The sales of Richmond residential lots are tied closely to the new home sales activities. Richmond has experienced a drop in sales activities for new homes since the middle of 2008. The market downturn the past 9 months has resulted in new homes selling at lower prices than those sold in late 2007 and early 2008.
The supply of building lots for new homes is from older homes that Richmond home builders are buying in certain prime West Richmond neighborhoods.
Building lot prices compared with City Values
During the height of construction boom, Richmond home builders were buying prime West Richmond older homes as building lots for $725,000 to $800,000. Home prices for older homes have dropped substantially over the past months. Home builders are currently able to buy older homes in prime West Richmond neighborhoods at a prince range of $550,000 to $650,000. These prices are now 15% to 20% lower than the peak.
Lower costs for new home construction
The the past 3 months average selling price for 15 west Richmond older homes suitable for the building of new homes at $596,000 was around 7.3% below their average listing price. The average selling price for these Richmond building lots was 9.4% below their average city value. The market slow down has also resulted in home builders being able to save 15% or more in their labour cost for home construction.
Million dollar new homes market
According to Richmond MLXchange sales data, the average monthly sales for million dollar new homes were 10, of which 9 of them were less than 2 years old. There are presently 87 million dollar homes under 5 years old listed for sale on the market. Majority of these newer homes - 69 units or 80% of these homes are less than 2 years old. At just over 8 months supply of new homes, the market is still experiencing an excess supply of homes compared with the demand for these homes.
Richmond home builders are now cautiously optimistic that they can make moderate returns building spec homes for sale. You can view the million dollar homes listed for sale in Richmond here.
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