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Price Increase Reflects Shift to More Costly Homes

by devteam June 25th, 2014 | Share

RealtyTrac reports a very large increasernin the median price of a home sold in the U.S. in May compared to the medianrnprice in April.  There was also a surgernin the price on an annual basis, one more in keeping with the types of pricernhikes that were seen in 2013.</p

The median price of a residentialrnproperty including single family homes, condos, and townhomes was $180,000 inrnMay, a 6 percent jump from the previous month and 13 percent higher than thernmedian in May 2013.  The annual increasernwas the second consecutive double digit gain and the largest since prices hitrntheir post-recession low in March 2012. rnRealtyTrac’s median price figures include sales of both distressed andrnnon-distressed properties.</p

RealtyTrac said one factor behind the increasernwas the shrinking share of sales held by distressed properties which typicallyrnsell at a substantial discount. rnDistressed sales and short sales accounted for 14.3 percent of homesrnsold in May, down from 15.6 percent the previous month and 15.9 percent in Mayrn2013.  The median price of a distressedrnproperty was $120,000 while non-distressed residences had a median of $190,000.</p

A factor with a larger bearing on thernrising prices however, was what RealtyTrac identified as a shift away fromrnlower cost homes to those in the higher price ranges.  Thernshare of home sales in all price ranges below $200,000 decreased from a yearrnago.  The lower the price, the larger therndecrease.  The share of homes pricedrnbetween $100,000 and $200,000 decreased 5 percent from a year ago, while thernshare of homes between $50,000 and $100,000 decreased 13 percent and the sharernof homes priced below $50,000 – often highly distressed homes – decreased 22rnpercent.</p

</p

Conversely, sales of homes pricedrnabove $200,000 increased as a share of total sales, both from the previousrnmonth and from a year ago.  In generalrnthe higher the price, the greater the increase with sales in the $200,000 torn$300,000 price range up 2 percent from the previous month and 6 percent from arnyear ago, but the share of home sales in all price ranges above $750,000 was uprnmore than 20 percent from a year ago.  Salesrnof homes priced in the $200,000 to $400,000 range accounted for 32 percent ofrnsales, the highest percentage since September 2008.</p

It is important to note that farrnfewer homes sell in the lowest and highest price ranges so even a smallrnup-or-down tick in the number of sales can have a disproportionate impact onrnpercentages such as the whopping near six-fold increase in the highest pricerncategory. </prn<table cellpadding="0" cellspacing="0" border="0" width="488"<tbody<tr<td valign="bottom" width="140"

Sales Price Range</p</td<td valign="bottom" width="117"

Share of Total Sales May 2014</p</td<td valign="bottom" width="121"

Pct Change from April 2014</p</td<td valign="bottom" width="109"

Pct Change from May 2013</p</td</tr<tr<td valign="bottom" width="140"

>$100 & <=$50K</p</td<td valign="bottom" width="117"

4.81%</p</td<td valign="bottom" width="121"

-20%</p</td<td valign="bottom" width="109"

-22%</p</td</tr<tr<td valign="bottom" width="140"

>$50K & <=$100K</p</td<td valign="bottom" width="117"

13.01%</p</td<td valign="bottom" width="121"

-4%</p</td<td valign="bottom" width="109"

-13%</p</td</tr<tr<td valign="bottom" width="140"

>$100K & <=$200K</p</td<td valign="bottom" width="117"

32.55%</p</td<td valign="bottom" width="121"

1%</p</td<td valign="bottom" width="109"

-5%</p</td</tr<tr<td valign="bottom" width="140"

>$200K & <=$300K</p</td<td valign="bottom" width="117"

20.16%</p</td<td valign="bottom" width="121"

2%</p</td<td valign="bottom" width="109"

6%</p</td</tr<tr<td valign="bottom" width="140"

>$300K & <=$400K</p</td<td valign="bottom" width="117"

11.52%</p</td<td valign="bottom" width="121"

2%</p</td<td valign="bottom" width="109"

11%</p</td</tr<tr<td valign="bottom" width="140"

>$400K & <=$500K</p</td<td valign="bottom" width="117"

6.54%</p</td<td valign="bottom" width="121"

5%</p</td<td valign="bottom" width="109"

17%</p</td</tr<tr<td valign="bottom" width="140"

>$500K & <=$750K</p</td<td valign="bottom" width="117"

6.90%</p</td<td valign="bottom" width="121"

5%</p</td<td valign="bottom" width="109"

15%</p</td</tr<tr<td valign="bottom" width="140"

>$750K & <=$1MM</p</td<td valign="bottom" width="117"

2.49%</p</td<td valign="bottom" width="121"

14%</p</td<td valign="bottom" width="109"

23%</p</td</tr<tr<td valign="bottom" width="140"

>$1MM & <=$2MM</p</td<td valign="bottom" width="117"

1.75%</p</td<td valign="bottom" width="121"

1%</p</td<td valign="bottom" width="109"

24%</p</td</tr<tr<td valign="bottom" width="140"

>$2MM & <=$5MM</p</td<td valign="bottom" width="117"

0.26%</p</td<td valign="bottom" width="121"

3%</p</td<td valign="bottom" width="109"

26%</p</td</tr<tr<td valign="bottom" width="140"

>$5MM</p</td<td valign="bottom" width="117"

0.01%</p</td<td valign="bottom" width="121"

39%</p</td<td valign="bottom" width="109"

569%</p</td</tr</tbody</table

  </p

“Distressed sales continue tornrepresent a smaller share of the overall sales pie nationwide, helping to boostrnmedian home prices higher given that distressed sales tend to be in lower pricernranges,” said Daren Blomquist, vice president at RealtyTrac. “When broken downrnby average price range, U.S. sales are clearly shifting away from the lowerrnend. Properties selling below $200,000 represented 50 percent of all sales inrnMay, but that was down from a 55 percent share a year ago. Meanwhile, the sharernof homes selling above $200,000 increased from a 45 percent a year ago to a 50rnpercent in May 2014.”</p

RealtyTrac also notes, in its May 2014rnResidential and Foreclosure Sales Report, that home sales in May were at arnseasonally adjusted annual rate of 5.15 million, virtually unchanged from Aprilrnand up less than 1 percent from a year earlier. rn</p

The 1 percent increase in U.S.rnannualized sales in May from a year ago was the smallest increase in any monthrnso far this year, and the 0.19 increase from the previous month marked therneighth consecutive month with flat or declining home sales on arnmonth-over-month basis.</p

Annualized sales volume in Mayrndecreased from a year ago in 23 states and the District of Columbia, along withrn31 of the nation’s 50 largest metropolitan statistical areas.  Among states with significant drops in salesrnvolume were California (-15 percent), Arizona (-10 percent), and Nevada (-7rnpercent).  </p

Major metro areas with decreasingrnsales volume from a year ago included Boston (-23 percent), Fresno, Calif.,rn(-22 percent), Orlando (-18 percent), Los Angeles (-16 percent), and Phoenix (-13rnpercent).

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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