Richmond continues to see a decline in residential home sales with a 46.6% decrease in September 2022 in comparison to September 2021.
Home buyers today are exercising more caution in response to rising interest rates, inflation, and recession concerns. The Bank of Canada plans to increase interest rates by another 0.5-0.75% before the end of 2022. The Richmond HPI Benchmark Price for all property types is down -1.0% in August and -5.9% in the last 3 months.
Downward pressure on home prices usually occurs when the sales-to-active listing ratio dips below 12% (buyer's market), while home prices experience upward pressure when the ratio passes 20% (seller's market) over a sustained period of time.
Listings in Richmond are up by +20.0% for detached homes, +22.4% for townhouses and +26.6% for apartments in September compared to August 2022. In contrast sales in Richmond have decreased by -5.4% for detached homes, -12.5% for townhouses, and -5.7% for apartments.
The current real estate market has become very illiquid. There are huge discrepancies between what sellers are asking for and what buyers are willing to pay. With inflation sitting at 7% this month, it is unlikely that interest rates will come down before inflation reaches a more acceptable number.
As inventory continues to build, buyers will have more choices and control over the market. Sellers will slowly realize that they have to lower their asking prices if they want to remain competitive.