“August was another disappointment for many home sellers who were hopeful of selling their homes.
The real estate market in Richmond deteriorated further in August.The lack of buying activities and large number of listings continued to exert pressure on home sellers to cut their prices in order to sell their homes. There are many more homes listed at or below their city assessment values.
There are no signs of the market in Richmond getting better. With the onset of the seasonally slower months in the fall, it is unlikely the last 3 months of 2012 will bring any relief to home sellers who are desperate to sell.
For sellers who have to sell, the only way out is to cut prices… not just 5%, a much deeper cut of 10% to 15% is required.
A prolonged period of low sales, and declining home prices could take many years to play out. Declining home prices will erode seller confidence, resulting in more motivated home sellers to cut prices to sell before home prices drop further.
A real estate down cycle is already in motion, and just like from 1995 to 2001, the real estate market in Richmond will have a persistent high level or homes for sale, and few buyers willing or able to buy due to tighter lending rules.
Richmond detached homes over $1,000,000 are not seeing much buying interest. With total active listings of 721 and average sale around 26 homes the past 3 months, there are 26 months supply of homes. For detached homes over $1,500,000, there are currently 366 homes for sale. With an average past 3 months sale of 12 homes, this translates into 30 months supply of homes.
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