About two days after one of my out-of-state buyers asked me about how the housing slowdown has effected Lake Norman builders, the lead article in The Charlotte Observer’s Business Section was: “Housing slump slams Mecklenburg builders. In a signal of the market’s steep decline, building permits are off 40% from 2007.” The article went on to say:
- Permits fell 30% below the lowest level in the last decade
- Permits for the 8-county Charlotte area fell 49% in the first half of 2008 and 52% for the second quarter compared to the same periods last year according to Market Opportunity Research Enterprises.
- Nationally, construction permits are at a 17-year low!
Lake Norman permit statistics aren’t available yet so I thought I would go to the MLS and do a quick analysis of new construction versus re-sale listings and sales. Here is what I found:
|7/19/2008||New Construction||Resale||New Construction % of Total|
|Solds 1/1/08 – 7/19/08||181||360||33%|
|Months of Supply||18||23||-21%|
|Solds 1/1/07 – 7/19/07||274||635||30%|
|Solds 2008 vs 2007 % change||-34%||-43%|
|Average Sales Price 2008||$497,554||$465,407|
|Average Sales Price 2007||$552,044||$479,364|
|Average Days on Market||158||103|
- Relative to the resale homes, the number of active listings versus sales and the number of months of inventory show slightly less of an over-stocked position than resale homes. ie: new construction represents 28% of our existing active listing inventory but represents 37% of our pending sales
- The most telling numbers are the average days on market where new listings are active for 153 days versus 103 or 53% longer than resale homes and the average sales price has dropped 9.9% for new construction versus 2.9% for resale homes.
Based upon these statistics it would appear that inventory of new construction is trending downward as are the sales prices and that they are sitting on the market on average of almost 6 months before selling. When Market Opportunity Research Enterprise releases their data for the Lake Norman area, I am pretty sure we are going to see an equally dramatic drop in new home permits and as a result a drop in the quantity of new construction homes available in the next year or more.
As was the case in California during the early 1990’s, builders are less likely to build large quantities of spec homes and more likely to have a committed buyer before breaking ground on a new home.
Learn More About Life in Lake Norman: