitable that foreclosures and bankruptcies will increase in the near future.

The loan loss for each default in the high-priced centers in Canada can easily exceed $100,000. A 20% drop in price on a $500,000 home will wipe off $100,000 value from a home. Together with interest cost, real estate/legal fees, etc, loan losses can piled up quickily.

Buying opportunities

There are many buying oppotunities for investors who have the financial resources. Home owners who could not hold on to their homes may be forced to sell at lower than market prices. Until more buyers return to the market, home prices will continue to decline. It's difficult to tell if the market will stabalize by the end of 2009 or 2010.

If you are looking for investment properties in Richmond, Vancouver or Burnaby, you can contact me at 604-721-4817 or email me.

The subject on "writing a low ball offer" in a buyer's market is aptly described in a blog post by Vancouver's Realtors Rob Chipman and Aaron Best.

"Lowball opportunities are now available, and their numbers will only increase in the coming months".

"Lowballs are a funny subject. They’re easy to talk about, but tough to pull off. In the first place they take a certain amount of nerve. In the second place, they’re a tougher offer to close than a non-lowball. There’s no reason why a buyer shouldn’t consider lowballing, however. Its not a tactic for everyone, and it involves lots of hard work and learning, but it can pay off handsomely".

You can read the full article below:

So You Want To Write a Lowball! (part 1), and the second part of the article:

So You Want To Write a Lowball! (part 2)

If you are a homebuyer, you may find some great buying opportunities in today's market. Whether you are buying a home in Richmond BC for your own occupation, or a second or third home for investment, you can view the latest Richmond market activities here.

If you have a specific real estate need, kindly contact me at 604-721-4817 or email me.

An analysis on the sales history of Richmond Seafair older detached homes helps in monitoring the pricing trend and demand by new home builders. Declining prices are signs that new home builders are not bullish on the housing market in next 9 to 12 months.

Click here for the latest Richmond housing market update.

The homes selected are based on homes that are over 25 years old, with lot size over between 7,000 to $9,000 sq ft. The build-up areas for these homes are between $1,000 to $2,000. During the period form 2001 to end Nov/2008, the average number of homes sold was 36 a year.

Home Prices Declining Since May/2008

The drop in demand for these older homes since May, 2008 had resulted in significant price reductions by home sellers. Homes similar to those previously sold at $600,000 to $650,000 are priced much lower now.

There are some homes in the Seafair area being priced at the $500,000 range now. There were 2 recent sales in this area that were done at $450,000 to $488,000. The soft housing market is expected to continue into next year, and home prices are likely to continue the decline.

Rental Income & Cap Rates

Buyers interest is epected to improve when home prices become more attractive. An acceptable price range is when investors are able to buy revenue properties at 4.5% to 5% cp rates. Current gross yearly rental income for these homes is around $21,600.

Based on investors expectation of 4.5% to 5.0% cap rates, buyers will become more active when the selling prices for these homes are in the $432,000 to $480,000 range.

If you like to have more information on homes for sale around Richmond Seafair area, you can contact me at 604-721-4817 or email me.