More signs of a move from the cities to the suburbs? Supply of houses is tight; condos are piling up.
By Wolf Richter for WOLF STREET.
Sales of existing homes (closed transactions of single-family houses, townhomes, condos, and co-ops) in June fell 11.3% compared to June last year, to a “seasonally adjusted annual rate” of 4.72 million homes, according to the National Association of Realtors. Sales were down 18% from the recent peak in February. On a month-to-month basis, sales bounced off 20.7% from the historic lockdown-low in May (historic data via YCharts):
The 11.3% year-over-year drop in the seasonally adjusted annual rate of sales was the sharpest drop, after the plunges in April and May, since April 2011 (historic data via YCharts):
Sales fell in all regions, compared to June last year:
- Northeast: -27.9%
- Midwest: -13.4%
- South: -4.0%
- West: -13.6%
Condo sales in deep trouble, house sales drop less, compared to June last year:
- Single-family houses: -9% year-over-year, to 4.28 million units seasonally adjusted annual rate.
- Condos and co-ops: -22.8% year-over-year to 440,000 units seasonally adjusted annual rate.
From the big cities to the suburbs?
This is a theme that is now propagated widely, and anecdotal evidence has been accumulating to support it, including the continued massive weakness in condo sales (-22.8% year-over-year in June after having plunged 41% in May). These “closed sales” in June reflect contracts signed largely in May and April, so it’s early to draw conclusion about a long-term trend.
The NAR report also mentions this from-the-city-to-the-suburb theme as a possibility:
“Homebuyers considering a move to the suburbs is a growing possibility after a decade of urban downtown revival. Greater work-from-home options and flexibility will likely remain beyond the virus and any forthcoming vaccine.”
There had been a huge surge over those ten years in high-rise construction in city centers – condos and apartments, and mostly higher-end. High-density living has its advantages, including short or no commutes, being close to lots of things to do, particularly in lively walkable city cores. High-rise living can also offer panoramic views.
But the pandemic has shed a very different light on this type of living arrangement, and it makes intuitive sense to see a move from the city centers to the suburbs, especially now with commutes no longer being an issue for some people as they have switched to work-from-home, with the expectation that this will largely remain in place going forward.
Prices rise for single-family houses, barely tick up for condos.
The median price of all types of homes – meaning half sold for more and half sold for less – rose 3.5% from a year ago to $295,000.
- Single-family houses: +3.5% to $298,000.
- Condos and co-ops: +1.4% to $262,700.
Inventory of houses is tight, but condos are piling up.
Unsold inventory of homes that are for sale and that haven’t been pulled off the market yet ticked up in June from May to 1.57 million homes, but remains 18% below where it was in June last year. Potential sellers are still not putting their properties on the market, given the uncertainties, the issues related to showing a home during a pandemic, the facts of forbearance that over 8 million homeowners have entered into, and other considerations.
But in some markets, this is now changing. For example, in San Francisco, a flood of homes has come on the market, and inventories have ballooned to the highest levels since the housing bust.
Supply of all types of homes for sale at the current rate of sales ticked down to 4.0 months, from 4.8 months in May, and from 4.3 months in June last year, thereby returning into the range of the past few years. But there is now large divergence between supply of single-family houses and condos:
- Supply of single-family houses: 3.8 months
- Supply of condos: 5.3 months.
In San Francisco, sellers are suddenly coming out of the woodwork. And the housing market is having a moment. Read... “Pent-up Supply” Floods San Francisco Housing Market, Most Since Housing Bust
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