After a very disappointing November, but a respectable December, January is an important gauge of just where our Lake Norman real estate market is headed. Lake Norman’s January housing market started out quite slowly but picked up enough to almost match last year’s sales. Yes, I said “almost match last year’s“. I think we are going to hear a lot of this throughout 2014. 2013 was a recording breaking year both for Lake Norman home sales which were up 19.7% versus 2012 but also for the nation as well. Like the nation, however, Lake Norman experienced a marked slowdown in the 4th quarter. Last January’s 72 sales were the best since 2007 as were all but two months in 2013. Most economists feel that the national housing market will struggle to match the strong 2013 numbers in 2014 and our January Lake Norman numbers indicate that this may also be true here.
Here are the January 2014 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* All date is from the Charlotte Regional Multiple Listing Service
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) represented 13.6% of Lake Norman’s total home sales which is up from last month’s low but down from 14.8% in November and significan’t lower than last January’s 29%. We only had 9 distressed home sales in January. The average price for distressed single family home sales was $326,555 compared to an earlier low of $252,526. Distressed active listings comprise only 1.9% of our total inventory of Lake Norman homes sale. Clearly distressed sales no longer play a significant role in our Lake Norman real estate market!
- 30.3% of our closed sales were waterfront homes which is down slightly from last month. The average sales price of Lake Norman waterfront homes in January was $809,625 which was the highest since July’s $874,988, June’s $990,693 and higher than May’s $778,045. In January we had an slight uptick in our luxury housing market. Our average price per square foot was $219 after peaking at $229 earlier this year. Lake Norman’s waterfront home sales above $700,000 remain sluggish but the homes that are selling are getting relatively strong offers based upon their size.
- 7 new construction homes closed in January down slightly from the last few months. The average listing price vs sales price of new construction single family homes, while strong at 99% was actually down from an impressive 103% last month. Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 46 new construction homes under contract. The average sales price in December was down, logging in at $394,006 compared to 476,627 last month, 448,564 in November, $359,018 in October and$406,596 in September. It is important to note that many of the new construction homes you will see driving around Lake Norman are custom homes or will be sold directly from the builder to the home-buyer so will not be included in our Multiple Listing Service numbers.
- 47% of Lake Norman’s October home sales were under $400,000.
- 63.6 % of the entire Lake Norman home sales in January were under $500,000. Clearly our lower price ranges are still dominating our housing market.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 185 was the first time in nine months that we saw an upswing in these numbers after April’s record high of 319 . At 185, we are well below last year’s 219 at this exact date. So, while we are definitely seeing an upswing in activity, it looks like we will really struggle to match last February’s sales. Sound familiar?
A closer look at the chart:
- The number of Active Listings in Lake Norman is now up to 8% higher than last January’s. Our absorption rate/months of supply of active listings today is 12.2 compared to last month’s 8.08 and is also well above May’s post recession low of 5.9. Using the nationally defined goal of 6-8 months of supply for a balanced housing market, January’s lower sales definitely put us well back into the buyer’s market status. Low inventory has played a significant role in Lake Norman’s housing recovery as it has nationally and is what has been driving the price increases nationally so we need to keep our low levels of inventory for the sake of the health of our Lake Norman real estate market. However, I hear a lot of agents talking about new listings coming on soon so I am concerned about our first quarter. One bit of good news is that the average number of days an active listing has been on the market dropped again by 7%.
- Under Contract Show (conditional sales), increased 7% when compared to this same time 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 February/March/April. It is great to see some strength in these right now as it may be a signal that our Lake Norman real estate market will improve after a dip in the winter.
- Pending/Under Contract No Show sales are a whopping 39% LOWER than last January’s making this the fifth month in a row of decline. These are the contracts that are past their inspection/due diligent periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon this I predict that we will definitely not exceed 2013 closed sales numbers this month. Pending home sales are down throughout the US.
- The number of closed home sales in Lake Norman in January as of today and as stated above, was down 8% compared to last year’s. However, , the average sales price increased 17% and the average days the homes were on the market dropped an impressive 6% which is good news. Yes, January closed sales were down but prices were up slightly and homes sold a bit faster so it isn’t all bad news!
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- February 6, 2014: 185
- January 6, 2014: 155
- December 6, 2013: 197
- November 6, 2013: 207
- October 6, 2013: 207
- September 6, 2013: 218
- August 6, 2013: 264
- July 6, 2013: 271
- June 6, 2013: 293
- May 6, 2013: 316
- 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, 2012: 134 (the lowest ALL year)
Here is a breakdown by price-range of our January 2014 closed sales in Lake Norman’s area 13-1 to 13-5:
- $22,000 – $199,999: 6-
- $200,000 – $299,999: 12-
- $300,000 – $399,999 13-
(These price ranges represented 47% compared to 50.5% last month.)
- $400,000 – $499,999: 12+
- $500,000 – $599,999: 9+
(These price ranges represented 31.8% compared to 18.9% last month and 12.9% in November)
- $600,000 – $699,999: 3-
- $700,000 – $799,999:6++
- $800,000 – $899,999: 0 (Compared to 5 last month)
- 900,000 – $999,999: 1
(These price ranges represented 15% compared to 21% last month)
- $1,000,000 – $1,499,999: 1- (Compared to 7 last month, 2 in November)
- $1,500,000 – $1,999,999: 2
- $2 million+ : 1
(#Solds $1 million+ = 6% compared to 9.5 % last month, 4.5% in November, 3.1% in October, 5.7% in September, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April)
The most improved price ranges in December were the $400,000’s, $500,000’s and the $700,000’s. This trade-up segment of our market is what accounted for our increase in average sales prices.
