The laws of supply and demand rule.  The shelf is empty.  So prices continue to increase.  May 2015 vs May 2014:  21% less homes for sale, 8% less new listings, yet 3% more homes went under contract.  The result:  The average sold price per square foot was $153 in May 2015, 19% more than May of last year.

In May the average days a home was on the market before it went under contract was 69 days.  Of the 213 closed sales, 96% was the sold price to list price ratio.  What this means is that consistently, month in and month out, homes which are properly priced, i.e., within 4% of the fair market sold value, go under contract within 2 – 3 months.

Notwithstanding the foregoing, I think it more probable than not that a push back in accelerated price appreciation is beginning to rear its head.  I am seeing signs of it in my practice.  We are witnessing resistance.   Although the unemployment rate has decreased, wages have not.  Accordingly, the mid-priced market, which I define as up to $700,000, is unlikely to be able to continue to sustain the current accelerated rates of appreciation.  Our “feeder markets” up north, of retirees or soon to be retirees, who need to sell their homes in order to buy here, depend upon buyers who can afford to purchase their homes.  For those buyers to do so requires an economy with strong employment and increasing wages.  Although the number of unemployed has decreased, wages have not.

On the other-hand, the luxury market will continue to grow.  The wealth segment is invested in stocks and other passive investments, and enjoy high compensation.  Accordingly, they are not fundamentally affected by the rate of employment or minimal wage appreciation.

May 2015 is a Seller’s market*

Home for Sale in May 2015: 501 units.

Home Listed in May 2015: 180 units.

Home Closed in May 2015: 213 units.

Home Placed under Contract in May 2015: 209 units.

May 2015 Average Sold Price per Square Footage is Appreciating*

Average Sold Price per Square Footage in May 2015: $153