Richmond Condo News

Richmond Regency Park Towers - 6611, 6631, 6651 Minoru Blvd, Richmond

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Fri, 29 Aug 2008 23:32:08 -0400

Richmond Regency Park was Richmond's premier concrete 17 storey high-rise project that was built more than 30 years ago. For many years. the 3 high-rise towers were one of the most outstanding land-marks in Richmond city Center. Residents on the higher floors at Regency Park Towers can enjoy sweeping views of Richmond and the snow-capped mountains of Northshore and Mt. Bakers.

In spite of its age, Richmond Regency Park is still a favourite residence for many of its residents.

Prime Richmond City Center Location

Richmond Regency Park towers are located in Richmond City Centre, and to the east of Richmond Centre Shopping Mall. The high-rise towers are within walking distance to Minoru Park, Richmond main library, Minoru Community Centre, Richmond Aquatic Center, Ice Skating Arena and Richmond Center Mall.

Over the past few years, many more high-rise condos like Acqua, Ocean Walk, Lotus Living, Versante' Hampton Park, etc were built in and around Richmond City Center. Richmond Regency Park Towers compared very favourably on location, amenities and being next to scenic Minoru Park. Richmond Regency Park condos are affordable alternative residences for home owners who prefer living in the City Centre of Richmond.

The convenience of Richmond Centre Shopping Mall, the soon to be completed Skytrain transit system, public amenities, etc enhance the attractiveness of having a residence at Richmond Regency Park Towers.

Price History

The appearance of Regency Park Towers may not be as appealing as compared to the new condos. But, compared with the newer condos around Richmond's City Center, the selling price per sq ft at Richmond Park Towers at just around $300 per sq ft is un-beatable. The following table summarized the condo prices from 2005 to present:

Condo Type Size sq ft 2005 2006 2007 2008 2009 2010 1 Bedroom 626 to 879 $138K/176K $145K/200K $194K/238K $210K/232K $166k/249k $258k 1 Bedroom + den 805 to 895 $170K/180K $195K/209K $220K/245K $290K $215k/261k $261k 2 Bedroom 1,043 to 1,256 $210K/275K $223K/256K $265K/365K $298K/345K $248k/348k $305k/359k 2L Bedroom 1,463 to 1,623 $280K $325K $322K/360K No Sale $310k/$348k NA 3 Bedroom 1,570 No Sale no Sale $368K/375K No Sale $282k/393k NA

The Regency Park towers cost around $300 per sq ft, and this compared favourably with current new condos' prices around $450 to $500 per sq ft. A smart home buyer who desires a more comtemporary home can spend a moderate sum of money to remodel and up-date his/her condo. Some buyers will pay a higher price for units that are on higher floors that have panoraic view of the Minoru Park and the snow-capped mountains.

If you like to have more information on the condos available for sale at Richmond Regency Park, kindly email me.

Home buyer package for Richmond Riverfront condos

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Tue, 04 May 2010 22:39:41 -0400

A spectacular Richmond waterfront location – Riverport condos for sale

The Waterstone Pier condos at Riverport, Richmond are mere meters away from the Fraser River! The 3 buildings were designed to allow for optimum balance of space inside and maximum exterior views of the large landscaped courtyard spaces.

Some of these Richmond condos have spectacular views of the the river and Mt. Baker view. A public waterfront walkway at Waterston Pier is integrated into Richmond’s public trail system. View condos listed for sale at Waterstone Pier – 14100 Riverport, 14200 and 14300 Riverport Way, Richmond.

Waterstone Pier at Riverport is a little resort oasis on the water, with a high level of quality and a nautical feel. Waterstone Pier residency is a unique water-front life-style, and once home, you don’t have to go out again for rest and relaxation. A river walk and the Riverport Sports and Entertainment Complex are just steps away from your new home.

Buyer Package for Waterstone Pier condos

A “Buyer Package” valued up to $750 is available to home buyers who purchase a condo at Waterstone Pier through James Wong or Jameswong’s Home Team. There are many unique features for this Richmond Riverfront condo development.

View condos listed for sale at Waterstone Pier – 14100 Riverport, 14200 and 14300 Riverport Way, Richmond.

Kindly contact me if you like to set up and appointment to view some of these beautiful homes listed for sale.

