I got a call yesterday from a potential buyer for one of my listings.  He told me he would like me to present an all cash offer of $350,000 for a property I just listed at $429,000.  With a little prodding I was able to find out that he hadn’t seen the home and didn’t know the neighborhood.  I tried to explain a bit about the price and comps and his response was “it is a terrible real estate market and that’s all I need to know”.  REALLY?

Needless to say, my client’s counter to this buyer was not accepted.

This is just one example of how not to be successful in our current Lake Norman housing market. While it is quite common for investors and low-ballers to make these kind of offers when a new listing comes on the market, I have to wonder what these buyers are thinking?  Or, are they thinking at all?  Even banks get disgusted with these types of buyers.  Here is a great example:

A Lake Norman waterfront foreclosure was listed a few months ago for $399,000.  I had an interested buyer so I spoke with the listing agent.   At that time, the bank had already received and turned down several very low offers from investors and it was clear that both the listing agent and the bank were frustrated with these buyers.  My buyer decided to wait.  Over a period of several months the price was lowered twice.  Finally, they lowered it to $329,000.  My buyer quickly made an offer of $305,000 and it was accepted just before multiple offers were coming in.  Clearly, if my buyer had made an offer of $305,000 when it was originally listed it would not have been as well received.

I had a buyer a while back who wanted to make an offer of $800,000 on a home listed at $1,189,000 because he heard the sellers might be desperate to sell.  I knew the comparable sales would not justify anything even close to this price but my buyer felt that if “your throw out enough of these offers eventually one will stick”.  But seriously, if the seller was that desperate wouldn’t they have lowered the price to get multiple offers?  This kind of thinking is truly irrational.  This property just closed for $1,100,000.

I have sold and continue to sell some incredible bargains on Lake Norman but I try to counsel and educate my buyers:

• Timing is everything.  Develop a relationship with the listing agent, especially of foreclosures and shortsales, so that you will know when the sellers are ready to work with a lower offer.
• Do your homework!  I always do a complete market analysis and research the history of any property for my buyers before they make an offer.  We will know how long it has actually been on the market, how many price reductions, what their loan amount is and if there are any signs of distress like a notice of default, a divorce, etc.

There was a recent article in the Los Angeles Times “Low-ball Offers Decline in Some Housing Markets” April 22, 2012 which stated “For home buyers who still think they have a chance of hitting it lucky with a low-ball offer, they’re finding in many markets that their offers are more often being rejected or countered closer to the original asking price.”  In my opinion this is an accurate description of our current Lake Norman real estate market.  Be smart!

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It is important to note that these numbers are only as good as the agents who report them. Expect an adjustment in our 83 sales in March upward perhaps two more sales by the end of the month since it takes some Realtors several weeks to actually input their sales into our MLS.  I create these reports early in the month while the information is still very fresh so always pad the sales upward just a bit.

Here are the March 2012 numbers from our Charlotte Multiple Listing Service for our Lake Norman area real estate market:

Some significant additional interesting statistics for you:

• “Distressed sales” ( Foreclosures (REOS), defaults, Short Sales) comprised 27.7% of our closed sales in March up from 21% last month,  31% in Janurary,  36.7% in December, 36% in November, 19.8% in October, 10% in September, 16.8 in August,  18.5%  in July,  25% in June and 27% in May. The US average is 24%. The price range of these distressed sales was 120,000 – $1,421,000.  Our percentage of distressed active listings dropped to a new low of 6.2 %. Our ratio of distressed new listings to non-distressed has been consistently decreasing.  We are not being bombarded by foreclosures and shortsales so far in 2012 as some had predicted.
• 31% of our closed sales were waterfront homes which is almost identical to last month’s.
• 43% of our March Lake Norman home sales were under  $400,000 compared to 49% last month & 60.9 %  in January.
• 61% of March sales were under $500,000 compared to 70% last month.
• Our average prices are up for closed and active sales.
• On April 1st the number of active listings for all of Lake Norman totaled 861 up slightly from 856 on March 1st.  To put this number in context, back in June of 2008 we had 1789 active listings.

A closer look:

• The number of Active Listings in Lake Norman increased  less than 1% from last month and were 25% lower than last March. So far our inventory has not increased substantially as one would expect in preparation for our strongest seasonal sales market. Our absorption rate/months of supply of active listings stands at 10.3%.  Our shrinking inventory and rising sales are getting us closer to a balanced 6-8 months of supply in Lake Norman area (MLS area 13).  This is very good news for the long-term health of our Lake Norman housing market.

• Contingent Sales, (sales contracts that are contingent upon the buyer selling their own home) which don’t account for a significant segment of our housing market, have increased a bit.  This could be because sellers are more willing to take a risk or more buyers have homes already under contract before they put in an offer.

• Conditional Sales increased for the fourth month in a row, this time by a whopping 30%!  The upward momentum of our Lake Norman housing market is continuing and even increasing.  These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late April/May. Based upon these numbers our closed sales this month and next should exceed the same months in 2011.

• Pending sales were down slightly compared to March 2011 but up from last month.    These are the contracts that are past inspections and are just waiting to close.  Pending sales are usually the best indication of closed sales in the next few weeks.

