Let’s face it, we are being bombarded by economic predictions of all kinds this month; so much so that I even hesitated to add my own to the massive pile.  But, since my mission is to provide you with  insight into our Lake Norman housing market and the role the national, state and local economy plays on our successes and weakness, I will once again do my best to assess and make predictions for 2012.

The last line of my 2011 predictions was actually a fairly accurate summary of 2011:

2011 may hold some surprises but for the most part it will be a year of stops and starts; ups and downs and hopefully dwindling inventory.

And, indeed, we did experience a significant shrinking of our inventory of active listings so the 2011 Lake Norman real estate market actually exceeded my expectations.

In some respects, I could pretty much just copy my 2011 predictions for 2012 as I really don’t see many short-term signs that would justify a significant change in either direction. With distressed sales currently representing only 10.8% of our active inventory in my opinion short sales and foreclosures will not drive or dominate our market as they did in the past, particularly 2009-2010.  That said, in the first two weeks of  2012, 46% of the properties that just went under contract were either short sales, pre-foreclosures or bank-owned which underscores the mood of our current buyers…they want bargains when possible.

Before I go into more detail, let’s look at the larger economic issues that will impact our local market.

The Big Picture:

2012 will be about jobs, consumer confidence, stability of the European economy, handling of the backlog of foreclosures not to mention a year of political elections.

• Most economists seem to agree that our country will experience a year of modest growth  in 2012.
• Interest rates are currently at record lows (under 4%) and are expected to rise hand-in-hand with the strengthening US economy but remain historically low.
• “A fresh emphasis on healing the housing sector by…the Federal Reserve, in the Obama administration and in state capitols reflects the view that a healthier real estate market would go a long way in strengthening the economy” according to an article on November 3, 2011 in Reuters. Good news that they are focusing on housing!
• The proposed Feds pilot program turning bank-owned properties into rentals and a proposal that Fannie and Freddie provide an 12-month reprieve or reduced payments for the unemployed are supported as positive efforts that will help stabilize our national housing market.  Home loans will continue to be a very challenging process and will play a role in hindering the ability for our housing market to improve.
• Unlike last year at this time, nationally and locally our unemployment rates are falling.
• Inventory of homes for sale and mortgage delinquencies are dropping nationwide and here in Lake Norman
• Regarding shadow  inventory of properties in the foreclosure process, one pundit summed it up very well: ”Distressed inventory’s impact isn’t so much to lower prices as to prevent them from rising for many years.”
• National Association of Realtors chief economist Lawrence Yun said: “Lower inventory is a signal that price declines are coming to an end….prices have been moving both up and down with no consistent direction since 2009.  In other words: prices have been roughly stable for the past 3 years.”
• The National Association of Home Builders is forecasting GDP growth in 2012 at 2.2-2.4% and single-family housing starts to gain 17% in 2012 “following what was almost the worst year on record in 2011… The bottom line for 2012 is that, while demand for new homes won’t ‘burst forward’, it will slowing improve now that the overall housing market appears to have reached bottom and started back on the path to recovery.”
• An article on 12/11, Money Magazine noted that 2012 is a great year to buy “if appropriate for you” based upon cheap interest rates and a slight uptick in the national housing market
• According to a survey (sponsored by Zillow Inc) of more than 100 economists, real estate experts and investment strategists, Home prices…won’t hit bottom until late 2012 or early 2013.
• An article this week in Kiplinger noted: “The bleeding is just about over, but don’t expect a speedy recovery…the worst is over…this doesn’t mean prices across the nation are poised to rebound any time soon.”  “2012 will be the year that prices finally stabilize, setting the stage for gains in 2013.”

North Carolina:

Our Lake Norman housing market is also going to be impacted significantly by regional economic components, especially jobs.

