The dynamics of our Lake Norman real estate market are continuing to impress. What started as an upward trend in sales and a downward trend in inventory of homes for sale in 2012 has given way to a true break through in so many aspects of our Lake Norman housing market. There is a sense of energy and hustle reminiscent of the good old days. For some Realtors the days of 24/7 have also returned. But make no mistake, every closing is challenging in one way or another!
Let’s take a closer look at the numbers to glean some insight into the short term future and exactly where the Lake Norman housing market stands right now.
Here are the April 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* Note that the Charlotte Regional Multiple Listing Service has created two new categories, Under Contract Showings (UCS) to continue and Under Contract no showings (UCNS). These replace the Contingent, Conditional and Pending categories. Contingent Sales are now joined with Conditional sales in my reports.
Some significant additional statistics for you:
- “Distressed sales” ( Foreclosures (REOS), defaults, Short Sales) comprised a record low of 14.1% of Lake Norman’s total home sales down from 20.4 % last month, 16.9% in February and January’s 29%. The average price for distressed single family home sales was $344,597 indicating that these sales were primarily in our lowest price ranges. Distressed active listings dropped to a new low of only 3.1% of our total inventory of Lake Norman homes for sale! According to a recent article on Trulia the “normal” delinquency and foreclosure rate for the US is 5.25%. The most recent US distress home sales stood at 21%.
- 34% of our closed sales were waterfront homes which is up from 27% last month. The average sales price of Lake Norman waterfront homes in April was $766,027 and the average price per square foot was $217 which was just about equal to last montj’s $218 but up from $202 per square foot last month and $199 per square foot in January.
- 9 new construction homes sold which was identical to last month. While this number is not really impressive, we currently have 58 new construction single family homes under contract in Lake Norman. These represent 18.3% of all Lake Norman homes under contract and the average listing price vs sales price is 98%! Clearly there isn’t a lot of wiggle room on prices of new homes. It is important to note that many of the new construction homes you will see driving around the lake are custom homes so will not be included in our Multiple Listing Service numbers.
- 58.5% of Lake Norman’s March home sales were under $400,000.
- 68.8% of our March home sales were under $500,000, again equal to last month’s but lower than February’s 81.7%, 81% in January, 74 % in December, 75% in November, and 67% in October. While our lower price ranges are still dominating our Lake Norman housing market this is the second month in a row that the have declined since October 2012.The trade-up buyers are jumping off of the fence which is one reason I feel there are so many more showings right now. There are simply more buyers out there looking in all price ranges.
- Our “Under Contract Show” AND “Under Contract No show”/Pending numbers keep setting new records! At a combined total of 316, not only are they up 28.5% from last March’s but once again they are the highest since I have been keeping records and probable the highest since the recession! Clearly our Lake Norman’s housing market is headed for record-setting spring/early summer sales.
- As of today, the number of active listings for all of Lake Norman total 941, up from last month’s 854, but still 1% lower than April 2012. We had a considerable jump in the number of active listings in the past week so I have a bit of a concern that if our active listings continue to increase we might see an imbalance grow in the Lake Norman real estate market.
A closer look at the chart:
- The number of Active Listings in Lake Norman dropped 1% from last March’s. Our absorption rate/months of supply of active listings today has dropped back down to 8.9 which puts us just shy of our goal of a balanced 6-8 months of supply in the Lake Norman area (MLS area 13). However, the national number today is 4.7 months of supply so despite our improvement since January of 2009′s 52.5 months of inventory we are still not completely in a buyer’s market unlike some areas of the country.
- Conditional Sales, which are now called Under Contract Show, increased for the 15th month in a row, this time by 16% compared to last year. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late May/June. Based upon these numbers we should see strong closed sales in the next few months.
- Pending/Under Contract No Show sales are a whopping 73% higher than April 2012′s. These are the contracts that are past inspections and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. I am pretty darn confident that we will again exceed last May”s strong sales of 120. 2013 is already showing it can not only sustain the sales growth trends of 2012 but even beat them month after month.
- The number of closed home sales in Lake Norman in April as of today are an impressive 16% higher than last April’s and the best April since 2007. They are also 10.4% higher than last month’s.
The total number of Lake Norman homes under contract (but not yet closed) on the first of each month are as follows:
- May 6, 2012: 316 (The highest since I have been keeping records!)
- April 2, 2013: 290
- March 5, 2013: 255
- February 7, 2013: 219
- January 6, 2013: 184
- December 6, 2012: 197
- November 7, 2012: 214
- October 8, 2012: 218
- September 6, 2012: 206
- August 6, 2012: 228
- July 6, 2012: 234
- June 6, 2012: 235
- May 7, 2012: 246
- April 1, 2012: 227
- March 1, 2012: 178
- February 1, 2012: 155
- January 1: 134 (the lowest ALL year)
Here is a breakdown by price-range of our April 2013 closed sales in Lake Norman’s area 13-1 to 13-5:
- $37,000 – $199,999: 17
- $200,000 – $299,999: 28
- $300,000 – $399,999: 17
(These price ranges represented 58.4 % of our April and just about equal to last month’s 52.7 %.)
