Richmond Real Estate Pricing Trend
The most common question asked by home buyers on the value of a home is the relationship between current market price and the city assessment value of a property.
The market value of a detached home is affected greatly by the location, home condition, and improvements done to the house. Homes that are more desirable will command higher selling prices. The city assessment value being an aggregrate valuation of similar homes in the neighborhood, will not reflect the dsirability of a home to a buyer.
What can the city assessment value tells us?
The city assessment value being a previous year's value is a lagging indicator. City assessment value tends to be lower than the market value in a rising market. During the boom years from 2005 to 2007, the selling prices for most homes were found to be 12% to 15% above the city assessment values. Conversely, when home prices drop for a few months, the market values for homes sold may be lower than the city assessment values.
The following table helps to track the housing market values in relation to the assessment values.
Selection Criteria for comparison
The homes selected for this comparison were based on older homes located in West Richmond. The homes were over 25 years old and with lot sizes between 7,000 to 9,000 sq ft. These homes were sensitive to demand from home builders, and they helped to set the pricing trend based on builders' activities.
When home builders' were competing for building lots, they pushed up the selling prices for these homes. Up until April 2008, home builders were still actively buying up these older homes. These homes were torn down to be replaced by million dollar homes. Home prices for resale older homes peaked in the first quater of 2008.
| Quarter | No. Homes | Av. List Price | Av. Sold Price | Av. City Value | % Var. Sold vs List price |
% Var. Sold vs City value |
| Oct-Dec/07 | 24 | $689,100 | $680,100 | $638,400 | -1% | +7% |
| Jan-Mar/08 | 27 | 652,800 | 683,900 | 600,800 | +5% | +14% |
| Apr-Jun/08 | 14 | 691,100 | 687,700 | 609,400 | -2% | +13% |
| Jul-Sep/08 | 7 | 672,100 | 633,400 | 607,200 | -6% | +4% |
| *Oct-Dec/08 | 13 | 614,500 | 574,400 | 614,500 | -7% | -7% |
Sample Size Limitations
The small number of sales registered for Jul-Sep/2008 could have skewed the comparison between market value and city assessment value. The average selling price showed a drop of around 8% compared with the previous 3 qaurters.
Market Value Vs City Assessment Value
The average city assessment value for Oct-Dec/07 was skewed by more higher valued homes being sold during the period. The average home selling price for the the first and second quarter of 2008 were 14% to 13% higher than the city assessment value.
From March 2008 onwards, declining sales and widespread price reductions had resulted in the average selling price for these homes in the Jul-Sep/08 quarter averaging just 4% higher than the city assessment value. With housing trend continuing its decline, home prices are expected to slide lower. It is likely that many homes will be sold below city assessment values.
We will continue to monitor and report on the pricing trend each quarter.
Current real estate news for metro Vancouver and Fraser Valley can be viewed here.
* Updated on February 13/2009 - homes sold at 7% below city assessment value by the 4th quarter of 2008.
Very interesting layed out that way - its hard to argue with those stats and unfortunately its an in your face reality......great job!
Maybe one day you can give me tips on how to do it for my area! :-)