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Richmond Mandalay Condo

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Tue, 12 Aug 2008 01:23:10 -0400

About Richmond Mandalay Condos

Mandalay is a mid-rise concrete multi-family project built by Cressey Development in Richmond. The Mandalay project is consisted of two five-story concrete low-rise buildings consisting of 232 luxury residences. The condo units are designed to offer a variety of floor plans finished with modern and contemporary designs.

The centerpiece for Mandalay's luxurious condos is the 6,600 sq ft clubhouse which house an indoor pool, swirlpool, fitness studio with gym, steam room, games room and furnished terrace.

The mid-rise architectural design for Mandalay allows for extension of interior floor space to the exterior through incorporation of the balcony space for each condo unit. Mandalay condos are considered the most prestigious and luxurious in Richmond. Hence, the cost per sq ft for the Mandalay condos is higher than any other new condos in Richmond.

The Floor Plan

Mandalay offers a variety of internal floor plans. The one bedroom condos are consisted of 576, 650 and 678 sq ft interior living area. The one bedroom + den floor plan has 732 sq ft interior living space, while the two bedroom floor plans are consisted of very functional 961 and 999 sq ft interior spaces. The penthouse units are mostly 2 bedroom condos ranging in size from 920 sq ft to 1,067 sq ft. Most are designed with extention of the interior to exterior with extra large balconies.

View homes for sale at Mandalay - 9371 Hemlock Drive and 9373 Hemlock Drive.

Garden City Park

Mandalay condos are just steps away from the 21 acres beautiful Garden City Park to the south. The park is designed with a man-made lake with all weathered trails for recreational activities, like jogging, rollerblading, etc. This is a favourite park for kids and families around the surrounding neighborhoods.

Together with Hampton Park - a previous Cressey development at Mclennan North sub-division, Mandalay Development set a new standard for planned residential development in Richmond.

This well-planned neighborhood with parks, schools and Richmond City amenities close by is one of the most important selling features for Mandalay condos.

Mandalay Condos Available For Sale

9371 Hemlock Drive and 9373 Hemlock Drive.

If you like to have more information, or interested to view any of the above condos, kindly contact me at 604-721-4817 or email me.

Making sense of home prices in Vancouver

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sun, 11 Apr 2010 20:54:28 -0400

Home prices in Vancouver earned the distinction of being amongst the highest in the world. I come across some interesting information comparing the Global & Canadian supply of money, crude oil and real estate prices.

Canadian real estate prices and money supply

Real estate prices in Vancouver when compared to the supply of money in Canada and the world, showed a direct relationship in growth over the past 20 years. Similarly, the gain in crude oil prices appeared to follow the growth in the global supply of money.

The following table summarizes the prices for real estate, oil and the supply of money as recorded for January of 1990, 2000 and 2010 - for a period of 20 years.

Time Period Jan/1990 Jan/2000 Inc. 1st 10 Yr Jan/2010 Inc. 2nd 10 Yr Inc. 20 Yr Van SFH $300K $380K 27% $950K 150% 216% Van Thse $190K $220K 16% $355K 61% 87% Crude Oil/barrel $20 $27 35% $68 152% 240% Cdn $ Supply $18 Billion $33 Billion 83% $55 Billion 67% 205% Global $ Supply $17 Trillion $26 Trillion 52% $64 Trillion 146% 276%

First 10 years - 1990 to 2000

During the above period, home prices for single family homes and townhomes in Greater Vancouver made moderate gains of 27% and 16% respectvely. The increase in crude oil price and the supply of money were 2 to 3 times higher.

The gain in home prices from 1990 to 1994 was reversed after 1995 when some Chinese homw owners sold their homes and capitals back to Hongkong and Taiwan. The collapse in real estate prices was partly due to the exodus of capitals from Vancouver when the political situation in Hongkong stabalized.

Second 10 years period - 2000 to 2010

As you can see from the table above, the gain in Vancouver single family home prices followed the global supply of money closely. Although the Canadian money supply was increasing at half the rate of global money supply, some of the global money could have been recycled and ended in Canadian.

This may be the case as during this period China was growing at a rapid pace, and home prices continued to gain in values. Real estate prices all over the world, especially the developed countries, all experienced double digit gains.