- 400,000 – $499,999: 11
- $500,000 – $599,999: 5
(These price ranges represented 15.1% compared to 26% last month)
- $600,000 – $699,999: 9
- $700,000 – $799,999: 6
- $800,000 – $899,999: 4
- 900,000 – $999,999: 1
(Solds for $600,000 – $1million = 18.9% up from 13.4% last month )
- $1,000,000 – $1,499,999: 7 (6 were $1.2 million or below)
- $1,500,000 – $1,999,999: 0
- $2 million+ : 1
(Solds $1million+ = 7.5 % compared to 7.6% last month)
The most improved price ranges was in April were the $200,000 – $299,999 and the $600,000 – $699,999.
Higher-end home sales in Lake Norman
Once again the $1,000,000 – $1,200,000 price range is quite strong. Sales just under $1 million are week and once you get above $1.2 million sales are sparse. While we have had some headline sales like Michael Jordan buying Doug Herbert’s estate which was in foreclosure for $2.8 million and Kyle Busch purchasing a large estate for $7.5 million, these sales are few and far between.
9-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers are for single family homes. They come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.
** I adjust past months when I do the monthly update as a few more sales are usually input late by agents.
As you can see in our Lake Norman sales by month and year chart above, Lake Norman’s home sales for the first four months of 2013 exceeded 2012′s by 22.1%!
Summary and My Insight
Good signs/news:
- Once again, our unprecedented number of properties currently under contract indicates that our Lake Norman housing market should record strong closed sales numbers for at least the next several months.
- Lake Norman has been enjoying consistently higher closed sales for over a year. Prices have not only stabilized but are actually increasing in some areas. A good example is our waterfront average price per square foot increase from $199 to $217 in the past four months. Averages sales in The Farms in the 1st quarter of 2013, for example,were$149 per square foot compared to $130 per square foot in the 1st quarter of 2011 and $134 in 2012.
- The number of distressed homes for sale are so low they are almost irrelevant in 2013.
- New construction is back. Not only did we sell 9 new homes last month but we have 58 new homes under contract and 124 for sale and this number is climbing. Just drive down Brawley School Rd and turn down streets like McKendree, Chuckwood, Tuskarora Trail, Isle of Pines and you will see an impressive number of new homes under construction!
- Showing activity of homes on the market in Lake Norman is bustling. Home buyers are out in numbers looking around all of the Lake Norman area. Properly priced listings in very good condition are selling more quickly and sometimes with multiple offers even in our $1 million+ price ranges. This is particularly true of waterfront homes.
- Lake Norman’s inventory of homes for sale remains low and is now down to 8.8 months of supply.
- Interest rates dropped a bit last week and are predicted to remain low in 2013.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Positive national housing reports continue to headline news about the US housing market this year. The US March sales marked the 21st consecutive months of monthly sales above their year ago levels. Distressed sales are down in the US housing market 29% versus 2012. Home prices in the US have increased for 13 consecutive months. Charlotte foreclosure rates have also fallen according to CoreLogic and in February were below the national average as well.
- My buyers from out-of-state are selling their homes more quickly than in the past years enabling them to buy in Lake Norman more quickly.
Challenges/Weaknesses:
- It is one thing to get a property/home under contract but it is quite another to get it to close these days! My most recent contracts have been some of the most difficult I have experienced in quite some time. This is primarily due to loans but both homebuyers and sellers seem a bit more stressed out in general leading to more distrust and challenges during the negotiations.
- I still have concerns about Lake Norman sellers and listing agents being overly optimistic not only when they initially price their properties but also during negotiations. With the increase in showings many sellers are expecting higher offers so are not as willing to appreciate and work with good offers by qualified buyers.
- I have equal concern for Lake Norman home buyers. A good number are still in the old mind set that they have plenty of time to consider new listings and might initially want to make lower offers. But, right now good properties are selling quickly, sometimes with multiple offers. It is critical to know comparable sales activity in your price range and act quickly if/when a good listing comes on the market.
- What can I say about home loans, whether conforming, jumbo or construction, other than that they continue to create unnecessary stress during the sales process and at closing. One of the biggest challenges I have faced is lenders getting appraisal reports in a timely manner, not so much at the purchase price but the actual report being received. Even with “rush” appraisals the appraisal might take almost 2 weeks from the day the appraiser views the property until the appraisal is received by the lender. Because of the new third party laws lenders don’t have the leverage or ability to push appraisers. The appraisal companies aren’t really accountable to anyone.
- Then there are the tougher guidelines for home loans and the underwriters who, up until the day of closing, many times keep asking for more and more documentation. This is not only the case with challenging buyers but also with very well qualified buyers.
