May condo sales increased to 379 from 293 in April. That’s an increase of some 30% and seems pretty significant. Is it a shift to condos as prices of detached houses move out of reach of local buyers? Is it a lack of inventory forcing people into alternatives? Is it a wave of retirees downsizing into condos? A run on AirBnB investments?
Or nothing. It’s always good to take a step back and make sure we’re not getting all excited about that much noise. One way to take a look is whether the breakdown between single family, condos, and townhouse is out of normal ranges (I’m leaving out manufactured homes).
The percentage of single family home sales bounces around between 55-65% and May was nothing at all unusual from that perspective. While it was a relatively big shift from April, those things periodically happen. But let’s look at the raw numbers instead.
Aside from the staggering increase in sales this year, it does seem a bit unusual that detached sales have dropped off this early in the year. May and June is when we normally see the largest number of detached sales and a more gradual dropoff after that. Looking back further, we see the pattern stays constant.
The only other year that doesn’t fall this pattern is 2010, when the market last topped out. Now I wouldn’t jump to any conclusions based on this one month, but something to keep an eye on. I’d say the most likely explanation is a lack of inventory pushing down sales because there just isn’t enough out there to buy. What do you think?