West Richmond detached homes sale in June and July 2008 at 115 and 92 units respectively were down significantly from the average sales of 150 units for 2007.
Homes prices dropped 4% compared with the previous month. High inventory combined with dropping sales will exert pressure on home prices until the supply and demand for housing is in balance.
New Home Sale Activities
For builders who purchased older homes as building lots at peak prices of $750,000 or more, they need to build and sell the new homes at prives over $1,500,000 or more to stay in business.
According to Richmond MLXchange sales data, only 11 million dollar new homes under 2 years old were sold in July. With supply of 250 homes in Richmond priced over a million dollar, the market has 22 months supply. With the housing market slowing down, home builders will be under pressure to drop their selling prices.
Will Richmond Housing Repeat What Happened in 1993?
When compared with the housing peak in 1993/1994, the stake this time is much higher. The average selling price then for new homes in prime Richmond locations were just around $850,000.
The selling prices for these new homes dropped to $685,000 level. The market languished for almost 8 years before recovering to the $850,000 level in 2002.
New home prices now are double the previous 1993 peak. The are a fairly large number of million dollar homes for sale in Richmond currently. The next few months sales will provide a clearer picture as how the market will adjust to the slower sales for million dollar homes in Richmond.
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