Richmond's Million Dollar Homes

The reason why large-size lots are popular is because new homes built on these lots are in demand and they are selling for $1.35 to $2.00 million dollars. There are profit to be made by new home  builders who are building spec homes for sale. You can view the million dollar Richmond homes here.

The profit margin for purchase-and-build is normally at 20% to 25%. But, for builders who are building on properties they bought 1 to 3 years ago, they can make a lot more money building and selling these new homes. The property appreciation already assured the home builders getting as much as $250,000 (a large-lot property sold 3 years ago at just over $400,000 is now priced at around $650,000 to $700,000).

These houses are built to the maximum allowable size by the local municipality zoning by-laws. Generally, such houses are spacious with over 3,500 sq ft living area, well-designed and luxuriously built with premium quality materials and fixtures. New immigrants and successful rich business owners from overseas have the money and appetite for multi-million dollar homes in Richmond. Compared with buyers who desire to own their super-luxurious homes in Vancouver Westside and prestigious West Vancouver, they may have to spend $5.0 to $10.0 million for theiir homes .

Appreciation Potential

Over the long term, properties in Richmond with large lots are expected to remain the most desirable for home owners and investors. Over the long term, the scarcity of such properties will reinforce the demand and price appreciation of these properties. Click here for the latest news on Richmond's real estate market.

If you are looking for older detached houses on large lots for long term investment, call James Wong at 604-721-4817. Or, click on this link to send James an email.  

An article by Peter Schiff of Euro Pacific Capital submitted to Financial Sense Online on December 28, 2007 highlighted the financial problems faced by US consumers.

"Beneath the surface lies not only a sea of tenuous loans to prime borrowers, but also an assortment of other liabilities backed by auto loans and credit card debit.  For years standard practice allowed millions of car buyers to trade in old cars (that were worth less then outstanding loans), and roll the balances into new low interest rate loans for new cars. The same phenomena also occurred with credit cards. 

For years, low short-term interest rates and low defaults encouraged banks to aggressively seek new customers.  By turning higher interest rate, non-tax-deductible consumer debt into lower rate, tax deductible mortgage debt, consumers were able to temporarily manage their debts.  Plus with their credit cards paid off, card holders were not only free to run their balances back up again, but their improved credit scores resulted in even more credit card offers.

Because defaults were low, bonds backed by auto loans and credit card debt were rated AAA, allowing Wall Street to easily package the debt for investors.   Lenders, burned by subprime losses are cutting back.  The home equity ATM has been shutdown and credit card and auto loan delinquencies are already at record highs.  Auto lenders will no longer allow potential buyers to roll their negative auto equity into new loans.

As delinquencies continue to rise rating agencies will downgrade bonds backed by auto loans and credit card debt, inflicting subprime type losses on a much wider scale". 

Click here to read the full article...

Can Ben BEN BERNEKE and the central banks fix the US housing crisis?   

An article posted by Calculated Risk

on December 28 pointed to the possible loss of

$1 Trillion in Mortgage Losses?

and the real possibility of Americans 'walk' from loans as reported by Australia theage.com.

In another news segment, well respected Yale Professor Robert Schiller discussed with Blomberg that the decline in the US housing market could take years to bottom out.

Shiller: “It’s Not Implausible that Prices Wont Bottom Out for Another 5 Years”

Professor Robert Shiller joins Bloomberg to discuss the latest results of the S&P/Case-Shiller home price indices. Shiller suggests that the boom is clearly unraveling with broad based price declines and the seizing up of the credit markets. Shiller goes on to state that “it’s not implausible that prices wont bottom out for another five years.

Originally aired on: 12/26/2007 on Bloomberg

Running Time: 6 minutes 23 seconds

BC Real Estate Market for 2008

Unabated consumer spending for 2007 has been fueling the US economy inspite of the problems faced by the US housing market and liquidity crunch experienced by the credit and financial markets. If consumer confidence further deteriorates, the decline in house prices could accelerate causing sharper drop in home prices.

As the U.S. economy decelerates, pummeled by the aftershocks of the worldwide financial crisis, consumers have been hit from every direction: Unemployment has spiked, and will continue to rise, economy unwinds and continues to work through the aftershocks of the global credit crisis, consumers have been beset on all sides. Unemployment is up, home prices are down, and credit is hard to come by.

Nouriel Roubini: I fear the worst is yet to come

You are welcome to post your thoughts on how the slow down in the US economy will affect the real estate market, and what we can do to position ourselves as Realtors, Mortgage Brokers, Appraisers, etc.

Richmond Real Estate Report

Although there was a drop in the median price for detached houses for November 2007, the year-over-year price was still higher. The number of listings over 90 days month-over-month is the key monthly figure to follow. This is one of the indicators to watch for any sign of market pressure on prices. So far, Richmond’s housing activities on listings and sales ratio remain healthy.

