Lake Norman homes sales remain historically strong (post the recession) but continue their softening trend after our record setting high in May. That said, we still logged in some solid number in August. At 128 single-family home sales we had the 4th best month in the Lake Norman real estate market since August 2007 . Once the late comers input their sales into the MLS my guess is that we will have closed 132 contracts last month.
Let’s take a closer look at the numbers to glean some insight into the short term future and exactly where the Lake Norman housing market stands right now.
Here are the August 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* Note that the Charlotte Regional Multiple Listing Service created two new categories, Under Contract Showings (UCS) to continue and Under Contract no showings (UCNS). These replaced the Contingent, Conditional and Pending categories. Contingent Sales are now joined with Conditional sales in my reports.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) comprised 9.4% of Lake Norman’s total home sales which is down from 11.3% last month, up from 6.9% in June but below May’s 10.6% , the 14% in April, 20.4% in March, 16.9% in February and January’s 29%. We only had 12 distressed home sales in August. The average price for distressed single family home sales was $252,526 so clearly the very lowest of Lake Norman’s price ranges. Distressed active listings comprise only 3.9% of our total inventory of Lake Norman homes for sale! According to a recent article on Trulia the “normal” delinquency and foreclosure rate for the US is 5.25%.
- 31 % of our closed sales were waterfront homes which is equal to last month’s. The average sales price of Lake Norman waterfront homes in August was $709,753 which is down from last month’s $874,988 June’s $990,693 and May’s $778,045. The average price per square foot was $214.5 which was down significantly from last month’s $229 and all prior months this year after February. This can be directly attributed to having only 6 waterfront home sales over $1 million compared to 13 sales of waterfront homes over $1 million in both June and July.
- 11 new construction homes sold which was 3 less than last month’s. The average listing price vs sales price of new construction single family homes was 101%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. The average sales price was $373,183. It is important to note that many of the new construction homes you will see driving around the lake are custom homes so will not be included in our Multiple Listing Service numbers.
- 50% of Lake Norman’s August home sales were under $400,000.
- 67.2% of our August home sales were under $500,000 which is up from the past few months but significantly lower than February’s 81.7%, 81% in January, 74 % in December, 75% in November. After seeing an upswing in both the trade-up price ranges and our Lake Norman luxury homes, August seemed to return to our my typical post recession norms.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 118 was the fourth month in a row of decline after April’s record high of 319 . Looking at this number compared to the past two years (see below), it is clear that our Lake Norman housing market has definitely slowed down. There is no doubt now that our home sales in Lake Norman this year did peak in May but seem to be maintaining a slight edge on the same period in 2012.
A closer look at the chart:
- The number of Active Listings in Lake Norman increased 8% compared to last August’s. Our absorption rate/months of supply of active listings today has edged up to 7.8 after May’s post recession low of 5.9. We are still within our goal of a balanced 6-8 months of supply in the Lake Norman area (MLS area 13). To put this in perspective of our post recession Lake Norman housing market, in January of 2009 we had 52.5 months of inventory. The average number of days on the market for active listings dropped by a healthy 17%.
- Under Contract Show (conditional sales), increased for the 19th month in a row when compared to the same month of the prior year, this time by a more modest 3%. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late September/October. Based upon these numbers I expect us to maintain slightly higher sales than 2012 but not the double-digit increases we have experienced for the past 4 months.
- Pending/Under Contract No Show sales were a modest 10% higher than last August’s compared to June’s impressive 34% higher than June 2012’s. These are the contracts that are past their inspections/ due diligent period and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. While I don’t expect doubt digit increases in the next few months I am pretty darn confident that we will again exceed last September’s sales of 92 but with three months of trending downward it looks like Lake Norman home sales in May will be our peak for 2013.
- The number of closed home sales in Lake Norman in August as of today were only 6% higher than last August’s and the average sales price was actually down 9%. Obviously, the slowdown in our higher-end homes has impacted this number.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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: 134 (the lowest ALL year)
Here is a breakdown by price-range of our August 2013 closed sales in Lake Norman’s area 13-1 to 13-5:
- $33,820 – $199,999: 16+
- $200,000 – $299,999: 29-
- $300,000 – $399,999: 19
(These price ranges represented 50% of our August home sales.)
- 400,000 – $499,999: 22+
- $500,000 – $599,999: 12-
(These price ranges represented 26.5%)
- $600,000 – $699,999: 12++
- $700,000 – $799,999: 5 (compared to 12 last month)
- $800,000 – $899,999: 4 (compared to 7 last month)
- 900,000 – $999,999: 3
(#Solds for $600,000 – $999,999 = 18.75%)
- $1,000,000 – $1,499,999: 4 (compared to 8 last month)
- $1,500,000 – $1,999,999: 1 (compared to 4 last month)
- $2 million+ : 1
(Solds $1 million+ = 4.7% compared to 11.2% last month, 10.4% in June, 4.4 % in May and 7.5% in April)
The most improved price ranges in August were homes under $200,000, the $400,000’s and the $600,000’s.
