Rising interest rates and buyer fatigue are some of the reasons.
As sales decrease for detached homes in Richmond, their prices are starting to follow suit.
According to data compiled by HouseSigma, average sale prices for detached homes in Richmond have decreased slightly from February to April 2022 – from $2.15M to $1.96M.
“In the short term, prices will probably come down a bit if not stabilize, relative to what we saw… February or March was probably the peak of the market as far as price is concerned this year,” said a local Richmond realtor.
“Prices shoot up very rapidly in a market where you see an imbalance in demand and supply, but they are very slow to come down, even as sales fall off,” said the realtor.
The market saw a high demand but a lack of supply for detached homes during that period, which could be why prices rose, he explained.
But the demand appears to be softening due to different factors, such as rising interest rates and buyer fatigue.
“I’ve been working with a number of clients that, over the last number of months, have been in a market where they’re competing with others looking at properties. And some of these people are frustrated and dejected at having to be in a market like we’ve seen, and some have exited the market,” said the local expert.
Although HouseSigma’s latest data for May shows that prices might be going back up, it could be because less sales have been completed this month so far.
“If we look at the numbers that we got from April, there is a record of 65 properties that exchanged hands. For May, to date, there’s only 14. As the number gets smaller, they will get a bit skewed because there’s not enough data to date yet to pinpoint on exactly if the trend has gone upward or downward,” said a local agent at HouseSigma.
Simply put, one sale that is more expensive or cheaper than the rest can easily affect the average, so it would be best to consider May prices at the end of the month, when more sales have been completed.
Will prices continue to drop in summer?
This decrease in sale numbers and prices appears to be similar to last year’s market.
HouseSigma data for the same period last year also shows a gradual decrease in average sale prices from $1.90M in February to $1.79M in April and then $1.67M in May.
This could have something to do with people’s real estate habits.
“A lot of people like to get that out of the way earlier in the year, especially families that are coming to the end of the school year, perhaps moving out of school and wanting to get into a new house, a new school district area during the summer,” said the realtor.
But even as the demand for detached homes softens, it is unlikely that prices will tumble, they told the News.
“Prices shoot up very rapidly in a market where you see an imbalance in demand and supply, but they are very slow to come down, even as sales fall off,” they said.
“What we see in the marketplace is that there are properties that are very desirable that are out there, and those properties are still getting multiple offers and offers above asking,” they added.
At the end of the day, there is still a shortage of supplies despite the softening demand, which will continue to deter prices from dropping, the expert explained to the News.
The local realtor advised that buyers and sellers should gather as much information as possible so they can better understand what’s going on in the marketplace.
“For those that are perhaps waiting for that 10 to 20 per cent drop in prices, I don’t think that’s coming in the short or medium term,” he added.
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Source: Richmond News