Here are the November median sale prices as reported by the Real Estate Board of Greater Vancouver:

The chart below showed the monthly total active listings, monthly listed and sold detached houses for Richmond, B.C. for the 12 preceding months.

Source: RealtyLink Online

Click here for the listing and sale activities for Richmond's townhouses and condos for the 12 preceding months.

The only sector showing an increase in the listings and sales ratio was in the condo market. The active listings and sales ratio for condo in Richmond was showing a small increase for November. The next few months activities will give a better indication whether the condo market in Richmond is reaching the market top for this housing market cycle.

How easing regulations will affect Canada's real estate? The Competition Bureau of Canada on 2007-12-12 released its report on "self-regulated professions on balancing competition and regulation"

Despite comprising a significant part of the service economy in Canada, perhaps as much as one fifth, the professions comprise one of the overall economy's least productive sectors.

According to the Conference Board of Canada , professional services rate in the bottom quintile for productivity per hours worked. In addition, labour productivity in the professions in Canada is approximately half that of the professions in the United States.

At the same time, the professions are one of the most regulated sectors of the Canadian economy, and the regulation in place in the professions is more restrictive in Canada than in many member nations of the Organization for Economic Co-operation and Development

So far the Canadian Real Estate Association (CREA) has not issued a formal response to the Competition Bureau's recommendations. The Bureau says it plans to do another review of all the professionals studied in two years, to see if its recommendations have been implemented.

Market exuberant, huge supply of liquidity and loose or no control on lending standards were what get us into the present housing recession. Real estate supply, demand and price are severely out of whack and can only be fixed by a significant decline in prices.

The housing market will eventually reach a bottom and a healthier housing market will emerge. The question is how long this will take. From financial reports and predictions by housing experts, the market for 2008 will continue it's decline from 2007.

IRWIN KELLNER wrote on MarketWatch from DOWJONES:

"Today, median home prices are 3.5 times the size of median annual family incomes. This may be down from the recent peak of 4.2 times incomes reached last year, but it's way above the 2.8 times that home prices averaged during 1984-2000, when lots of homes were bought, sold and built".

The following housing market report was filed by Bob Willis and reported by Bloombarg.com:

Purchases fell to an annual pace of 718,000 from 728,000 in October, according to the median forecast of economists surveyed by Bloomberg News. The 716,000 pace reached in September was the lowest since 1996.

The real-estate slump, already the deepest in 16 years, shows no sign of abating as discounts fail to lure buyers and inventories swell. The risk that the slowdown will spread through the entire economy is prompting business to rein in orders for new equipment, a separate report may also show.

``We're not in line for any good news on housing for a long period of time,'' said Mike Schenk, chief economist at the Credit Union National Association, in Madison, Wisconsin. ``It's a sector that will take a long time to turn around.''

Click her to read the full article...

The real estate market for North America will be hugely impacted by what's going to happen to the world financial system. The quality and financial health of financial institutions around the world are affected by the very serious liquidity problem faced by the world financial markets. The following article published by Christopher Laid in Financial Sense Online highlights the danger we faced.

MARKETS IN DENIAL

The ECB just lent out an astounding half $Trillion worth of money to 390 banks in only one day this week. It was to combat the lending freeze in Europe where banks are refusing to lend to each other over concerns about the mortgage losses this year. The demand was so high it caused alarm.

The question that comes to mind is, ‘Hey, we have a first class financial emergency here, when are the stock markets going to react accordingly?’

Consider this comment:

“Commentators joke about banks and financial institutions "going to the confessional," meaning that they admit that a percentage of their assets are mortgage-backed securities that are now near-worthless.

The fact is that very few institutions have gone to the confessional. Probably 99.9% of even the world's financial institutions are hiding vast amounts of near-worthless securities, and that doesn't even touch upon investments by non-financial companies (such as investment pools in state and local governments like those in Florida and Montana.”… Link

Click her to read the full article...

Richmond Rapid Transit System : Positive impact on Richmond real estate value

Richmond Rapid Transit system is a major infra-structure public work connecting Richmond to downtown Vancouver and other parts of metro Vancouver serviced by the BC's Light Rapid Transit (ALR) system which is popularly called The Skytrain System. City planners and economists are in agreement in attributing the economic benefits of efficient public transport system in stimulating economic growth. The sector that benefits the most is the local real estate owners, developers and Richmond City Council.

With the current housing boom, home buyers are snatching up Richmond new condos in anticipation of strong run up in housing prices when the city is linked to Vancouver City center by the rapid transit system.

The rapid development of the City's downtown core since the 1990s, and the current construction of Rapid Transit Skytrain will further enhance the rapid growth of Richmond. The Olympic Speed Skating Oval to be completed before the 2010 Olympic Winter Games, will showcase to the world Richmond's attraction as a livable, friendly and modern city.

There are many new condos available for sale to the public. If you are looking for a Richmond Realtor to assist you with your home buying or selling needs, call me directly at 604-721-4817 or email me.