New money and old money

The rapid rise in home prices, easy money policy from CMHC and low interest rates all helped to fuel the real estate boom in Canada. Liberal lending by Canadian banks through “home equity lines of credit” to home owners added fuel to the housing market.

Home owners who could tapped into their home equities through their LOC started to invest their money on 2nd, 3rd or even 4th homes. With rapidly increasing values, real estate proved to be a sure winner to the public.

Will real estate prices collapse?

This may not look likely if the gain in real estate prices has a direct relationship with the supply of money globally.

As can be seen above, real estate prices have a positive co-relation with the supply of money. Similarly, crude oil prices appeared to be affected to the same extend by the increase in global supply of money around the world. Money from China has a strong influence on Canadian real estate prices, and for many years the flow of money from China has not slowed down. This is not expected to slow down in the near future.

Home owners had enjoyed the price ride in the past. The factors affecting home prices are complex. If money supply is an important component in the whole scheme of thing, we may not see real estate prices coming down anytime soon.

Is This The Right Time To Buy A Downtown Vancouver Condo?

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Tue, 30 Sep 2008 15:51:20 -0400

Condo buyers are faced with the question whether this is the right time to buy a downtown Vancouver condo. What is certain is that prices have definitely come down. While selling prices are expected to continue to decline, it is difficult to know when will condo prices hit the bottom. If you feel comfortable buying, you can then commit yourself to look for the condo you like.

Up until the spring of 2008, the demand for Vancouver condos remained strong. Condos in downtown Vancouver continued making price gains through 2007 and the first 3 months of 2008. Real estate market ran out of steam and sales took a dive in April, 2008. Within a year condo prices dropped around 18%, and condos sale was down as much as 40% compared to the previous year.

Should You Buy Now?

For many buyers, the attraction in of Downtown Vancouver is the proximity to all the interesting events and activities only Vancouver City can offer. If you work in Vancouver City, this may be your chance to get into the market as you can buy your condo at a reasonable price now.

Why Commute When You Can Live In Downtown Vancouver?

Commuting from Richmond or Burnaby to downtown Vancouver will take over 30 minutes daily - Monday to Friday. The time spent commuting, or if you own your car... the cost of gas, maintenance, parking and financing add up quickly. You can ditch owning a car when you work and live in Downtown Vancouver. Click here to view homes for sale in Downtown Vancouver.

Although Burnaby and Richmond are good alternatives for most condo owners, why go for the second best if you can afford the best. You do have the option now with so many great buying opportunities around downtown Vancouver.

Higher Rental Rates In Downtown Vancouver

The attractiveness of Downtown Vancouver can be illustrated by comparing rental cost - rental in downtown for a new d1 bedroom is around $1600 to $1,900. For similar condos in Burnaby and Richmond, the rental is between $1,400 to $1,500. So for about the same price, you a getting a better deal buying in Vancouver City.

There are some very attractively priced resale new condos available for sale at Spectrum Towers, near to GM Place Stadium. Click here to read the story about the Spectrum project.

For more information on buying a 1 bedroom or 1 bedroom + den condo at Spectrum at prices from $295,000 to $350,000, kindly contact James Wong at 604-721-4817 or send me an email.

Vancouver Spectrum Condos - Yaletown, Vancouver

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Thu, 02 Oct 2008 22:02:28 -0400

Vancouver Spectrum Condos, Yaletown

Spectrum 1 - 111 West Georgia Street, 30 levels - 221 condos

Spectrum 2 - 668 Citadel Parade, 27 levels - 222 condos

Spectrum 3 - 131 Regiment Square, 26 levels - 211 condos

Spectrum 4 - 602 Citadel Parade, 32 levels - 245 condos

The last 2 of Spectrum Tower 3 & 4 of four towers were completed by the fall of 2007. The neighborhood came to live when Costco opened it's Downtown Vancouver store in 2006. Presale condo buyers were the lucky ones who recognized the incredible values Spectrum condos had to offer.

The presale condos were selling at $129,000 for the 483 sq ft studio units and up to $375,000 for the larger 958 sq ft 2 bedroom + den condos. Click here for price range for resale Spectrum condos over the past 12 months - up to September 30, 2008.

