Richmond Real Estate Market Report-August 26, 2016

Blog by Arnold Shuchat | August 26th, 2016

Reviewing market activity in the aftermath of August 2, 2016 being the effective date of the new 15% Foreign Buyers Tax is one way to determine the effect it has had on the real estate market.  Richmond is one of the more sensitive Lower Mainland areas to foreign buyers and offers a good litmus test for the tax's effect on the greater market.
Here is a table of the active reporting days in August since the 2nd with the weekend dates removed, since there is no sales reporting on those days. 

Days back # New listings Price Changes # Sold Absorption rate %
1 11 10 6 54.55
2 18 15 8 44.44
3 28 20 11 39.29
4 41 31 14 34.15
7 53 33 16 30.19
8 65 35 18 27.69
9 68 38 20 29.41
10 85 44 22 25.88
11 98 47 26 26.53
12 109 55 26 23.85
13 117 58 28 23.93
14 131 66 31 23.66
15 143 69 31 21.68
16 163 77 35 21.47
17 167 81 40 23.95
18 176 86 45 25.57
19 196 91 47 23.98
20 212 96 51 24.06

The "20" in "Days Back" refers to reporting days from August 26 and is inclusive of all of the activity since August 2.  What is interesting is that I have found that a significant number of sales do not get reported within the 5 day period immediately following "subject removal" when the deal goes "firm", as required under the Real Estate Board of Greater Vancouver's rules. It is likely that about 40% of more are reported late.  This means that the number of the more recent days would not likely be reported and the sales statistics would most likely be significantly under reported the fewer days back one looks.

The striking thing on the above table is how the absorption rate in the last column has actually increased significantly over the last 8 days from what looks to be the whole period's average of about 24%. And,  those more recent numbers are the ones most likely to be under reported!  I maintain that it is still too early to tell about the direction of the market.  Sellers may sit out as well waiting for busier times such that the absorption rates could hold above 24%.  It is said that above approximately 21% on the sales to active ratio, the market favours sellers as opposed to buyers. 

On the other hand, year over year, the following graphs would indicate a more cautious sentiment:

The sales in units already started slowing down compared to the same period last year.
In addition, inventory of single family home listings is also on the rise:
On a final note, one cannot look at our local market without thinking in relative terms. There isn't another market in the country that wouldn't want to look like the graph below, where days on market" until a sale is still below 20 days, and that, includes the due diligence period up to subject removal. So, let us not forget that we have become spoiled rotten in terms of real estate liquidity expectations. In fact, most appraisals will state right on page one: "The opinion as to valuation is conditional on the property being market for a reasonable period of between 3-6 months..... "