• “Economists are predicting a sluggish economic recovery for North Carolina and the nation in 2012″ according to an article in the Charlotte Observer on 1/4 2012.    According to attendees at the recent Economic Forecast Forum sponsored by the NC Chamber and NC Bankers Association, “don’t expect dramatic improvements in the state unemployment rate this year.”
• Predictions for North Carolina: N.C. Jobless rate will drop to 9.3% from 10% in 2012. N.C. economic growth for 2012 will be 2% and N.C. will gain 40,000 jobs in 2012 compared to about 21,000 in 2011.
• North Carolina is still a destination for many from around the country ranking among the fastest-growing states according to the U.S. Census Bureau.  Altas Movers also ranked North Carolina in the top ten “inbound” states where more people move into the state than move out.  Good news for our long term market!
• North Carolina also ranked at the very top for the number of retiree’s moving to the state by the U.S. Census Bureau.
•  Forbes and Site Selection both ranked North Carolina 3rd in the best states for business/best business climate and in 3rd place on the list of migration to rather than from the state.
• North Carolina ranks among the states with the lowest number of foreclosures, coming in at 34 according to a Charlotte Observer article on 11/11/11.

My Predictions:

• Buyers will continue to expect bargains sometimes unjustifiably so.  With such low inventory, I am seeing properties that have been sitting selling at prices that are higher than the past few years. Sellers will need to steel themselves for low-ball offers as buyers continue to feel the need to attempt to get a very low price.  This will change as prices stabilize and consumer confidence rises.  It is important to note that this varies greatly by price range and neighborhood.
• Foreclosures and short sales will continue to make up about 1/3 of our Lake Norman sales but represent only about 10% of our inventory. We will continue to see active listings slowly evolving into short sales or foreclosures and new foreclosures coming on the market as the shadow inventory is cycled into our market.  These will sell at a disproportionately higher rate that non-distressed properties.
• Shadow Inventory?  One of the biggest questions I have again this year is just how many Lake Norman homeowners are either waiting to sell until they see a turn in the market or have withdrawn their homes from the market while planning to bring them back on the market once they see signs of improvement.  Our inventory is currently at record lows and we are closing in on our goal of 6-8 months of supply. The question is will a large number of sellers who have been waiting now jump into the market as they see sales improving thus weakening our recovery?  And, how many foreclosures are coming?
• More of the same?  Yes and no.  We are starting out 2012 with weak sales numbers but significantly lower inventory as well.  In 2012 I think we will continue to experience erratic monthly highs and lows in sales.  Foreclosures and shortsales will continue to keep our overall average prices down but will not dominate our prices in every price range or neighborhood. As pent-up home-buyers begin to accept that our Lake Norman housing market is stabilizing, they will take advantage of the low interest rates and jump off the fence when they find the right home that suits their needs.
• With inventory so low, I predict that our sales will remain at about 900 in 2012 which is about equal to the past two years.  Our overall average prices will stabilize but there will be many fluxuations within price ranges, neighborhoods, waterfront properties.  I feel pretty confident that 2012 is the year to buy waterfront properties as I watch the inventory of nice homes with good water at great prices disappearing and not being replaced.  It is going to more important than ever for buyers and sellers to know their specific niche’s recent comparable sales and not to rely on old data.
• Be informed, be smart and be realistic!

I would love to hear your thoughts and predictions. Please leave a comment!

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The article went on to say that “Although affordability has increased….housing demand remains depressed with existing home sales back to 1998 levels.”

Of course, I had to see if these is true of our Lake Norman real estate market and here is what I found:

* Note that our 2011 numbers are through today and I expect them to equal 2010.

Insight Summary

• If you look at the Sales column, you can see the dramatic rise, fall and recent leveling out of the number of single family homes sold in Lake Norman (MLS area 13) since 1998.
• The second easiest column to explain is the average Days on Market which shows a fairly consistent time until the past few years.  Imagine that back in the early 2000′s it took less than 2 months to sell a property!
• What is fascinating but a bit more complicated is the average sales prices and the average dollars per square foot columns. Overall our average sales prices in Lake Norman really haven’t dropped that much yet this is counter intuitive to our experiences of the past 4 years.  (Unfortunately I can’t get the median prices from our MLS which is what most national statistics use).  The average sales are particularly skewed here in Lake Norman because of our waterfront homes which can sell as high as $6 million.  It doesn’t take too many very high end sales to impact the average sales numbers dramatically.  As you can see, over all our prices have only dropped about 5% from our highs in 2006/2007.