Condo owners and renters moved in by the fall of 2007. The resale prices for studios reached as high as $313,000 and the higest price 2 bedroom + den condos were selling close to $599,000. The great demand for Spectrum condos spurred condo buyers' interest on other developments around International Village/Tinseltown and Bosa's Brighton Towers at Citigate.

Transformation Of Downtown Vancouver

As part of Concord Pacific Group's Spectrum project, Costco bought the 127,000-square-foot store and successfully opened for business in 2006. Access to this new Costco Downtown Vancouver store is from Expo Boulevard. This new Costco warehouse store is a feat of engineering. The store is bordered by GM Place, the Georgia viaduct and the eastern end of Vancouver's downtown.

Concord Pacific has also incorporated an elevator and stairway that connect the store to the Stadium-Chinatown SkyTrain station above it. This Costco store has two floors of parking below it and two floors of parking above it. The four Spectrum Towers with with 900 condos perched above it.

This Costco store is a very valuable piece of real estate - Downtown Vancouver is one of the most densely populated areas in North America. "It is the most unique Costco in the world," said Robin Ross, Costco's regional marketing manager for Western Canada. An expanded deli selection of "home ready meals" catering to the shopping needs of singles, couples and young families living in Downtown Vancouver.

Click here to read the story : "Warehouse retail chain opens doors of its most urban outlet in North American to a horde"

Is this a good time to buy a condo in Downtown Vancouver? There answer depends on whether you feel comfortable to make the move. You can view Vancouver Downtown West condos for sale here.

If you like to have more information on some of the great buying opportunities at Spectrum towers, kindly call me at 604-721-4817 or email me.

Vancouver West - South Granville Homes

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sat, 13 Feb 2010 23:15:46 -0500

South Granville homes in Vancouver West are sought after by wealthy home buyers. South Granville is a prime Vancouver west side neighborhood and has easy access to other municipalities in metro Vancouver. Granville Street, Oak Street and Cambie Street provide easy commute to Richmond and downtown Vancouver.

The boundary for South Granville as generally used by the Real Estate Board of Greater Vancouver is south of 33rd Avenue, east of Oak Street, West of West Blvd and north of 57th Avenue.

Homes located in the adjacent areas like Shaughnessy, Kerrisdale, Oakridge, South Cambie and Marpole appeal to different home buyers. You can view homes for sale in other Vancouver Westside neighborhoods here.

South Granville neighborhood

South Granville neighborhood is charatherized with matured trees, and some of the most beautiful custome-built homes in Vancouver. Generally, the lot size for South Granville homes may range from the smaller 7,000 to over 18,000 sq ft.

Home prices in South Granville are one of the highest in Canada. Detached home prices here range from the low $1.00 to over $5.70 million. Click here to view homes listed for sale at South Granvile, Vancouver

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Vancouver has world's least affordable housing

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sat, 13 Feb 2010 20:54:20 -0500

Below is a CTV.ca nes report:

A new report says Vancouver has the world’s least affordable housing, and blames land-use policies designed to limit urban sprawl.

The Demographia International report released Monday looked at 272 metropolitan markets in Canada, the U.S., the U.K., Australia, New Zealand and Ireland and calls on governments to allow more housing to be built on the fringes of urban areas to help keep costs down.

The report also classified Toronto and Montreal as being severely unaffordable, and seriously unaffordable, respectively.

But Vancouver was deemed the most unaffordable market in the world last year when median housing sale values were compared to median household incomes.

Read the full story here.

Vancouver West Homes

Some of the most expensive homes in Canada are located in Vancouver West. Only the rich and wealthy can afford multi-million dollar homes in Shaughnessy, Point Grey, South Granville and other surrounding neighborhoods. You can view homes by price range using the links below:

Below $800,000

$800,000-$1,000,000

$1,000,000- $1,500,000

$1,500,000-$2,000,000

$2,000- $3,000,000

$3,000,000-$4,000,000

Over $5,000,000

Vancouver Real Estate - Buy or Sell?

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sun, 03 Jan 2010 13:29:20 -0500

Can one time the real estate market, and make money by following the monthly supply/demand for homes?

Real estate follows the basic economic principle that home prices are affected by market supply and demand. As can be seen from pricing trend and data here, home prices are inversly related to the changes in the supply/demand or list/sale ratios.

