Earlier this month CNN Money reported that McMansions are back and noted a rise in consumer spending on luxury items such as SUVs. In early May, TIME Magazine stated: “Wealthy Americans don’t really think that good times are here again for the economy. But they’re going on shopping sprees anyway…” Our first statistic supports the fact that wealthier consumers are ready to spend. Closed sales in the $600,000 to $999,999 price range are up 92.3% for townhomes/condos and 92.6% for single family residences.
Active inventory for townhomes/condos is down 10.8% and for single family residences is down 15.3% from last June. We remain in a seller’s market with inventory below 5.5 months for single family residences and townhome/condos. The lack of inventory continues to frustrate potential homebuyers seeking the American dream of homeownership. Many potential buyers are losing out to wealthier cash buyers and large investment firms.
The law of supply and demand comes into play as the median sales price for townhome/condos is up 11.2% from last year at $119,000. With the exception of May it has increased every month since January. The median sales price for single family residences is up 18.7% from last year at $159,000. This is a decrease from May’s number of $162,250 but is still higher than any other month we’ve had in years.
The number of closed sales for single family short sales has decreased 31.6% and the number of townhome/condo short sales has decreased 40.9%. This may be attributed to the fact that more owners are willing to try a loan modification and wait it out for now with prices increasing. The number of closed sales in foreclosure has stayed relatively the same. Closed sales for townhome/condos in foreclosure is up 2.9% and for single family residences in foreclosure it is up 7.7%. It is interesting to note that the median sales price on foreclosures has decreased 12.4% for townhome/condos but increased 33.1% for single family residences.
Regardless of the motivation for consumer spending, we’re excited to see the market back in action.