What you see in Richmond is just a sample of what's to come

[HAM]

Richmond realtor warns:"price declines in excess of 30% coming, price collapse looks inevitable!"


Two months ago we introduced you to Richmond realtor James Wong.

Mr. Wong was the first of a growing legion of realtors we profiled in the Greater Vancouver area who have been telling you that if you want to sell "deep price cuts are needed."

He's out with his latest monthly report and comes to a conclusion that should send a chill down the back of any Richmond homeowner looking (or planning) to sell.
"In Richmond, there is a high probability of a price decline for detached homes in excess of 30%."
Wong sees the events over the next few months following the pattern we saw in 2008/2009. But, instead of a recovery like 2009, Wong thinks sales will stay at their current dismal rates with home prices declining even more.

As that happens, Wong finally connects the dots to paint the picture we know all too well is coming:
"Sellers who need to sell will have to cut their prices more deeply to attract buyers. This could be the beginning of a real estate down cycle. The momentum will pick up when more sellers realize that a real estate downturn is in motion."
And by then, of course, it will be too late.

The writing is on the wall. More from Wong:
"The cascading effect of declining home prices will snowball, causing more home sellers to sell before home prices drop further... The in-balance in supply and demand is massive for million dollar homes in Richmond. A price collapse in Richmond detached homes looks inevitable!"
That imbalance Wong speaks of is epic.

There are a total of 722 listings in Richmond right now for homes over $1,000,000. With average sale around 27 homes the past 2 months, there are 27 months supply of homes.

For detached homes over $1,500,000, the past 2 month’s sale averaging 11 units against 361 listings. This translates into a staggering 33 months supply of homes.

As prices implode on the million dollar homes in Richmond, sub-million dollar homes will be dragged down accordingly.

And as Richmond collapses, the contagion will spread quickly around the Lower Mainland.

Here is Wong's full July 2012 month end report....
July home sales in Richmond turned out to be worst than in June and the month before in May. The number of homes sold for the month was 216 which was 13% lower than the previous month sales of 248 homes. Active listings for detached homes, townhomes and condos/apartments in Richmond at the end of July, 2012 totalled 2,700 units, just 30 units shy of the previous month high of 2,730. Home sellers are faced with a dilemma, cutting prices more aggressively to sell or to take their properties off the market.


The real estate market in Richmond deteriorated further at the end of July. The supply of homes now reached 11.02 months compared to the previous month of 9.93 months of supply. The higher ratio was due to lower average sales, although the total listings were around the same level as the month before. Some home sellers were making drastic price reductions and generous concessions in selling their homes. More homes were now listed and sold at prices significantly below their city assessment values for 2012.

Richmond real estate market outlook

The next few months are expected to remain lacklustre. The next few weeks and months would probably follow what happened in 2008. But, instead of a recovery like 2009, home sales could stayed low at current level with home prices declining. In Richmond, there is a high probability of a price decline for detached homes in excess of 30%, and attached homes in the range of 20% or more over the next 3 years.

The biggest problem faced by home buyers are getting their mortgages approved. Canadian banks are now required to underwrite their mortgages based on borrowers’ ability to debt service their loans”.

The cascading effect of declining home prices will snowball, causing more home sellers to sell before home prices drop further. Unlike 2009, even if home prices drop 20% or more, many home buyers and investors would be prevented from buying due to the difficulty in getting financing.

Richmond detached homes over $1,000,000 are not seeing much buying interest. With total listings of 722 and average sale around 27 homes the past 2 months, there are 27 months supply of homes. For detached homes over $1,500,000, the past 2 month’s sale averaging 11 units against 361 listings, translates into 33 months supply of homes. The in-balance in supply and demand is massive million dollar homes in Richmond. A price collapse in Richmond detached homes looks inevitable!

Sellers who need to sell will have to cut their prices more deeply to attract buyers. This could be the beginning of a real estate down cycle. The momentum will pick up when more sellers realize that a real estate downturn is in motion. This could take a few years for home prices in Richmond to reach a more sensible level.

The smart Richmond Boomer is making that minimum 30% price cut right now.

