Did You Know: More than 11% of homes sold had a sales price over $500,000, and sales growth was highest among homes in above-median-priced categories.
- In spite of the price variation by region, when summed to the regional level the median sales price for all regions of the US except the West falls into the $100,000 to $250,000 price range. The West is slightly outside of this range and the Northeast is near the upper edge.
- The median price is the point at which the middle-priced home sold. By definition, half of homes in an area sold at a higher price and half of homes sold at a lower price than the median. But that’s just one part of the story. We can dig in deeper and look at the distribution of sales by price categories.
- Doing so, we see that roughly a fifth of homes sold for less than $100,000 a year ago and that share shrank in September 2013 to 17.4 percent.
- One year ago, homes sold at $500,000 or more were roughly 10 percent of the market; they now comprise more than 11 percent of recently sold homes.
- There are coincident reasons for this trend: 1) sales growth is highest among homes in the highest home price tiers, and 2) home sales are shrinking in the lowest price tier—most likely a result of limited inventory in this price range as would be expected in a housing market where prices are rising.
- Sales in the lowest price tier fell by more than 7 percent nationally while sales in higher priced categories were up by more than 30 percent from September one year ago.
- While distressed sales as a share of closed sales ticked up in September, the longer-term trend for these properties has been down. Single-digit market share of distressed properties could be seen in the months ahead. This means smaller inventories of low-priced homes and smaller sales shares for low price homes relative to high priced homes which will mean continued upward pressure on the median price of homes compared to one year ago until additional inventories help relieve some of this pressure.
In line with the broad decline in foreclosure inventory, distressed sales continue to make up for a smaller share of overall residential sales. Approximately 12 percent of respondents who reported a sale in the August REALTORS® Confidence Index Survey sold a distressed property, substantially down from levels seen a few years ago.
For the past 12 months, properties in “above average” condition have been discounted by an average of 10-11 percent, while properties in “below average” condition were discounted at an average of 15-20 percent.
- Distressed property sales reached a new cyclical low in the past two months. Only 15 percent of all transactions were classified as being due to a foreclosure or needing a short-sale approval from a bank. This is a marked change from nearly one-third of all sales being distressed from 2008 to 2011. Last year, the figure decreased to 26 percent. This year, it is likely to hit 17 percent for the entire year.
- Better news yet – distressed sales will hit 11 to 13 percent in 2014, and then fall to a single-digit percentage in 2015. Why? The number of seriously delinquent mortgages in the pipeline has been steadily falling. With fewer in the pipeline, fewer distressed properties will show up as for-sale. Fewer distressed home sales also mean higher home prices. Higher prices in turn mean more people getting lifted out of the underwater status and hence will not face a distressed situation.