August 21, 2006
July produced positive increases in units-closed and average
prices, but there were also a couple of negative trends that very likely
could continue through for the rest of the year and bring us a few down
periods.
First, there were 6,203 single family detached closings in
July. This is down 4.7% from July 05’, but after lags are reported we should
be up at least 5%.
Condos and townhomes closed 1,011 units in July, which is up
1.4% before lags and should keep our streak of 38 double-digit percentage
increases intact. There have been more condos and townhomes closed through
July than we had in all of 2003.
The average sale price for condos and townhomes in July was
$184,841 or the lowest average price so far in 2006 and the lowest since
October 2005. How do you maintain 38 consecutive double-digit percentage
increases for closings? Have an average price in a "July 06" that is below
the overall average in 2003, 2004, and 2005.
The average price for condos and townhomes was almost $100M
less than it was for single family detached. The average price of a condo
and townhome in July was 66.2% for the average of a single family detached.
In 2003, a condo and townhome’s average price was 79% that of a single
family detached, but in July of 2006, one out of seven closings was a condo
or townhome versus single family detached, while in 2003 it was one out of
nine. Price is "everything" and the market always will reflect it.
The average price for single family detached was $278,110 in
July. This is another new all-time high, but inventories and months-supply
for single family detached is on the increase, so their prices should
moderate.
The months-supply for single family detached has trended
upward over the past 5 periods at a pace greater than normal. Condos and
townhomes have also trended upward, but just slightly and actually back to a
"normal" pace. Months-supply trending is one of the best indicators for a
housing market, because it illustrates the balance between supply and demand
so well.
The number of expired listings for single family detached in
July was 3,817. This is the seventh consecutive year-to-year increase (every
period in 2006), after every period in 2005 had a year-to-year decline. The
year-to-year increase was 688 or the largest increase since June 2002-2003.
Expired listings for condos and townhomes also increased,
but not as much, going from 829 in July 2005 to 860 in July 2006. However,
with increasing months-supply we will see record expired listings by the end
of the year for both condos & townhomes and especially detached single
family.
We have actually had some good economic news the past few
weeks. Interest rates have declined about a third of a point since 6/29 and
gas prices had a significant drop in price this past week. However, gas
prices are much more volatile than interest rates and they can go up just as
fast, but let’s hope both of these positive trends can continue.
Thank you,
Steve Palm
Smart Numbers
