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I’ve been talking for a couple months about how prices were surging into the final days of the double-dip home buyer tax credit. The double-dip, described in last month’s price update, allowed certain buyers to receive both a federal and a state tax credit as long as they closed before June was over. I posited that it was no coincidence that prices rose so strongly as people rushed to buy before that deadline hit. I also speculated that we’d see another strong month in June, the last month in which buyers could receive both tax credits.
That, as the accompanying graph shows, turned out not to be the case. Despite the looming tax credit expiration, prices as measured by the median price per square foot actually fell last month. This price measure fell by 1.4 percent for single family homes, and for condos it fell by a whopping 10.6 percent — more than enough to neutralize the prior month’s 11.3 percent increase.
As I pointed out last month, short term moves in the condo price per square foot have a tendency to jump all over the place and just aren’t that meaningful. So you can probably disregard the magnitude of the condo price drop, as you hopefully ignored the size of last month’s increase.
Single family prices, on the other hand, are a much better gauge of the state of market pricing power. Even there, we saw a decline. It was not a serious decline, but neither was it the final lunge into the finish line that I was expecting. I guess that whatever boost the market was getting from the double dip had already used itself up in May.
— RICH TOSCANO