Following the pricing indicator

It is generally accepted that a ratio of 6 is neutral, or the market is considered to be in balance. There is no pricing pressure for home prices to move up or down. When supply exceeds demand, the supply/demand ratio rises above 6, resulting in home prices falling. The reverse happens when the ratio falls below 6, signifying stronger demand than supply, resulting in home prices going up.

Supply/demand ratio for Richmond

Home sales activities in Richmond contribute to the overall Greater Vancouver pricing trend as shown above. The list/sale ratio below showed a clear trend as whether home prices will move up or down.

Month

Total Active Listing Av. 3 Month Sales

List/Sale Ratio

FEB/08 1320 309 4.29 MAR 1545 359 4.30 APR 1830 423 4.33 MAY
2075 438 4.73 JUN
2335 411 5.68 JUL 2495 352 7.09 AUG 2430 270 9.00 SEP 2530 233 10.86 OCT 1540 196 12.96 NOV 2495 164 15.21 DEC 2080 126 16.51 JAN/09 1750 101 17.33 FEB 1820 139 13.09 MAR 1685 211 8.97 APR 1673 321 5.87 MAY 1550 421 3.68 JUN 1540 503 3.06 JUL 1416 570 2.48 AUG 1410 564 2.50 SEP 1435 560 2.56 OCT 1405 531 2.65 NOV 1273 518 2.46

You can see from the data that the supply/demand ratio tipped over in June and July of 2008. That's when home prices falled, and reached the bottom around Jan/2009 when the list/sale ratio was at it's highest at 17.33 months of inventory. The ratio falled quickly the subsequent months, and crossed the 6 month supply ratio by April, 2009. At this point, home prices turned and gained in values due to stronger demand.

The ratio tightened further to below 3 from June, 2009 and remained around the 2,5 months ratio until today. The 15% or so drop in home prices since May, 2008 to the bottom around February 2009, recovered just as quickly by November 2009.

Future market activities and pricing trend

The above is a simple housing price indicator to follow. There are many factors influecing the supply and demand for homes. There are many economists who are sounding the alarms that home prices in Greater Vacnouver are over-valued. If you are wondering whther it is time to buy or sell, you may want to follow the supply/demand ratio to guide you with your investment decision. You can be a month or 2 ahead of the crowd by taking action before the ratio turns above or below 6.

Click the link to view Vancouver and Richmond homes currently listed for sale.

Supply, demand, and a real estate rebound

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sat, 02 Jan 2010 14:27:34 -0500

Outlook for Greater Vancouver's real estate market for 2010 and beyond

Below is a quote by James Schouw, James Schouw & Associates, Published on January 02, 2010 in The Vancouver Sun:

"Greater Vancouver's real estate market will continue to be driven by the growing number of people that simply need homes. Speculation, the catalyst of a 'bubble', is largely absent from the market due to lingering fear from the lessons of 2008. A bubble will only materialize if overconfident developers and speculators manage to oversupply demand".

Read the full article here>.

A review on current home prices and the market fundamentals are telling us that home prices at current levels are economically unsustainable.

Housing market dynamics

The supply and demand for resale and new homes are driven by market confidence. Home prices rebound due to ultra-low interest rates, and limited supply of homes. A case in point for Richmond, B.C, showed that in November 2008, there were 2,495 homes listed as compared to just 1,275 homes listed for sale in November 2009. The supply of homes was down by half!

The market dynamics may change again when market confidence is affected by external events beyond the control of the market players. A repeat of the housing correction that happened in late 2007 may happen again when there is a loss in market confidence. When signs of a market turning south are apparent, more sellers will want to sell, accelerating the price decline.

Cheaper to rent than to own

Buyers can opt to rent than to buy when they find home ownership is not affordable. A jump in mortgage interest rates will swing buyers decision, and will result in many of them staying on the sideline. Home prices are too high at current levels, as renting make more sense to many prospective home buyers.

You can view Vancouver and Richmond homes currently listed for sale.

Greater Vancouver housing market outlook for 2010

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Thu, 24 Dec 2009 20:24:39 -0500

Can Greater Vancouver housing market go higher?

Market sustained by low interest rates

Longer amortization and low interest rates have a huge impact on home prices. With the introduction of mortgages with 35-year (from 25 years) amortization, home buyers are able to afford homes 16% higher in value. Coupled with interest rates drop from 5% range to around 3.55% for 3-year fixed rate now, home owners can afford homes 40% higher in values as compared to 10 years ago.