• The number of closed home sales in Lake Norman in March were up for the third straight month in a row.  This was the BEST March since 2007! (See the annual chart below).

The total number of Lake Norman homes under contract (but not yet closed) on the first of each month are as follows:

• April 1, 2012: 227  (Wow, the highest yet!)
• March 1, 2012: 178
• February 1, 2012: 155
• January 1: 134 (the lowest ALL year)
• December 1: 147
• November: 169
• October: 193
• September: 183
• August: 193
• July: 178
• June: 199,
• May:  173
• April 195,
• March: 163
• February: 142

We are clearly seeing a marked upward trend after a lag at the end of 2011.  This consistent uptick in sales coupled with our low inventory bode well for the overall health of the Lake Norman housing market.

Here is a breakdown by price-range of our January 2012 closed sales in Lake Norman’s area 13-1 to 13-5:

• $40,000 – $199,999:  11
• $200,000 – $299,999: 15
• $300,000 – $399,999: 10

(These price ranges represented 43% of  March sales )

• 400,000 – $499,999:  15
• $500,000 – $599,999: 7

(These price ranges represented 26.5% compared to 26% last month)

• $600,000 – $699,999:  5
• $700,000 – $799,999: 5
• $800,000 – $899,999: 1
• 900,000 – $999,999:  5

(Solds for $600,000 – $1mill = 19% compared to 14% last month)

• $1,000,000 – $1,999,999: 9
• $2 million+ : 0

(Solds $1million+ = 10.8 compared to 7% last month)

8-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 have made an adjustment of  the totals reflecting the ACTUAL  sales  every month in 2009, 2010 and the totals in the prior calendar years.  The columns may not add up but I do my best with what I have to work!  I also adjust past months when I do the monthly update as a few more sales are usually input late by agents.

Summary and My Insight

The Positives and the Negatives:

 Good signs:

• Inventory remains low without a significant spring bump
• Increasing conditional sales indicate that our Lake Norman housing market has strong momentum which will be reflected in higher closed sales for at least the next two months.
• Number of distressed homes for sale are actually decreasing as a percentage of our total inventory
• Higher-end home sales up to $1.5 million are picking up after dropping off in the winter.
• I have experienced multiple offers including one listing of mine that sold for OVER ASKING last month
• We are seeing more and more new construction popping up (Not spec homes)
• Interest rates are at all time lows
• Unemployment rates are dropping locally and nationally

Challenges/Weakesses:

• Sales prices remain low and I don’t see an signs of them going up. Rather, properties are selling once they are priced low enough to attact offers and then they are likely to get mulitple offers.
• With a shrinking inventory of active listings, buyers have fewer options
• Home loans, especially construction loans, are still a challenging process.
• New: Homeowner’s Insurance is harder to get due to new stricter guidelines

I am more convinced than ever that our Lake Norman housing market has hit its bottom in terms of sales volume.  However, this has not translated to higher sales prices. Prices are low and buyers continue to be very picky; not willing to pay a higher price than past comparable sales.

The gossip amoung Realtors is how dramatically our activity has increased.  Despite low inventories, the number of buyers out actively looking has increased substantially.  Real estate firms are touting their sales increases and talk as if we are going to sustain these strong numbers. I am a bit more cautious.  While the worst is most likely behind us, we have a long way to go and most expect that it will be a very slow recovery.

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) and floorplan. 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 at all time lows and prices low it is a good time to buy.  With only 6.2% of Lake Norman’s current listings being “distressed sales” don’t expect the perfect foreclosure or shortsale to come along at an unrealist price.  If you insist on lowballing, at least have some comparable sales to justify your number.  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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 Want the very latest insight into our Lake Norman real estate market? So do I which is why, every month, I do a snapshot analysis of the middle two weeks of the month to get a sense of where our Lake Norman real estate market is at this very moment…an almost live insight into the heartbeat of the Lake Norman housing market.  These Hot Sheet reports serve as pretty good predictors of our short-term Lake Norman real estate market.

Well, last month I wrote: “There is nothing better than a HOT Hot Sheet!”  But, you know what, I was wrong. TWO months in a row of HOT Hot Sheets is even better! Here are our numbers:

Lake Norman Real Estate’s Two-Week Hot Sheet

3/21/2012

* The above chart is a summary of today’s “Hot Sheet” from the Charlotte Multiple Listing Service for single family homes in all of Lake Norman (area 13).  These numbers represent a real time snapshot of the past two week’s activity.  (March 7th – 21st).  As always, I have included the past 6 months so that you can put these numbers in perspective.

I created this additional chart comparing just the March Hot Sheets for the past 3 years to help put our March 2012 numbers in perspective with the past Marches, not just the past 6 months:

March Hot Sheet Numbers for the Past 4 Years

Highlights:

• New listings: While our new listings are up from the winter months, they are still lower than any March since I have been keeping these records. If you add our new listings to the 16 back-on-market we only had a total of 117 Lake Norman properties added to our housing inventory in the past two weeks compared to last March’s 127, 192 in March 2010 and 178 in March 2009.  As of this morning the total number of active listings in Lake Norman had increased from our all time low of 752 in January back up to 876 which is still extremely low historically.  The reason these low numbers are all good news is because keeping our inventory low will help stabilize our own Lake Norman housing market no matter what is happening in other areas or states.

