Richmond Condo News

A Statistics Canada survey shows real estate investing has been on the upswing over the past six years. The federal agency's Survey of Financial Security found the dollar value of real estate holdings, not including principal residences, rose 80.5% from 1999 to 2005. The market has been good, so there are a lot of people buying second homes now. These second homes include investment properties for rental and recreational properties.

A decade of capital appreciation in the residential market has convinced many middle-aged consumers to make real estate investing not just about the home they are living in, but about a second property. Some housing experts have suggested as much as 25% of the condominiums in Toronto and Vancouver are owned by investors. Many older couples are refinancing the mortgage on their principal residences for the investment in second revenue properties.

Some are found to buy recreational properties that they can use for short few weeks period, and professionally managed in a rental pool for the rest of the year. Financing second properties by the banks can be difficult. But if you have plenty of equity in your main residence, it is easy to use that cash for second property investment.

If you like to find out more information on second property investment, kindly contact James Wong at 604-721-4817. 

Should a home buyer seeks a Realtor Buyer Agent to represent him?

When a home buyer has a realtor as his Buyer Agent representing him in the negotiation of an agreement of purchase and sale, he has the full fudiciary and legal duty of the realtor. The buyer’s realtor is looking out for the best interests of the buyer, and he is not legally obligated to the seller in any way.

The level of service a Buyer Agent provides to a home buyer can be from the basic negotiation for the purchase of a home. Or, it could be a full start-to-finish service in searching, showing, negotiating and arranging home financing for a home buyer. Ultimately, it’s how much time and efforts that a Buyer Agent has to spend in his engagement in helping a home buyer. The cost of engaging a Buyer Agent should be clearly understood by a home buyer and his Buyer Agent.

Service level expectation

If you have already done your homework and know what you want to buy, we’ll help you to identify the property, negotiate the price and assist you in closing the deal. In a situation like this, you should be able to benefit by negotiating for a re-reimbursement of some costs incurred by you in buying your home.

If you like to find out more information on Buyer Agent representation in Vancouver and Richmond, kindly contact James Wong 604-721-4817. 

Unsustainable Pricing Trend

Home prices in Vancouver is not sustainable at the present level. The market has been sustained these past few years by home buyers sentiment and expectation of higher prices, and new home buyers' fear of not buying their homes before they are out of reach. The 40 year mortgage introduced 2 years ago enable more home buyers getting into the market and helps to fuel the market.

 For investors, they are hoping the capital appreciation in home values will off-set their monthly costs/losses to support their mortgage payments. If this expectation of profit is absence, there is little inventive for investors and speculators to stay invested in real estate.

Lack of Affordability

Affordability of home ownership is now out of reach for most home owners. The numbers of qualified home buyers are diminishing with ever higher home prices. For many people, renting is cheaper than home ownership. For example, an older 2 bedroom apartment costing $280,000 to purchase, can be rented at around $1,100 to $1,100. By owing the aparrtment, a home owner's cost with 10% down payment will require the payment of $1,500 (at 5.25% interest and 25 years amortization) of montly mortgage payment, plus $250 to $300 a month for strata management fee and property tax payments. 

How Much Over-priced?

Some people may not agree that home prices in Vancouver are over-priced. By plotting the trend lines for detached houses, townhouses and condo/apartments, current price levels are 30% to 35% above the trend lines. It would not take much of a push to turn the market.

It's a matter of consumer psychology and market sentiment - the market can turn bearish when home buyers decide to hold off their buying decisions, and home owners wanting to sell before home prices falling lower.

Greater Vancouver housing report for August, 2007

According to the Greater Vancouver Real Estate Board's August 2007 report on house prices and sale activities, the demand for housing continue to be positive. The average sale prices for apartments, townhouses and detached homes are:

Apartments: $367,944
Townhouses: $446,577
Detach homes: $726,067

With the average Greater Vancouver household income at $63,300, home buyers are squeezed out of the home ownership market. Or, they are forced to buy the most affordable apartments as shelters for their families.

There is a market disconnect with "affordability" and "average prices" in other major Canadian Cities. If you take a look at the various charts as presented by Brian Ripley here, you'll find that Vancouver home owners are bearing a much heavier cost in home ownership.

Unaffordable Housing in Greater Vancouver

The Vancouver average detached homes costs twice as much as that in Calgary and Edmonton and Toronto detached home prices are only around 40% of that in Vancouver. Ottawa and Montreal prices are at about one-third the price in Vancouver, have the most affordable detached homes in the country. In Richmond, house prices are out of reach by the average family.

For years Greater Vancouver home prices are the highest in Canada. The high prices for home in Greater Vancouver area are mainly due to lack of land parcels for housing developments. The constraint on land supply for housing is one of the most critical factor affecting home prices.

Restrictive Land Policy  

The conservation of agriculture lands for farming as mandated by BC's Agriculture Land Reserve Board is in conflict with urban land use and housing priority for its population. The high cost of housing is a economically detrimental to the long term growth of the province. Urban town planners are urging for better utilization of land resources. Farming for agriculture lands bordering the city centers is not the best and highest use of these land parcels.

Richmond real estate sale commission

Are real estate commissions too high? There are a number of reasons why real estate commission are perceived to be high by home sellers. This perception becomes more prevailing when homes are sold within days of being listed on the market. Realtors are seen to be making easy money with relatively little efforts. But, in a slow market, the question seems to disappear.

The biggest cost to a Realtor is advertising in various local real estate newspapers. Realtors routinely spend many hours working with home buyers or sellers that turn out to be wasted.

The commission structure compensate Realtors for the costs of marketing the homes listed by them. Not all homes can be sold, and many homes costs the Realtors advertising money and time. So, for houses that did not sell, Realtors are absorbing the advertising costs against commissions made on homes they successfully sold.

Sale commission structure

The Richmond real estate sale commission structures used by most Richmond Realtors are based on 7% on the 1st $100,000 and 2.5% on the balance of the sale price. The current MLS system and commission structure provides the buyer agent to share a portion of the commission with the listing agent.

Home sellers are free to neogotiate with their Realtors  the real estate commission payable to sell their homes. In the case as in Vancouver Island, 6% on the 1st $100,000 and 3% on the balance of the sale price. On a $600,000 home, the normal real estate commission in Greater Vancouver works out to be $19,500 plus $1,170 GST.

There is no fixed commission fee structure for home sellers to have their homes listed for sale. And, Realtors are free to set their own commission they deemed appropriate. If under certain circumstances, where home buyers are to pay a recommission to their Buyer Agents, disclosure and signing of a "Fee Agreement" is required to be signed. 

If you are looking for current real estate information, you can view homes for sale, or follow the monthly housing market report for Richmond here.