The above price chart for detached homes at $910,000 range shows a huge price gap between current average house value and home pricing trend line around $540,000. The above chart showed that average Greater Vancouver home price as of November/09 is 69% higher than the base-line price!

Danger of higher interest rates on home prices

If the mortgage rates are raised from current fixed 3-yr term around 3.55% to 5% or higher, home buyers will be constrained to buy homes at only around 80% of today's price. A loss of market confidence will trigger a collapse in home prices. Current rental return is generating negative cash-flow if an investor is buying a home for investment.

Rental returns as compared to home prices

From 2001 to end 2009, rental increase was in the range around 25% to 30%. On the other hand, home prices more than doubled and gained almost 135% in value. A big jump in interest rates from current 3.0% level to higher rates of 5% to 6%, will have a major impact on many home owners.

When renting is an option, home buyers may want to wait and see how the economy and interest rates play out in the next year or two.

Homes currently listed for sale in Vancouver and Richmond can be viewed here.

Richmond Real Estate - A Risky Investment

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Mon, 28 Dec 2009 22:18:38 -0500

Market confidence is the key

Market confidence is the driving force behind the high housing prices in Richmond and Greater Vancouver. The credit crunch of 2008 scared home buyers away from buying, resulting in home prices declining 15%. Rapid and successive cuts interest rates by the central Bank of Canada Canadian from early 2008 drove base-lending rate down from 4.25% to 0.25% by April 2009. Current rate stays at 0.25%. Low interest rates helped to boost demand for homes, and within a year home prices almost regained all the losses.

Month

Total Active Listing Av. 3 Month Sales

List/Sale Ratio

Facing the inevitable - higher interest rates

How long the current low interest rates environment can be maintained is anyone's guess? By 2006, home prices in Richmond already reached an over-heated level. Buyers who purchased their homes the past 3 years will not have a large cushion to buffer them from a large drop in home prices.

Outlook for the next few years

The current over-priced market will correct sooner or later. When market sentiment turns negative, demand from home buyers will collapse. When home prices are losing values, more sellers will want to sell their homes, increaasing the supply causing a rapid decline in home prices. As shown in my earlier post, there is a large price gap between current home prices, and the break-even price point for real estate as an investment.

Real estate as an investment

At current price level, the risk of capital loss due to declining home prices is extremely high. The return on investment for a rental property in Richmond and other Greater Vancouver cities is negative. Home prices will have to decline significantly before a reasonable return on investment can be expected.

Click the link to view Vancouver and Richmond homes currently listed for sale.

Making sense of Richmond's home prices

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sun, 27 Dec 2009 21:39:25 -0500

Why Richmond and Greater Vancouver home prices are so high?

The main driver for Richmond and Vancouver home prices reaching current level is ease of financing, The average family income in Greater Vancouver assuming to be around $65,000 can only afford a $325,000 mortgage (using 5% interest rate and 35-year amortization). It will appear that the average home owners can only afford to buy townhouses or condos as detached homes are out of reach.

Longer amortization and low interest rates

The availability of 35-year amortization and ultra-low interest rates allow an average home buyer to buy a home 40% higher in value, as compared to the market conditions some 10 years ago. Easy credit, financial innovation and low interest rates have now resulted in home prices reaching an un-sustainable level. See chart below.

While longer amortization and low interest rates may account for some 40% higher in home value, the average Greater Vancouver home price around $910,000 is around 69% higher than the base trend-line price around $540,000.

Market confidence

The price difference between $910,000 and $756,000 may be attributed to buyer confidence. This may contribute to lift the average home price above the trend line. Those home owners who entered the market prior to 2004, are well cushioned and can weather a price decline of 30% or more.

What happens if interest rate rises, and market confidence collapses?

When the market sentiment turns and confidence disappears, home sellers will swarm the market. The important ratio to watch is the supply/demand ratio or "months of inventory". A reversal in the current ratio around 2.5 months to 6 months supply or more, will put pressure on selling prices resulting in a decline in home prices.