• The number of properties that came back-on-the-market, most likely due to cancelled contracts,  remain historically low which is even more telling because the market is very active. Clearly sales are “sticking” better now. Compared to the past four March’s they are extremely low. While challenges continue related to securing financing due to tight restrictions on home loans by lenders, they are improving.  And, it appears that buyers are more committed than they have been in years.  (Although some remain very challenging!)

• The number of price changes, while up compared to the past few months, are down substantially from the past 3 March’s.  Considering sales are picking up, this would indicate that our prices are stabilizing and a continued decline may reflect a stabilizing of our prices.

• Pending home sales are actually the weakest category on this chart for the second month in a row.   This indicates our closed sales for the next 30 days may not be as strong as they will be further into spring. Pending home sales are contracts that have passed all of their conditions/contingencies/Due Diligence Deadlines and are just sitting ready to close.

• The number of closed sales reported in the past two weeks improved slightly from last month’s  and is more in line with our  late 2011 numbers.  They were sigificant;y higher than any March in the past four years.  So far this month 43 closed sales have been reported to our MLS compared to 34 last month,  21 in January,  33 in December, 37 in November, 47 in October, 29 in August, 55 in June, 45 in July, 44 in June, 30 in May, 50 in April, 34 in March and 20 in February 2010.  Considering all of these numbers, my best guess is that we will close about 70 – 80   home sales this month.

• Our Conditional and Contingent sales are slightly better than last month’s and simply HUGE when compared both to the past 6 months and the past March’s of 2009 – 2011. 52 new contracts in just two weeks of March is just plain exciting.  As the very most recent properties to go under contract, this further substantiates that our Lake Norman housing market is not just accelerating but, if sustainable, may truly be heading back up for good or at least stabilizing at higher numbers than the years since the recession hit us.  Each month will help to support this or undercut it and this m is the second month in a row with such strong numbers.

I have used the term  “erratic” for more than a year now when describing the nature of our 2011 Lake Norman real estate market.  The next few months may serve to enable me to eliminate this adjective once and for all or may bring it back in my vocabulary.  While this month our closed sales numbers will not be remarkable, the Lake Norman real estate market is definitely trending upwards right now.  With record low inventory, fewer price reductions/stabilizing prices and increasing sales, I’d say we are in for a very positive spring.

With our range of the months of supply of active listings at about 14.8 months using our 59 closed sales in February compared to the national average of 9.4 months and a balanced real estate market of 6-8 months, we clearly have a ways to go.  However, if we have 70-80 sales this month our months of supply will drop to 10-12 months. Improving national economic and jobs numbers and improving consumer confidence should help support the current healing of our Lake Norman housing market. I am encouraging my buyers to buy if they find a good home at a good price, especially waterfront homes.  While I don’t anticipate prices going up in Lake Norman this year, I also don’t see that many truly exceptional bargains. (Less than 8% of our inventory are distressed properties: foreclosures and shortsales).  Prices in general are low as are interest rates.  In my opinion, 2012 represents a great opportunity for potential Lake Norman home buyers.  Is that a light I see at the end of the tunnel?  Only time will tell!

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Ask any Realtor active in the Lake Norman residential market how business is and they will collectively smile and say great.  But, are the current Lake Norman sales evenly distributed around all 4 counties that share waterfront land on Lake Norman?

Over the past few years I have created sales charts focusing on all of the largest of the Crescent Communities on Lake Norman to provide insight into the different areas surrounding Lake Norman including:

• The Point, The Harbour at The Pointe and The Farms in Mooresville ( down Brawley School Rd)
• The Peninsula  in Cornelius
• Sailview in Denver
• Northview Harbour in Sherrills Ford
• Falls Cove in Statesville

Here is one fresh off the presses:

A couple of numbers stand out immediately, particularly the Months of Supply.  The Point, The Farms and  North View Harbour are well below last year’s and just slightly above a truly balanced real estate market of 6-8 months of supply.    Look at how they have improved compared to last June 2011:

• Another striking difference is the number of conditional properties.  (Under contract but not closed).  We currently have 30 conditional properties compared to 10 last June.
• While still trailing the communities on the east side of Lake Norman, Sailview and Northview Harbour have improved significantly.
• The Farms remains strong but what is a truly positive sign for Lake Norman is that a number of  NEW construction homes are now selling in The Farms after years of being almost non-existent.
• Finally, it is important to note that the average $ per square foot has dropped in every community but one.

Sales are up, prices are down and the number of distressed properties, if you read my February Sales Analysis, only represent 7.5% of our active homes for sale in Lake Norman.  I had multiple offers on my most recent waterfront listing and it sold above the asking price in less that 12 hours!  So far, 2012 is far exceeding my expectations.  Now would be a really good time for serious Lake Norman buyers to get off the fence before it is too late!

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