Richmond Real Estate Market Report Detached Houses

Blog by Arnold Shuchat | October 5th, 2018

Below are the latest statistics which include the month of September 2018.  I am including some graphs for the last 10 years so that we can see how 2018 compares to the highs and lows of the past decade. These graphs are dynamic in that you can scroll over any part of the curve and see the actual numerical value.  In addition, they will update automitically as the next month's data is uploaded.

Before jumping to conclusions, the qualifying words of the average appraisal report should be noted.  They read something like this: "The market appraisal herein contained assumes a property marketed in a free and open market without restriction or compulsion for a period of between 3 to 6 months".  When analyzing the current market, we often jump to conclusions based on comparisons with the most recent and robust years where often multiple offers within 1 week were the norm.  Well, they were not the norm for most of the country and when thinking about real estate, one should put these things in perspective in relation to the rest of the country.

There are a few benchmark intervals in the last decade that are worth using as comparisons to the current market: 1. The financial meltdown of late 2008, 2. The lull of 2012-2013, 3.  The government interventions of late summer 2016 and following.

Here is a graph with the Days on Market:

One can see that the number of days on market is beginning to rival the financial collapse of 2008.  At that time, extreme caution was exercised as major values were eradicated from mature wealth portfolios over a very short time and it was an international event. 

AS far as Units of Inventory are concerned, the numbers are up over the prime years but not that excessive compared to 2008 or 2012-13.  See below:Next, Sales in units is examined. Sales numbers are down almost as much as in 2008, surpassing the declines in the other 2 doldrum markets.

Next a look at the Housing Price Index for Richmond:  The decline so far is moderate given the large increases since 2008.

The price decline in 2008 from the top of the market in that year was 12.1% to the trough. In 2016 it was an 8.85% drop from peak to trough and so far in 2018 we are looking at a 6.1% drop, which may not yet have reached the trough.

Finally, we look at the Sold to Active Listing Ratio which gives us an idea as to market velocity and relative strength. When looking at Inventory levels together it can gives us an indication as to where the market is heading.

2012, 2016 and 2018 are all between 5-7% and being at 7% now, we have not yet reached the decade low which was 3% in November of 2018.

There is a different psychology now compared to 2008.  Then people wondered about the economy in general and whether their wealth would shrink. Today, affordability is a greater concern, foreign buying power has been squelched, interest rates are higher and said to be moving even more so and buyers are holding off all the while taking to social media to engineer as major a correction as possible.  In addition,  investors holding property solely for financial reasons (and there are an inordinate number of them in the Lower Mainland Market) are trying to bail out at close to the market's historical highs before the correction.  These are holders who do not have to sell but wish to book the profit while there is one.  Many of these also purchased property within the last 2 years.  

It would seem that a price adjustment would be greater here than in the last decade.  As investment falls, the local real estate dependent economy will also start to feel the pain: furniture stores, car dealerships, renovation trades, hardware stores etc... This will accelerate the deflationary cycle. October-November will be critical to the extent of this market's direction.