Through a Statistical Analysis Module I am able to get charts using our MLS data from 2005 to October 2011. I can’t copy them here but I can email you copies if you are interested. Here is what I learned:

• The median sales price in Lake Norman went from a low of $260,000 in January 2005 to a high of $$350,000 in 2007/2008.  Our median prices since then have followed a jagged line between $350,000 down to a low of $315,000 in November of 2009. Lake Norman median prices for home sales have actually increased since September of 2010 and stand at $330,000 as of the end of October.
• In contrast, I looked at the same median sales price chart for ALL of the Charlotte Multiple Listing Service and it resembled a pyramid; starting low in January 2005 and increasing steadily up until the first quarter of 2008 after which it dropped consistently until January of 2010 but not quite as low as the beginning of 2005.  Since then they have remained at about the same price.  Our entire MLS dropped significantly lower than Lake Norman and in a more predictable fashion.

My overall conclusion for these statistics is that Lake Norman truly is a unique market which can’t be discussed with a broad brush approach.  In order to truly understand our Lake Norman housing market if you are buying or selling a home you need to narrow your focus to your specific property type, location and price range.  Hopefully my monthly and quarterly sales analysis will provide more valuable insight for your purposes.  (See the right hand column on the home page of this website where is says “Topics” and click on “Market Reports” to access all of the reports available.

Questions? If you want copies of these charts please email me: diane@dianeaurit.com.

More Lake Norman Real Estate Sales Data:

Lake Norman Real Estate’s October 2011 Sales Analysis

Lake Norman Real Estate’s 3rd Quarter 2011 Price Range Analysis

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So, why I am not jumping up and down with enthusiasm?  Because I am more focused on our future numbers and our active price ranges.  As you will see below, our conditonal and pending home sales are lower than at the same time last year indicating a slow-down in November and even December sales.  And, a larger portion of our sales are at the bottom of our price ranges.

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

Some significant additional interesting statistics for you:

• 19.8 of our closed sales were “distressed sales” ( Foreclosures (REOS), defaults, Short Sales) compared to 10%  last month, 16.8 in August,  18.5%  in July,  25% in June and 27% in May. And, even better news, only 9.6% of our active listings are distressed.
• 28% of our closed sales were waterfront homes down from 38% last month.
• 60% of our October sales were under $400,000 and 80% were under $600,000.
• Today our active listings stand at 927, the lowest number since I started these reports in 2007.  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 dropped another 6% from last month and 20% from October 2010.  Our absorption rate/months of supply of active listings stands at 11.4.  Our shrinking inventory and relatively good sales are moving us closer to our goal of a truly balanced housing market of 6-8 months of supply in Lake Norman area (MLS area 13).  With only 9.6% of Lake Norman’s current listings being “distressed sales”,  if we don’t get a second wave of foreclosures, which we haven’t so far, our housing market is definitely over the biggest hurdle.

• 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, remain fairly low most likely because sellers are unwilling to take on the risk of waiting for the buyer’s home to sell before closing.

• Conditional Sales decreased 4% this month when compared to September 2010 but were about equal to last month’s. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late November/December. It looks like we will have a dip in sales in November and end the year about equal to 2010.

• Pending sales dropped to 79 from a whopping 102 last month.  They are also 12% lower than October 2010.    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. It looks like our November closed sales will be down from this month and November of 2010.

• The number of closed home sales in Lake Norman jumped up 29% compared to October 2010′s and were 4% higher than last month.

