After a very disappointing November, our Lake Norman real estate sales for December came in better than I expected and 2% higher than last December’s thus ending 2013 on a positive note. Our December 2013 home sales were actually the best since 2006 which is only the fourth month we have accomplished this in 7 years! I fear our celebration will be short lived however given the numbers below. There are also some interesting trends in our overall Lake Norman housing market so 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 December 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
Lake Norman Real Estate’s December 2013 Sales Analysis Chart
* 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.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) plummeted to a new low of 5.3% of Lake Norman’s total home sales which is down from 14.8 last month. Prior months were: 11.3% in October, 15% in September, 9.4% in August, 11.3% in July, 6.9% in June, 10.6% in May , the 14% in April, 20.4% in March, 16.9% in February and January’s 29%. We only had 5 distressed home sales in December. The average price for distressed single family home sales was $413,757 compared to an earlier low of $252,526. Distressed active listings comprise only 3.5% 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!
- 31.6 % of our closed sales were waterfront homes which is up from the last several months. The average sales price of Lake Norman waterfront homes in December was $772,116 which was the highest since July’s $874,988, June’s $990,693 and May’s $778,045. In December we had an slight uptick in our luxury housing market. Our average price per square foot remained $216 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.
- 11 new construction homes sold in December which is identical to November. The average listing price vs sales price of new construction single family homes was an impressive 103%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 41 new construction homes under contract. The average sales price in December was up, logging in at $476,627 compared to 448,564 last month, $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 homebuyer so will not be included in our Multiple Listing Service numbers.
- 50.53% of Lake Norman’s October home sales were under $400,000.
- 61 % of the entire Lake Norman home sales in December were under $500,000 which is the lowest in all of 2013. it is truly refreshing to see some improvement in our trade-up and luxury housing markets after an abysmal late summer and fall.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 155 was the eighth month in a row of decline after April’s record high of 319 . At 155, these are the lowest combined totals since February of 2012 and well below last year’s 184. This does not bode well for our January/February 2014 sales.
A closer look at the chart:
- The number of Active Listings in Lake Norman is now up to 10% higher than last December’s. Our absorption rate/months of supply of active listings today is 8.08 compared to last month’s 9.6 but well above May’s post recession low of 5.9. After 3 months of rates higher than the nationally defined goal of a balanced 6-8 months of supply, at least for the moment the Lake Norman real estate market is balanced. However, January’s lower sales will definitely put us well back into the buyer’s market status. In contrast, in the entire Charlotte MLS there is currently only a 5.6 month supply. 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 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 16%.
- Under Contract Show (conditional sales), decreased for the first time in 22 months when compared to the same month of the prior year, albeit by only 1%. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late January/February/March. Based upon these numbers I think our Lake Norman real estate market is going to struggle in the first quarter of 2014 to meet let alone beat 2013 numbers.
- Pending/Under Contract No Show sales are a whopping 29% LOWER than last December’s making this the fourth 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.
- The number of closed home sales in Lake Norman in November as of today and as stated above, was +2% compare to last year’s. And, the average sales price increased 16% and the average days the homes were on the market dropped an impressive 16% which is good news. So, yes, December logged in some solid number unlike October and November but they are honestly a mixed bag which definitely reflect some weaknesses and areas of concern!
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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 August 2013 closed sales in Lake Norman’s area 13-1 to 13-5:
- $117,000 – $199,999: 14-
- $200,000 – $299,999: 19+
- $300,000 – $399,999 15-
(These price ranges represented 50.5% compared to 57.95% last month.)
- $400,000 – $499,999: 10+
- $500,000 – $599,999: 8
(These price ranges represented 18.9 compared to 12.9% last month and 21.6% in October)
- $600,000 – $699,999: 11+ (7 last month)
- $700,000 – $799,999: 3
- $800,000 – $899,999: 5 (Compared to 7 last month)
- 900,000 – $999,999: 1
(These price ranges represented 21% compared to 21.59% last month)
- $1,000,000 – $1,499,999: 7+ (Compared to 2 last month, 1 in October, 2 in September, 4 in August and 8 in July)
- $1,500,000 – $1,999,999: 2
- $2 million+ : 0
(#Solds $1 million+ = 9.5% compared to 4.5% last month, 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 $200,000’s, $400,000’s, $600,000’s and the $1 million – $1,499,999.
Higher-end home sales in Lake Norman
Very interesting December! After 4 months of very weak sales in the entire Lake Norman luxury homes market, we finally saw some niches of strength, especially the $1 million – $1,500,000 price range. While we had fewer sales in our trade-up price ranges from $700,000 – $999,999 and our highest sale all month, at %$1,662,500, didn’t even break into the $2 millions, it was great to see some strong activity in this price range.
We currently have 296 waterfront homes actively listed for sale. With 30 closed sales in December that means Lake Norman has 9.9 months of inventory of waterfront homes for sale which is a bit higher than the overall 8.1 and above 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 for since early summer. We currently have 45 waterfront homes under contract compared to 54 last month but given that January is historically our slowest month of the year this will most likely translate in a continuation of our current, erratic trends. The big question is how many waterfront home sellers are waiting to list in our historically strong spring market? Will we be flooded with new listings?
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 2013 exceeded 2012’s by 18.5% and were only -7.4% 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!
Summary and My Insight
- 2013 was a very good year overall for Lake Norman with an 18.5% increase in sales.
- Lake Norman’s single family homes average sales price per square foot has increased about $4.65 or 3.3% in 2013.
- The average number of days a Lake Norman property took to sell was down 12.4% and the average price was up sightly.
- Our inventory of active listings is dropping consistently as it should during this time of year. (Albeit not as low as last year).
- 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 almost irrelevant in 2013 and the numbers are still dropping which means they will not play much of a role in our 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 11 new homes last month through the MLS, we have 41 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 103% 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).
- 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 improving real estate market based on owner-occupied rather than investors and we are already standing on our own.
- Interest rates remain historically low despite increasing a full 1% in 2013.
- 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.
- Freddie Mac economists recently said that they expect that a “much stronger economic recover will take hold next year, led by a resurgent housing sector.”
- 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.
- Interest rates are expected to continue to rise in 2014 with some economists predicting they will reach 5% or higher
- Combined with tightening credits and tougher loan standards, 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 and prices.
- While the average price of a closed home sale in Lake Norman in December increased 16%, 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 too high despite the recent drop. Lake Norman remains 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 almost 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 strong 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 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.
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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