Richmond's Million Dollar Home Market

The sales activities for million dollar homes in Richmond had slowed down considerably the past 2 months. There are now a large number of million dollar homes that are in various stages of construction.

What's going to happen to Richmond's million dollar homes now that the real estate market is cooling?

During the last correction in 1994 to 2001, many of those new homes were priced at $800,000 to $1,000,000. These homes languished on the market and eventually, many of these homes were sold off at steep discounts.

Over the past 12 months, builders were paying $650,000 to $800,000 for old houses on large lots in prime Richmond locations. These new homes have to be sold at $1,500,000 or more for the builders to make a profit.

Below is a sale summary for Richmond's million dollar homes as reported through the MLS:

There are currently 226 million dollar single family homes listed for sale in Richmond - as reported on July 22, 2008. Depending on how many more units will be added to the present total of 4, July will be a bad month for these million dollar home sellers. Even if over the next 9 days, another 4 sales are added, we will only finish the month with 8 sales. At this rate it will take 28 months to clear all the million dollar homes listed on the market.

Driving around Richmond and counting the number of new homes in various stages of completion, there will be a lot more million dollar homes available for sale. This is one market segment only the rich can afford.

The sales reported todate for Richmond for single family homes, townhomes and condo/apartments this month looks like a lot worse than last month. My preliminary figures showed that the overall sales is likely to be less than 50% of the total sales in June.