• One important note:  In ever single category on this chart our  average prices were down.  We had a marked decline in sales of properties at or above $900,000.  The lower price ranges in our Lake Norman housing inventory are driving our current market.  It isn’t so much that our prices themselves are still falling but rather the concentration of sales is in our lower price ranges.

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

• November: 169  (The lowest since March!)
• October: 193
• September: 183
• August: 193
• July: 178
• June: 199,
• May:  173
• April 195,
• March: 163
• February: 142

Last October we had only 165 so while we are trending down compared to most of 2011 we are about equal to last November’s.

Here is a breakdown by price-range of our June 2011 closed sales in Lake Norman’s area 13-1 to 13-5:

• $78,000 – $199,999:  13        
• $200,000 – $299,999:  14 
• $300,000 – $399,999: 22

(These price ranges represented 60% of October’s sales compared to 53 of September ‘s total sales)

• 400,000 – $499,999:  11
• $500,000 – $599,999: 5

(These price ranges represented 19.7% compared to 21.7%  last month)

• $600,000 – $699,999:  5
• $700,000 – $799,999: 4
• $800,000 – $899,999:  3
• 900,000 – $999,999:  1

(Solds for $600,000 – $1mill = 16% compared to 19%  last month)

• $1,000,000 – $1,999,999: 2
• $2 million+ : 1  ($3,030,000)

(Solds $1million+ = 3.7% compared to 6.4%  last month)

7-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 2011 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 Good News and the Bad:

 Very Good:

• Inventory is down
• Absorption rate/months of suppy is down
• Number of distressed homes for sale is below 10%
• We are finally seeing some new construction popping up (Not spec homes)
• Prices are inching up in certain price niches particularly in communities like The Farms and The Point now that their distressed sales are nearly gone.  There are even new-construction homes available in The Farms.

Bad:

• Sales are trending down again this month.  The irractic nature of our Lake Norman real estate market continues
• 60% of our sales were under $400,000.
• With few new listings, buyers have fewer options.  While at one time they could afford to be picky, now that many of the good properties have sold their options are to wait and hope that higher priced homes are reduced substantially or compromise more and be willing to pay a bit more than some of the extreme bargain prices of the past few years.
• With fewer distressed properties, the “screaming bargains” are few and far between.  Successful buyers are now concentrating on getting a good price but for the most part are not expecting huge price concessions.
• With construction loans nearly impossible to get, lots, especially waterfront, are still sitting.

In my opinion, overall our home prices may have hit bottom. The future of our Lake Norman real estate market now depends on two main things:

1. How much ”shadow inventory” do we have in our Lake Norman area?  Will we see more distressed properties coming on the market later this year or next year?  My guess is that while they will continue to exist they will no longer dominate nor drive our Lake Norman housing market.

2.  Consumer confidence based upon the national/global economy.

My advice to Lake Norman home buyers at this point is to look for homes that are in good locations and have most of the priorities on your list.  Then, to determine a realistic price, use VERY RECENT comparable sales and don’t get caught up thinking about the incredible bargains in the past.  Carpe Diem!

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Based upon our relatively strong numbers of new contracts (Conditional, Active Due Diligence Pending sales) it looks as though this positive trend will continue into September and perhaps into fall.

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

Some additional interesting statistics for you:

• Only 16.8% of our closed sales were “distressed sales” ( Foreclosures (REOS), defaults, Short Sales) compared to 18.5%  last month,  25% in June and 27% in May. This is extremely important because if we don’t have a new wave of foreclosures then our Lake Norman market truly is healing!
• 21% of our closed sales were waterfront homes down from 33% last month.
• 57% of our August sales were under $400,000.

A closer look:

• The number of Active Listings in Lake Norman remains well below last year’s and is continuing to drop.  Our absorption rate/months of supply of active listings dropped to the lowest level since the recession: 10.5 months!   For the first time since 2007 we are just shy of a goal of a truly balanced housing market of 6-8 months of supply in Lake Norman area (MLS area 13). This is truly a remarkable achievement given the weak national housing numbers and global economic problems.  It is  likely that we will see a slowing down in the fall and winter months but perhaps not as painful a slowdown as the nation as a whole.

