To the casual observer, the Lake Norman April 2010 housing market report above might look pretty darn good. After all, inventory is down and contingent, conditional, pending and closed sales are are up.
So why am I not celebrating? Because last month we had a total of 194 contingent, conditional and pending sales (compared to 227 this month) and they resulted in only 76 closed sales. That’s a mere 39% of sales that actually closed successfully.
Taking into consideration that the deadline for the tax credits was April 30th for accepted contracts and June 30th to close, we have to consider our bump up, particularly in conditional sales, to be heavily impacted by these deadlines. So, now that April 30th has come and gone, can our Lake Norman housing market sustain these higher numbers and convert them into closed sales for the rest of 2010 and beyond?
Let’s take a look at the details:
- Active Listings dropped 19% from a year ago. While any drop in inventory is good news in this market, our inventory seems to have stabilized these past three months. Right now, based upon our April sales, we now have only 17.6 months of inventory. While an improvement from our 27 months in February and our 20.5 months in March, this is not good enough. Remember that 6-8 months of supply is considered a balanced housing market. To achieve this given our current inventory levels we will need to sell about 160 homes per month! While we are trending in a positive direction, we still have a long way to go. Note that the average price of our active listings dropped 5%.
- Contingent Sales jumped 50%. These are the homes under contract that are contingent upon the buyer’s home selling. After months of reluctance, Lake Norman sellers are seeming to be more willing to accept contingent offers. Does this indicate a growing number of our sellers’ lack of confidence in their ability to sell their homes?
- Conditional Sales increased a whopping 149%! These are homes that just went under contract and still have financial and inspection conditions. I would be hard pressed not to attribute part of this increase to the April 30th deadline for the Federal Tax Credit programs. The question is, how many of these will translate into close sales? Note that the average sales price jumped 24%.
- Our pending sales represented a 27% increase over a year ago. These are the contracts that are past inspections and are just waiting to close. Pending sales are usually the best indication of future sales and help substantiate that our May sales should exceed the May 2009 sales and MAY even reach May 2008’s 90 sales. Remember, in the fourth quarter of 2009 our Lake Norman home sales consistently exceeded our 2008 sales numbers. After a relatively weak first quarter 2010, it looks like our second quarter has potential to show marked improvement.
- The number of closed sales were 17% higher than April 2009. This pretty much mirrors our March 2010/March 2009 increase of 16%. It looks like we are trending at a pace to just about match 2008 sales. While an improvement, if you look at the chart below you will see we are not even close to our 2007 numbers.
Note that our average sales price increased by 17%. Like last month, we also saw increases in the average price of conditional and pending home prices. This does not mean our prices are increasing. Rather, it means that our higher priced listing sales are improving. Because of the nature of our Lake Norman housing market, we really can’t use the average sales price to determine if our prices are increasing or decreasing because our inventory ranges from under $100,000 to $5 million. Our average prices vary with the price range that is selling. One or two $million plus sales can skew our average prices substantially. However, I am definitely seeing more sales above the $417,000 conforming loan limits
6-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers 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 monthin 2009 and 2010 and the totals in the prior calendar year. The columns may not add up but I do my best withwhat I have to work with!
Considering our improved sales numbers in March and April and our substantially higher condtional sales I would expect Lake Norman’s May and June closed sales to comfortably exceed the same months in 2009 and probably equal those of 2008. Yes, in number of sales, our market appears to have turned a corner and in this respect we probably hit bottom last winter.
What these charts aren’t showing you is how many of these sales are either foreclosures, shortsales or other forms of distressed sales. I just provided one of my waterfront sellers with a comparative market analysis for the past 6 months. In her price-range over half of the recent sales were either foreclosures or shortsales. Bargains are inspiring higher priced buyers to jump off of the fence. Over-priced listings are still sitting. There is still a serious disparity between the prices of many of our closed sales when compared to similar active listings. Until this disparity diminishes and Lake Norman homebuyers gain confidence, I fear we will not see a true stabilization of our single family housing market…Spring 2011?
In the meantime, however, in my opinion our “bargains” are at our bottom. There have been a few incredible “deals” that may not be seen again. Even banks are sitting on properties priced higher than the “deals” rather than reduce the prices to those levels. Who knew there was such a thing as an overpriced foreclosure?! The question is, who is going to blink first, the homebuyer wanting to move to Lake Norman who decides they have waited long enough or the banks and individual sellers who finally reduce their prices into the “bargain” catagory?
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