Because, as Wong says, when "sellers realize that a real estate downturn is in motion" - a 30% reduction in asking price won't even begin to attract interest. "The cascading effect of declining home prices will snowball, causing more home sellers to sell before home prices drop further."

Can you say 'Boomer Trigger'?

Sure you can.

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http://whispersfromtheedgeoftherainfore ... s.html?m=1

[jesse1]

One fascinating trend to watch is how long Richmond prices can stay elevated with current clearance rates. In the normal "luxury" market segment high months of inventory is normal because the pool of buyers is limited: houses can stay on the market for quarters if not years before selling. In Richmond properties are, at least according to their prices, in the "luxury" tier and without thinking too much one might think that clearing these properties is bound to take a lot of time. Problem is if these properties aren't really luxury at all and are instead akin to the "McMansions" that gave parts of the US problems it's going to get interesting. If I cared more about Richmond high-end I'd have a gander at what happened about 5 years ago in the OC and other areas plagued with large homes not able to sell. But the OC had subprime and AltA and Jumbo and NINJA and all that so it's not the same at all except for the stuff that's the same.

[HAM]

When was the last time you have heard that is positive a out real estate? My oh my! The winds have shifted and you need to react to market conditions. This is an interesting article:

http://www.thenownews.com/business/Hous ... story.html

[Warren12]

Realtors telling you to lower prices? Of course they do, properties who reduce prices will sell faster in any market. Selling fast = fast commission = realtor payday. You bears complain about realtors pumping the market, this is the same thing.

[eyesthebye]

at the end of realtor Wong's article:

The current low mortgage rates at just over 3.00 for 5-year fixed rate mortgage are expected to remain at current levels for some time. You can use the link here to view homes available for sale in Richmond. For more information on Richmond real estate, you are welcome to contact James Wong at 604-721-4817 or send James an email

just another fluff piece to drum up busniess.

In fact, most detached homes in my neighbourhood that had stagnated for two months are now sold, but data not posted.
Is real estate board deliberately holding these sales back so it produces data that makes the market appear in "buyers market" territory?

[jimtan]

At my end, the better condos downtown are selling steadily. Some after a long wait. Looks like strong owners waiting for the price they want.

[HAM]

11+ moi is just fine. Yup. Prices going down means nobody is buying unless you are stupid and delusional. Are you cows buying? 27 moi for sfh 1mil-1.5mil and 33 moi for homes 1.5mil +. Yup it's all the realtors fault. He's pumping it down and now you cows know you will soon be drowning in your pos homes. I love how you cows are standing fairly quiet and nothing to say or pump. You guys are scared and shaking your knees praying night after night for this not to happen. Well well, my friends and family in the states did the same. It didn't work out for them and maybe it will work out for you because you cows are all better than americans. Americans are stupid right? Yup the biggest economy in the world suck. jimtan and ETB, I can't wait to hear you come next year. Maybe you cows will finally understand what debt means.

Suckas!!!

[jesse1]

Prices going Dow

I hope for Vancouver's sake that's not going to happen

[timber2012]

Realtors telling you to lower prices? Of course they do, properties who reduce prices will sell faster in any market. Selling fast = fast commission = realtor payday. You bears complain about realtors pumping the market, this is the same thing.

Wow - how is this the same thing?

[HAM]

Realtors telling you to lower prices? Of course they do, properties who reduce prices will sell faster in any market. Selling fast = fast commission = realtor payday. You bears complain about realtors pumping the market, this is the same thing.

Wow - how is this the same thing?

Pumping the market is bullshitting to the buyer. Calling for a market correction is called being honest. There is no point to your comment. Just because everyday you experience equity theft, you bulls come here and cry away. All those years of equity gain was just a fantasy. Unless you did a heloc, the fantasy will become a nightmare. You bulls will be the next campers protesting for affordable housing. The bulls will start to point fingers as their lives fall apart. Trying to find any good news to comfort for their massive losses. It's the beginning of an end. If an Austrslian can see this, we should all see this. But the ones that don't listen and react, well, well, peace out!!

[Geyser]

If an Austrslian can see this, we should all see this. But the ones that don't listen and react, well, well, peace out!!