• 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, remain fairly low most likely because sellers are unwilling to take on the risk of waiting for the buyer’s home to sell before closing.

• The combined total of Conditional Sales and our new “Due Diligence” category  increased 23% this month when compared to August 2010.  These are homes that  just went under contract and still have financial and inspection conditions. They represent potential future closed sales most likely in late September/October.  These are the numbers that give me the most encouragement as they indicate our current pace of Lake Norman home sales may be sustained through early fall at least.   (Please note that I decided to separate Conditional from the new Active Due Diligence category because it has become increasing difficult to provide good insight into the average prices and days on market).

• Our Lake Norman Pending sales are also up 23% from August 2010.    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. While we may not match this month’s 101 closed sales, all indications are that we will continue to outpace our 2010 numbers and may again post record monthly highs since 2007 in September and October.

• The number of closed home sales in Lake Norman were a whopping  29% above August 2010′s.  One important note:  The average price of homes sold were only 2%  lower than last August 2010.

The total number of Lake Norman single family homes under contract (but not yet closed) on September 1, 2011 was 183, compared to August 1st’s 193, June 30th’s 178.  May 31st’s 199, April’s  173  March 31st’s 195, February 28th’s 163 and January 31st’s 142. Last August we had only 157 so this month’s are 16.5% higher; another indication that the next few months will be stronger than 201o. More good news!

Here is a breakdown by price-range of our June 2011 closed sales in Lake Norman’s area 13- to 13-5:

• $45,000 – $199,999:  13        
• $200,000 – $299,999:  30 
• $300,000 – $399,999: 15

(These price ranges represented 57% of August’s sales compared to 45.7% of July ‘s total sales)

• 400,000 – $499,999:  13
• $500,000 – $599,999: 13

(These price ranges represented 25.7% compared to 29%  last month)

• $600,000 – $699,999:  4
• $700,000 – $799,999: 2
• $800,000 – $899,999:  3
• 900,000 – $999,999:  1

(Solds for $600,000 – $1mill = 10% compared to 19%  last month)

• $1,000,000 – $1,999,999: 4
• $2 million+ : 3

(Solds $1million+ = 7% compared to 6%  last month)

7-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 2011 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

Above is a snapshot of Lake Norman home sales numbers by month for the past 7  years.   As you can see, our August sales were the best since 2007!  As opposed to most of the courtry, our Lake Norman real estate market has had 3 good months in a row and I anticipate several more to come!  This is the longest string of positive monthly sales numbers in quite some time.

So, what am I seeing as I am out selling? 

•  First and foremost, good properties that have been sitting for several years and have been reduced in price are selling, sometimes with multiple offers! My buyers who have been watching their own niche for years are seeing many of the properties selling and not much if anything coming on to replace them.
• With fewer distressed properties, the “screaming bargains” are few and far between.  Buyers are now concentrating on getting a good price but for the most part not expecting huge price concessions
• Once a listing is reduced to an appropriate price it will most likely sell fairly quickly depending on the price-range.
• With construction loans nearly impossible to get, lots, especially waterfront, are still sitting.
• Prices are inching up in certain price niches particularly in communities like The Farms and The Point
• Our inventory of homes for sale is shrinking so there are fewer options for buyers.

In my opinion, overall our home prices may in fact have hit bottom. The ability to find more “screaming bargains” will depend on how many more distressed homes come on the market in the future. How much ”shadow inventory” do we have in our Lake Norman area?  Will we see more distressed properties coming on the market later this year or next year? The fact that distressed properties only accounted for 16.8% of August’s sale shows how this portion of the Lake Norman real estate market continues to shrink.  My guess is that while they will continue to exist they will no longer dominate our market.  My advice to Lake Norman home buyers at this point is to look for  homes that are relative bargains and not wait for the screamingly low ones.  Carpe Diem!

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