Average Home Prices Drop Which I Predicted
I received from SMDRA our 7-county REColorado report on home sales for the month of May. Here are the details-
- Closings plummeted by 44% from May 2019 to just 3,175 closings last month. Closings of both attached and detached homes fell by a similar amount.
- New listings in May dropped by 19.7% from last May as homeowners placed only 6,701 homes on the market in May.
- New listings of attached homes only dropped by 9.9%; whereas, new listings of detached homes dropped by 19.3%.
- Under contracts increased in May to 6,432 under contracts or pending. This was a 13.8% increase from May 2019.
- We ended May with 6,141 active listings.
- This put months of inventory at 1.93 months.
- However, this will change dramatically in June as buyers put more homes under contract in May than we had active listings.
- Average Days in Market dropped to 22 days in May from 24 days last year.
- Median Days in Market increased to 8 days in May from 7 days last year.
- The average closed price in May DROPPED 0.3% year over year to $495,483. I told you it would!
- Average closed prices on attached homes rose 5.3% to $395,079.
- Average closed price on detached homes dropped by 2.2% to $533,921.
- The median closed price in May increased 2.1% to $435k.
- The median closed price in May for attached homes rose by 4.2% to $325k.
- The median closed price in May for detached homes rose 0.8% to $467,750.
- The average closed to original list price ratio was 98.7% May down from 98.8% last May and down from 100.2% in May 2018.
Here is where the middle of the market stands for the month of May. These are homes priced from $200k to $600k-
- New listings-71.2% of our new listings were in this price range.
- Solds-78.9% of our solds were in this price range.
- Actives-Only 55.6% of our active homes for sale are in this price range.
- We need many more homes for sale in this price range.
Here are some numbers from the luxury market of homes priced over $1 million--
- 7% of our new listings last month were priced over $1 million. In March (B.C.) this percentage was 5%. Last May this percentage was 5.1%.
- Only 3.2% of our closings were above $1 million last month! Down from 4.1% in March. Last May 4.3% of our home sales were above $1 million. This is a contributing factor to why average prices dropped in May.
- 15.2% of our active listings are priced over $1 million and in March this percentage was 13.1%. Last May this percentage was 12%.
Comparison of April to May-
Normally, I am not a big fan of month to month data changes, but we are living in extraordinary times. Thus, I decided to review April again versus May. Here is what I see-
- In April only 3,074 properties went under contract due to Covid restrictions. Still 3,175 properties closed in May. Normally about 15%-20% of under contracts don't close. Thus, we should have only seen about 2,600 properties close in May. This time more properties closed than went under contract last month which is a rare occurrence.
- The number of closings in May dropped by 11.8% from April. This didn't surprise me as buyers weren't allowed to look at homes in person until the very end of April.
- New listings in May surged upwards by 49% from April! Thus, homeowners still want to sell their home and move which is great news! I was scared that many homeowners might stay put.
- Under contracts or pendings surged upwards by 109% from April! A great sign that buyers till want to buy homes and these people were NOT impacted financial by Covid.
- Average sold prices dropped by $500 in May from April.
- Median sold prices remained the same from April to May.
- Home price appreciation slowed in May as average prices in April had risen by 1.9% year over year; but average prices dropped by 0.3% in May year over year.
- If you look back to March average sold prices had risen by 8% year over year.
- Median prices had risen 4.4% year over year in April; but in May median prices only rose 2.1% year over year.
- If you look back to March median sold prices had risen by 7.3% year over year.
My Thoughts and Observations-
- Was the smaller decrease in new listings of attached homes a "sign" that more homeowners of this style of home want to sell and buy a detached home instead because of Covid?
- If so, and you are looking for listings I would strongly consider attached homes. But, I would probably avoid communities with more than 3 stories as then elevators are involved and who the heck wants to get on an elevator today?
- I am glad I don't own a condo in a building with more than 3 stories as I worry that taller buildings with elevators may be shunned by potential buyers and thus these properties could see property values drop.
- Did average prices on attached homes rise because the number of new listings was down nearly 10%?
- I predicted 2 months ago that average home prices would drop as the number of sales of million dollar homes would drop.
- We had MORE new listings this May than we did in 2016 and 2017 which surprised me.
- Last June we experienced 5,400 closings. I bet we will exceed 6,000 for sure in June and maybe over 7,000.
- I am excited about our RE market as both buyers and sellers are pursuing a new home.
- I expect median home prices will increase by at 4% in June year over year. Whereas, average prices may barely increase.