Although I partly agree with some of the broad brush strokes of your post I think it's worth remembering that the Australian you speak of has a habit of "seeing" all sorts of things that don't exist. I'm not saying you are wrong, I am merely suggesting that Snakey might not be the most compelling reference.

BTW, I think that in the event of a serious price collapse it will be the HELOC folks who could be hit the hardest because they (and recent buyers) are the ones most likely to have less than 50% equity and hence are most exposed to going underwater. The thought of some people using the temporary illusion of increased equity as justification for a car purchase or a fancy vacation always struck me as nutty.

Maybe that's why the Australian oracle gets so twitchy on the subject of car prices. We know his wife owns the house, perhaps she let him use it as security for a car loan.

Cue the frantic denials from the far side of the planet!

[Taipan]

The thought of some people using the temporary illusion of increased equity as justification for a car purchase or a fancy vacation always struck me as nutty.

And on the way up you merrily sat back and enjoyed. We had dozens of posts on this forum, including ETB who equated the increase in value of their home to tax free income. I was one of the few he warned them that it was not income, while people like Geezer were either silent or encouraged such thinking.

This of course coming from a person who is so frightened that he hides behind his computer screen and trolls forums with comments which are pretty inane.

Now, in the countries using torrens title system of property or similiar, why would a business owner, company director have their family home in their wife’s names?

Geezer obviously doesn’t know, which also shows he hasn’t been exposed to much business. Otherwise he wouldn’t suggest such a question.

Supposedly has a stack of rental residential properties which has now dropped 15% in value.

So why would company directors have their homes in their wife’s names. Why would their accountants have their homes in their wife’s name? Why would their lawyers have their homes in their wife’s name? Why would accountants and lawyers advise their clients to place the family home in their wife’s name?

Oh that’s right when you have a credit crunch, the bank comes looking for everything they can get their hands on.

They send in a team of credit controllers, seeking and demanding repayment of everything they can get their hands on.

And property can be one of the least liquid forms of all assets. Just when you need to cash it in, you can’t sell it. Sound like the 19,000 vendors in Vancouver right now? So they grab anything else they can grab, including the family home, if you had pledged it.
And when the zhit hits the fan, the same happens to the lawyers and accountants, with clients suing them.

Bankruptcy, house is sold up, wife and kids in the street, even though it wasn’t the individuals fault. It’s a liquidity timing issue. In Australia and Id suggest in Canada, failure to pay a debt can result in the lender issuing a demand for repayment and giving 21 days to pay it. Failure to pay will result in the lender taking control of the assets and selling them mortgagee in possession.

That is why most serious business people, lawyers and accountants, prudently places the family home in their wife’s name.

Geezer will purposely misconstrue all this and attempt to troll what is a very normal business situation in Australia.

And if you can’t trust your wife, then why the hell did you marry her. Oh and the house, the car and the house in Canada are debt free. Paid for with cash. You know the sort - when you sell shit and make a profit, and then with a little of it you can enjoy a few little luxuries.

[Geyser]

Cue the frantic denials from the far side of the planet!

Ha! Right on time and even more rambling than I anticipated. You are nothing if not predictable.

So it's okay for you to use a house to ensure you have a wife but it's pathetic when Chinese men do it?

Remember posting this insight into why men buy women houses Snakey?

Do you deny that because of the one child policy, Chinese women are now able to demand property from Chinese men? 

And Unless you are wealthy enough to own property, your not going to get a wife, and most likely children!

The china one child policy cause a massive mismatch between males and females. There are now 26,000,000 more males then females. That gives females significant choice and the ability to demand things. Including houses and condo’s. Consequently no house, no wife for millions of Chinese men.

I guess it's just another example of your double standards. Having seen your photograph and observed your massive insecurities I understand why it would have been difficult for you to find a wife, and that's okay, but you shouldn't denigrate others for also using a home as consolation for accepting a less than appealing mate.

[Taipan]

If we are talking about insecurity, then Im not the one who who hides behind their computer screen, and trolls around picking fights.

And what you wrote was garbage and a waste of time.

[Geyser]

Oh dear, looks like I hit a raw nerve again!