Higher-end home sales in Lake Norman
Dang, after a bleak fall and winter but a relatively strong December our sales $800,000 and above all but disappeared in January. The only good news is that we did break into the $2 millions with one sale. Where is our luxury?
As goes our higher end sales so goes our waterfront home sales. We currently have 309 waterfront homes actively listed for sale. With 20 closed sales in January that means Lake Norman has 15.5 months of inventory of waterfront homes for sale which is not just higher than the overall 12.2 and almost double a balanced housing market. I am honestly baffled by the erratic nature of our waterfront and higher priced home sales in Lake Norman but there is no doubt that they have been weak since early summer. We currently have 49 waterfront homes under contract compared to 45 last month so there is a glimmer of hope but we need to see significant increases in the months ahead. The big question remains how many waterfront home sellers are waiting to list in our historically strong spring market? Will we be flooded with new listings?
10-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 2013 exceeded 2012’s by 19.7% and were only -7.0% below 2007’s. There is absolutely no doubt that 2013 has been a great year overall for the Lake Norman real estate market despite the 4th quarter slowdown.
Our January 2014 closed sales were the second best since 2007. If you look ahead you will see we have some hefty sales numbers to meet in the coming months.
Summary and My Insight
- 2013 was a very good year overall for Lake Norman with a 19.7% increase in sales.
- Lake Norman’s single family homes average sales price per square foot increased again this month, this time by 17%.
- The average number of days a Lake Norman property took to sell was down 6%.
- Our inventory of active listings is increasing but not at an alarming rate.
- There are still pockets of “hot” home sales in the greater Lake Norman area, notably the off-water popular and moderately priced communities in Huntersville, Cornelius and to a lesser extent Mooresville where inventory is very low and multiple offers are not uncommon.
- The number of distressed homes for sale are so low they are truly irrelevant and will not play much of a role in our Lake Norman 2014 sales. According to a recent Charlotte Observer article Charlotte foreclosure activity dropped 46% in September which is better than the national rate. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.
- New construction is definitely back. While we only sold 7 new homes last month through the MLS, we have 46 under contract and this doesn’t include custom homes and homes to be built in subdivisions. New housing communities as well as custom and smaller groups of spec homes are popping up all over Lake Norman. As I noted above, new construction homes are selling on average for 99% and in only 73 days. (Interesting note: Builders are more likely to build homes in existing subdivisions at slightly LOWER prices than the existing homes to ensure quick sales).
- Charlotte’s impressive home price gains have been linked to a significant number of investors taking advantage of low prices in “middle class neighborhoods” and turning them into rentals. They therefore have “inflated” prices. Since Lake Norman didn’t enjoy this surge, our sales are more reflective of a truly stable and slowly improving real estate market based on owner-occupied rather than investors and we are already standing on our own.
- Interest rates have actually fallen in the last few weeks to about 4.23% for a 30-year fixed despite increasing a full percent from their lows. This is attributed to weaker housing data nationwide.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Homeowners who went through short sales several years ago are now re-entering the market.
- Economists at UNC Charlotte say that they expect North Carolina to have a strong 2014 in terms of both housing and jobs.
- Charlotte remains North Carolina’s top metro on economic-vitality index by “On Numbers”. Factors they consider are private-sector job growth, unemployment, earnings, housing price appreciation and construction and retail activity.
- Charlotte regional experts expect a 4-4.5% improvement in our GDP in 2014 led by transportation and real estate.
- Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.
- Because prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move than in the past 5 years.
- Not only has Lake Norman experienced a slowdown in the past few months but economists are now saying that there has been a “pause” in the national housing market’s recovery as well.
- Interest rates are expected to continue to rise in 2014 with some economists predicting they will reach 5% or higher by the end of the year.
- Tightening credits, tougher loan standards and increasing interest rates are expected to impede home sales in 2014
- The national housing market is flattening and economists seem to agree that 2014 will be a stable rather than improving year for home sales with only modest gains in prices.
- While the average price of a closed home sale in Lake Norman in January increased 17%, this is more a reflection of what price points are selling rather than increasing home prices overall. There are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market. In addition, the lack of distressed sales has led to higher overall average prices. The “bargains” are all but gone. What I want to see is measurable increases in Lake Norman home sales in ALL price ranges.
- Our overall inventory of active listings in Lake Norman is high despite the recent drop. Overall, Lake Norman today is in a buyers market unlike the greater Charlotte area and many parts of the country where the last number reported was 5.1 months of supply in November.
- From what I am hearing from many Lake Norman Realtors, spring will most likely bring a good number of new listings as sellers who have been on the fence jump in to take advantage of Lake Norman’s traditionally strongest season. This is good news for buyers but may help to keep prices in check if our sales remain relatively flat.
- Lake Norman’s average days a listing takes to sell, while dropping, is double the national average of 56 days.
- Our trade-up and luxury housing niches are still erratic and have yet to recover unlike the lower price ranges.
- Finding the perfect home has become more difficult because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
- On the flip side, higher-end properties are simply taking much longer to sell.
- I have concerns that many Lake Norman home buyers will see weak overall numbers and misinterpret them. It is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and picked over inventory or you might not.
My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floor-plan is good, perhaps having to do some painting, new flooring etc. is your best option. 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 great time to buy. With less than 2% of Lake Norman’s current listings being “distressed sales” don’t expect a “bargain” 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.
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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