Richmond Condo News

Average 2007 sales - 171 units/mth, Average 2006 sale -167 units/mth

The Richmond condo market is showing a slightly longer time period to sell from 4.03 months to 4.30 months. Condo listings in Richmond are now showing 22.8% probability of being sold. This market segment is expected to be the first sector experiencing pricing pressure if inventory continue to increase.

If you like to find out more information on the Richmond real estate market, you can contact James Wong 604-721-4817.

Richmond changing skyline

The construction of the Light Rapid Transit System or SkyTrain connecting Richmond to the Airport and downtown Vancouver will forever change the once sleepy farming Richmond community into a modern City.

The City of Richmond is promoting the developments of higher density and multi-family deelopments along the Skytrain route around the city core.There are many young couples and first time home buyers who prefer living in Condos and within waliking distance from public transits and Skytrain stations.

Richmond Is a Young And Growing City

Richmond is accessible and has a good public transit system connecting Richmond to other municipalities in Greater Vancouver. Richmond is expanding fast, with good employment opportunities for high-tech and well-paid positions. Microsoft's Richmond Centre is geared to employ over 700 computer engineers and software developers. There are great shopping malls, specialty stores and excellent restaurants catering to the taste of consumers.

Richmond has all the modern shopping amenities, public parks, super-markets and ethnic retail shops catering to any resident wanting to live in Richmond. Click here to read the recently released CMHC housing report for Greater Vancouver.

If you are looking for information on buying a resale new condo or presale condo "assignment sale", kindly contact me at 604-721-4817 or email me.

Canadians are cautiously optimistic that the real estate market in Canada may be insulated from the decline in house prices in the US. The table below summarized Richmond's 2006 and 2007 home sales as reported   by the Real Estate Board of Greater Vancouver: 

Housing analysts expect the 2008 Greater Vancouver housing market to remain positive, projecting price further gain of 5% to 8% for the year. Others are cautious that the US downturn will eventually spread to Canada.

Absorption Rate. The health of the Greater Vancouver housing market and the sale and pricing trend for Richmond can be best monitored by tracking the "absorption rate". This is a measure of the supply and demand for housing. It is expressed in months to sell all the units currently listed for sale on the MLS system. It helps both buyers and sellers understand what’s going on in the market.

When listings take a long time to sell, prices will drop. When there is not much supply, buyers are willing to pay more, prices will rise.

Taking the total active listings divide by the sale for the month (or average monthly sale), the absorption rate can be determined. According to generally accepted figure, 6 months supply is considered a balanced housing market. Over 6 months supply represents a buyer’s market, and under 6 a seller’s market.

You can click here to view Richmond's recent housing market activities and price trend for February, 2008.

The reason why some home owners favor variable mortgage is because of the lower interest rates available on variable or floating rate mortgage. As of April 12, 2008 a qualified home owner can get a floating mortgage at Prime less 0.50% to 0.75%. The discounted variable rate mortgage is between 4.50% to 4. 75%. This compared to the 5-year fixed rate mortgage at around 5.50% to 5.70% is about 1% lower.

Savings on interest payment

For a $300,000 mortgage amortized over 25 years, the monthly interest payment for a fixed rate mortgage works out to around $1,866 as compared to around $1,650 to $1,701. The saving on a variable term mortgage is quite obvious and translates into $165 to $216 a month or over $2,000 a year in interest payment saving.

The big Canadian Banks love their customers and home owners choosing variable term mortgage. They are more than willing to compete with the smaller “mortgage bankers” like FirstLine Mortgage, FirstNational, MCAP and others head-on and match their rates. Some banks even offer “open variable mortgage” at similar deep discounts below prime.

Beware of 2 mortgage traps!

What was seldom mentioned by the big Canadian Banks is the discount a home owner will get if and when they switch over to a fixed rate mortgage. There are 2 problems faced by all home owners who signed on a variable closed term mortgage with their banks.

Firstly trap - Most of them are locked in on a closed term mortgage that they can only get out by paying the 3 months interest penalty or interest rate differential. When home owners convert their variable term mortgage to a fixed term mortgage, they are at the mercy of their banks on the discounts they can get below the posted rates.

The catch here is that a homeowner may be under the term of the variable rate mortgage contract that the discount on converting to a fixed term mortgage may only be 1% off the posted rate mortgage. If a home owner is getting a 1% discount below the posted rate, he or she is effectively paying around 0.5% to 0.6% more when converting to a fixed rate mortgage. Assuming when interest rates spike up after 1 year, and a home owner lock-in on a fixed term with 1% discount, he or she is paying $125 more in interest a month for a total of $6,000 extra in interest cost.