Duration of price decline

Over the next few years, mortgage payment will go up due to higher interest rates, and rental rates may decline due to the increase in rental stock. Declining home prices and higher mortgage cost will result in more investors wanting to sell their rental properties. A more balance market will likely returned after a decline of 20% or more in home prices.

A home buyer should buy a home based on his or her own comfort level and ability to carry the mortgage commitment. Click the link to view Vancouver and Richmond homes currently listed for sale.

Richmond housing market analysis

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sat, 26 Dec 2009 19:45:38 -0500

Below is an analysis on Richmond housing market and an attempt to establish the value of a home in relation to it's economic return as an investment.

What's the real value of a Richmond home?

The real value of a home is when the rental income can cover the cost of mortgage payment, property tax, maintenance, etc. When a market analysis (using 5% interest rate and 35-year amortization) is done comparing home values and their returns on investment, home prices in Richmond are found to be unrealistically high as shown below:

Home value Market rent/mth Cost of investment* Return per month
Break even value @ 5%
Break even value @ 2.25% $250,000 $1,200 $1,523 -$323 $185,000 $270,000 $400,000 $1,600 $2,356 -$756 $250,000 $363,000 $630,000 $2,000 $3,469 -$1,469 $360,000 $521,000

*computed at 5% p.a interest rate and 35-yr amortization, plus property tax, maintenance, etc.

Cheaper to rent than to own

The above analysis shows that it is cheaper to rent than to own except at the lower price range around $250,000 and when the interest rate is at 2.25%. As shown above, at historical interest rates around 5%, it is cheaper to rent than to own.

Generally, renters may quit renting and decide to own their homes when the cost of ownership is not more than 30% above their rental payments. As shown above, renters may opt to continue renting, until home prices decline significantly.

Break-even return on investment

Home prices in Richmond (and metro Vancouver) are much too high and cannot be justified as shown on the break-even analysis above. The lofty home values can be attributed to buyers who are willing to accept low or negative returns, while making gains on capital appreciation. Home prices at current level in Greater Vancouver is not sustainable. As can be seen from the illustration above, rental returns are not able to sustain current home prices.

You can view the metro Vancouver housing price chart here. The correction in 1994 took 4 years to bottom out in 1998 and another 5 years to recover to the 1994 level .

Market confidence & low interest rates

The critical factors affecting home prices today are buyer confidence, low interest rates and low supply of homes. The market dynamics can shift over-night with a change in market sentiment if interest rates rise significantly. Current low interest rate environment is not expected to last long. Eventually, higher interest rates will result in the housing market making a correction. A balance market will come about when the rental return from the investment is more in-line with other investments.

When renting is an option, home buyers may want to wait and see how the economy and interest rates play out in the near future.

Click the link to view Vancouver and Richmond homes currently listed for sale.

Negotiating for a commission discount

James Wong Richmond Realtor (Sutton West Coast Realty, BC) — Sun, 20 Dec 2009 18:16:41 -0500

Real estate commission in B.C.

When a home owner decides to sell their home, they often agree to pay their chosen salesperson / real estate company a commission based on a percentage of the selling price of their home. The sale commission is specified in the Listing Agreement when a home is listed for sale by a home owner. In British Columbia, the commonly used commission structure is based on 7% on the first $100,000 and 2.5% on the balance of the selling price. Other real estate companies may used 6% for the first $100,000 and 3% for the balance of the sale price.

Home Price Commission Cost
As % Home Price $500,000 $17,000 3.4% $1,000,000 $29,500 2.95% $2,000,000 $54,500 2.725% $3,000,000 $77,500 2.583%

Sale commission is negotiable

While majority of the home sellers accept paying the above commission fee structures when selling their homes, some may choose to negotiate on listing and paying their homes at lower commission rates. There are discount or flat-fee brokers willing to provide full MLS and real estate marketing services comparable to the traditional real estate companies. As in any business transaction, a home seller should firmly establish the level of service they will be receiving and the fees they will be required to pay.

How much should a home seller pay?

If you are looking for a good Realtor who is prepared to negotiate with you for a fair commission to sell your home, you should check with your local network of Realtors. Find a Realtor who is willing to work as a "discount broker" and negotiate with you on the sale commission. Make sure you are satisfied with the terms of the service, and you are getting the full service at a discount.

You can use the links here to research homes for sale in Richmond and Vancouver.