Higher-end home sales in Lake Norman
Wow, what happened to our trade-up and luxury housing market? After two really strong months we lost ground not just in the $1million+ homes but also the $700,000 – $999,999. This is supported by the fact that the average price of a waterfront home sale dropped to $709,753 from last month’s $874,988 June’s $990,693 and May’s $778,045.
9-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 first eight months of 2013 exceeded 2012’s by 24.5% and were the best since 2007. In fact, year-to-date we are only 14% below the number of Lake Norman home sales in the first 8 months of 2007!
Summary and My Insight
- The Lake Norman real estate market, while trending downward, is still posting historically positive numbers. It looks like we may see slightly lower closed sales again this month reflecting a consistent but modest slow down since May. While I have absolutely no doubt that Lake Norman’s housing market hit bottom and is well on its recovery path, the exceptionally strong numbers in May don’t appear to be sustainable yet. The last 4 months in 2012 were relatively strong and consistent so it will be interesting to see if we can match or beat these last months in 2013.
- Lake Norman has been enjoying consistently higher closed sales for well over a year. Prices have not only stabilized but are actually increasing in some areas. However, I can not yet say that our prices have increased across the board. Rather, 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.
- The reality is that our rock bottom prices are gone due to the disappearance of distressed sales and high levels of inventory. Gone are the great waterfront homes I sold in the $600,000’s and even $700,000’s in 2010/11 and the great waterfront teardowns in the $300,000’s I sold in the last year or two. Good, newer move-in condition homes with good, deep water are really hard to find under $1,000,000 on the east side of Lake Norman. Denver, Sherrills Ford as well as Troutman and Statesville have not caught up to the strong sales of Mooresville, Cornelius and Huntersville (off water).
- I have recently been working with a number of home buyers looking off water in the $250,000 – $500,000 price ranges. We are finding that most of the existing inventory of homes have some negatives that are making them less desirable so when a new listing comes on in a popular subdivision with good lots, good floorplans and tasteful upgrades they are selling in just a few days. These buyers are literally having to watch the new listings every day and get out to see them ASAP. I have found that there is a better selection of homes in these price ranges in Huntersville than in Cornelius and Mooresville where homes are a bit more expensive because they are closer to or in waterfront communities.
- Lake Norman homes are selling significant;y quicker (see the Days on Market above) and at higher list-to-sale percentages. With low inventory demand is higher and I would expect all price ranges to slowly improve on all sides of the lake just not at an equal pace.
- The number of distressed homes for sale are so low they are almost irrelevant in 2013 and the numbers are still dropping. According to a recent Charlotte Observer article Charlotte area homeowners who are “underwater” are now down to 17% compare to 23% a year ago. 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. Not only did we sell 11 new homes last month but we have 132 new homes listed for sale in our MLS. New housing communities are popping up now as well as custom and smaller groups of spec homes. As I noted above, new construction homes are selling on average for 101% of the listing price! (Interesting note: Builders are more likely to build homes in existing subdivisions at slightly LOWER prices than the existing homes to ensure quick sales).
- Lake Norman’s inventory of homes for sale has increased ever so slightly t0 a 7.8 month supply.Overall Lake Norman is pretty balanced between a buyer’s and seller’s market. Again, this depends a lot on location and price.
- Interest rates are on a mini roller coaster going up and down depending on the economic news of the day, especially speculation about the Fed’s next move. There is concern over potential increases which may, in fact, serve as a motivator for buyers who thought they could wait to buy but now feel they should to jump off the fence before it is too late.
- 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 shortsales several years ago are now re-entering the market and are ready to buy.
- Finding the perfect home has become more difficult with so fewer listings to chose from and the fact that the older inventory has been picked over. Buyers can’t wait too long to make decisions because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
- Mortgage rates have jumped up more than 1% from their lows earlier this year. While this may motivate qualified home-buyers to jump off the fence it will negatively impact buyers as to what they can afford and even if they can now afford to buy.
- I still have some concerns, but not as strongly as earlier this year, about Lake Norman sellers and listing agents being overly optimistic not only when they initially price their properties but also during negotiations. With the increase in showings many sellers are expecting higher offers so are not as willing to work with good but lower offers by qualified buyers.
- I also have concerns for Lake Norman home buyers. A good number are still in the old mind set that they have plenty of time to consider new listings and that they should start offers really low. Right now good properties are selling quickly, sometimes with multiple offers. It is critical to know comparable sales activity in your price range and act quickly if/when a good listing comes on the market. Starting the offer process out with an unsupportable, low purchase price is not a good idea. Again, know your comparable sales. I only use sales comparables from the past 3 months these days, not 6 or 9 months.
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), 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 rising and prices low but rising it is a great time to buy. With less than 4% 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. Get it in your head that the Lake Norman housing market is the strongest it has been in years and that prices are going up. 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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