My advice to Lake Norman home buyers remains this: Look for homes that are in good locations and have most of the priorities on your list. While your perfect home might come along, don’t wait too long and don’t dismiss a property if it isn’t perfect. Prioritize: Location, quality and depth of water (if waterfront buyer), lot and floor plan. Then, to determine a realistic price, use VERY RECENT comparable sales in your specific market niche. The selection may not be great but with interest rates near all time lows and prices low but rising it is a good time to buy. With less than 5% of Lake Norman’s current listings being “distressed sales” don’t expect the perfect foreclosure or shortsale to come along at an unrealistic price. Low-balling, except on distressed properties, really isn’t a great strategy nor will it result in a lower price. Get it in your head that the Lake Norman housing market is the strongest it has been in years and that prices are going up. Don’t focus as much on the price as on the future marketability of the property. A bargain that has incurable issues that will make it difficult to resale, really isn’t a bargain at all. Be smart!
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What are Lake Norman’s current real estate market’s challenges for buyers and sellers?
Our Lake Norman housing market is doing very well right now, but that doesn’t mean that buying or selling a home is easy. All real estate markets are constantly facing new challenges unique to myriad influences in any particular month, season or year. Today’s typical stress-producing hurdles can be minimized if you have a good understanding of what they are and how best to prepare for them:
Mortgage/Loan process
As a direct result of the lax lending practices that led to the end of the housing bubble throughout the country, the home loan process can now be overly burdensome and frustrating.
In order to minimize the stress in the loan process, I recommend only very qualified, experienced lenders to my Lake Norman area home-buyers. Which lender you use can make or break your ability to get a loan. (Don’t choose based on the lowest interest rate alone). It is critical to be proactive as well. From the first week, get a commitment from the lender as to when they will order the appraisal, what documentation they will need from you and when it will be submitted to the underwriter. After “conditional approval”, expect for the underwriter to ask for additional paperwork right up until several days before closing. Also make sure that your lender is in constant communication with your closing attorney so that they get the Title information etc. in a timely fashion. I try to anticipate any potential hurdles and keep in contact with the lender to make sure everything is being processed in a timely manner. If you are selling your home and the sale is contingent upon the buyer’s home closing, you also need to ask your Realtor to get updates on their buyer’s buyer’s loan. I just closed on a sale with buyers who had no problems with their loan but whose buyer of their home in another state had a terrible lender who almost ruined our contract due to their incompetence.
Appraisals
One of the critical changes to our real estate process is due to the Dodd-Frank law which essentially prohibits lenders from having any direct communication with appraisers. Lenders now use a third-party company to order appraisals. While I appreciate the reasoning behind this bill, the result has led to a number of challenges. The most common problems are appraisals being ordered too late, appraisers who are sent out who are not knowledgeable about Lake Norman, especially waterfront home sales, appraisers who take way too long to submit their appraisals which leads to delays in closing, and appraisals that are just poorly done. While, by law, lenders can’t contact the appraiser directly, Realtors can if we have questions or concerns. We can’t intimidate but we can provide additional property information. I have not actually had an appraisal come in below the contract sales price but I have experienced several fairly incompetent appraisers and an appraisal that took 2 weeks to be submitted despite a “rush” order. So, make sure that your Realtor keeps on top of the appraisal!
Multiple Offers
As a Realtor in California during the 2000-2005 bubble years when we got up to 60 offers on a listing, we worked hard to fine-tune the multiple offer process. If representing the buyer in a multiple offer situation, a cover letter can make the difference between you getting the home or not. The cover letter is my way of “selling” my buyers to the seller by emphasizing their strong financial qualifications, sharing what they love about the property and anything that might strengthen their position. (One time my seller chose a buyer because they shared a mutual love of dogs!). A good listing agent will counsel their sellers to take the offer that is most likely to close, not necessarily the highest price. All cash in this market should trump a loan. A short Due Diligence period is also a plus. Pre-approval letter is a must. And, believe it or not, the Realtor representing the buyer can make a huge difference. I would much rather work with a Realtor I know, trust and respect and I can usually get a pretty good sense of the competence of a Realtor by how they present the offer.
Unrealistic Expectations
As Teke Wiggin wrote in an Inman News article on April 18, 2013, “Today’s housing market is a weird animal”. Home buyers are still cautious and in some cases still have unrealistic expectations that if they search long enough they will find an incredible bargain. Afraid of overpaying, they are hanging on to the mind set to want to write low offers. With only 5% of our Lake Norman active listings distressed (foreclosures or shortsales), some buyers just haven’t fully embraced the upward trends in our housing market. While prices haven’t gone up a lot, we are seeing multiple offers.
At the same time, sellers hear about the strong sales and low inventory in our Lake Norman real estate market this spring and can get a bit too optimistic when it comes to pricing their homes. In fact, the same rules apply to over-pricing a listing today as they always have. Even in this strong market in Lake Norman, over-priced listing will sit.
The fact that you managed to read through this blog to this point tells me you are someone who wants to understand our Lake Norman housing market and will be well prepared to buy or sell! Great job! If you have any questions, always feel free to email or call me: diane@dianeaurit.com.