Second trap - Home owners are required under the bank’s variable mortgage plan to switch to a fixed rate mortgage not less than 5 years from the time when their mortgages were booked with their banks. Most smaller mortgage bankers have a lock-in period of 3 years. As shorter term fixed rate mortgages are normally priced lower than longer 5-year mortgage, a home owner ends up with a higher mortgage rate when locking in on a fixed rate mortgage.

You have a choice

If may be able to avoid paying too much to the big Canadian Banks if you are fully informed and knowledgeable with your mortgage plan and the potential problems you may faced. But, most homeowners may end up paying a higher price getting a mortgage with their banks. Most consumers do not realize the convenience and attraction of retail services available from their banks are paid for by higher interest rates they pay.

Mortgage professionals in Canada are licensed to provide the advise and service of their profession. They can help home owners save money by avoiding some of the problems as high-lighted above.

If you like to have more information on getting a mortgage, you can contact me at 604-721-4817.

Sky-high house prices are making home ownership less affordable to cash-strapped home buyers. Some economists and housing analysts are arguing that longer amortization is bad for home owners.

The danger in stretching a 25-year mortgage to the 40 year CMHC mortgage is that it will hurt home buyers who in the first place cannot afford to buy their own homes. The program is a two-edged sword. Yes, the lower monthly mortgage payment enable home owners in buying their homes, but it will also likely become a huge financial burden to the home owners.

 A recent article in the Toronto Star highlighted the effect of longer term mortgage on the Canadian housing market:

There's a revolution going on in Canada's housing market, one that is propping up prices and extending the boom.

More buyers are choosing mortgages with longer payback periods.

By stretching payments over 30 to 40 years (instead of the usual 25), they can enter the market sooner or buy a better property.

Mortgages with longer amortizations have caught on like a house on fire (pardon the pun).

"About 60 per cent of first-time buyers are opting for a 40-year mortgage," says Craig Alexander, deputy chief economist at TD Bank.

Click here to read the full report.

While Canadian Prime Rate is expected to be reduced this coming April 22, 2008 interest rate-setting meeting by Bank of Canada, RBC’s recent forecast on 5-year bond rates is projected to move up the next few quarters.

Canadian home buyers will likely have another year of low interest before rates are expected to move up. The US housing market and subprime woes will take a while to stabilized. A projected slow down in the US economy or a recession will have an impact on the Canadian economy.

More Balanced Market for 2008 

So far, the housing markets in Calgary, Edmonton and the Fraser Valley area of British Columbia have excessive housing inventories. A slower market in these areas may be sign that the housing market in Canada is loosing its momentum.

In view of the relatively strong economy, low interest rates and healthy demand for housing, housing experts are positive that price gain will continue. Price gain will be at a slower pace and the market will be more balanced for 2008. For home owners who are planning to get a variable mortgage, look for a bank that can assure you the "best fixed rate when you convert" from variable to fixed term.

#86 6880 Lucas Rd, Richmond Just Sold!

View here for similar Richmond townhouses available for sale.

General description:

This townhouse complex is around 30 years old. There are in total 101 units consisted of 2-level 3 bedroom homes ranging in built-up area between 1,400 to 1,605 square feet living area. The townhouse units have different floor plans; most units are with 1 full bath and 2 half-bath, while some larger 3 bedroom units may have 2 full baths and 1 half-bath. The parking arrangement is one covered front car porch and there are extra open parkings available in the complex. The property tax for 2007 is from around $1,667 to $1,809 and the monthly maintenance is from $216 to $244 a month.

This townhouse complex is located in the very desirable Woodwards area of Richmond. The amenities include a recreation center, outdoor pool, sauna and steam room.

Location:

Access to these 2 townhouse complexes are from Gilbert Road and Francis Road. Both elementary and secondary schools are within a short walk from this strata complex. The townhouses are close to the Minuro Tracks and Park, Aquatic Centre, Ice Skating Ring, the Richmond main library and Richmond Centre Shopping Mall.

Price history: 2005 - $260,000/$285,000, 2006 - $320,000/$345,000 and 2007 - $355,000/$380,000. Recent sales of comparable townhouses were priced in the $400,000 to $445,000 range.

Contact James Wong 604-721-4817 for more information.

More Richmond townhouses in this neighborhood can be viewed here.