To be perfectly honest, after such a great 2015 when we logged a healthy 7.3% increase over 2014, I had some concerns about this year particularly given our extremely low inventory of active listings. So far, however, these concerns have been unfounded. After a positive January, we were again in positive territory in February with a respectable 9% increase over February 2015 closed sales. In fact, this February we posted the strongest February since 2007. But where are we trending for the next few months? Let’s take a closer look:
* All data is from the Carolina Multiple Listing Service.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented 8.5% of Lake Norman’s total February home sales. With 8 distressed closed sales, we actually doubled last month’s 4. While distressed active listings currently comprise only 1.1% of our total inventory of Lake Norman homes for sales, it does look as if buyers are jumping on what are perceived as “bargains”. (Average days on the market was only 39). That said, clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- Waterfront homes continue to struggle. They represented only 26.6% of our February closed sales. At the same time they currently comprise 42.2% of our active listings. The average sales price of a waterfront home in February was $874,888. The average price per square foot came in at $232.73. It took on average 144 days for a waterfront home to sell and they sold for 95% of the listing price. We currently have 57 waterfront homes under contract. Our waterfront homes’ months of inventory jumped to 30. Yikes! Waterfront homes are very much in a buyers market overall but this varies by price range. At the same time, I am seeing more good waterfront listings coming on the market, particularly in the $700,000-$950,000. This was reflected in our higher sales numbers in the $700,000 -$1,000,000 in February.
- 17 new construction homes closed in February through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. (In fact, this segment of the market may be skewing our Lake Norman home sales numbers quite a bit. I read a tax report of all sales in Mooresville, for example, and 1/3 of them were builders selling directly to buyers.). The average listing price vs sales price of new construction single family homes was 99%. Once again, there is little wiggle room in new home prices. We currently have 78 new construction homes under contract in the MLS. The average sales price in February logged in at $410,638. The months of supply of 9.47 actually puts this group in a buyer’s market overall.
- 51% of Lake Norman’s February single family home sales were under $400,000, down from 68% last month.
- 69% of Lake Norman home sales in January were under $500,000, also down from 76.3% last month.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 234 is actually higher than the same period for the past two years. Given that we are up against some strong numbers in the spring of 2015 this is an indication that our momentum should continue for at least a month or more and that we will at least keep pace with or exceed 2015.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is 8% below last year’s. Our absorption rate/months of supply of active listings dropped down to 7.99 which keeps Lake Norman overall in a buyers’ market but the trend is heading towards a balanced market. Within specific price ranges, however, there are swings from a buyer’s market to balanced to a seller’s market. Lake Norman is not alone as throughout the country economists continue to note the low inventory of active listings and how this is impacting home sales volumes.
- Under Contract Show (conditional sales), were UP 3% versus this time last year.These are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. They represent future closed sales most likely in late March/April This number would indicate that we should at least match if not exceed 2015’s sales in the next few months.
- Pending/Under Contract No Show sales were up 2%. These listings went under contract on average in 84 days. Again, good, new listings are selling much faster than properties that are less desirable or overpriced. Pending sales are contracts that are past their inspection/due diligence periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. These would indicate that we should see some relatively strong closed sales in March.
- Lake Norman’s closed February home sales in our MLS as of today and as stated above, were 9% above last year’s. (Keep in mind that we should have about 3 or 4 more sales added as slower agents input their sales). Some positive signs: these closed in 105 days or 8% faster than last year’s. Good properties are selling in about 3 months yet our average active listing has been on the market for 155 days. This is the crux of the problem in Lake Norman. Stale, over-priced listings or listings with weaknesses are sitting and buyers are pouncing on good new listings.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- March 6, 2016: 234
- February 6, 2016: 207
- Januuary 6, 2015: 176
- December 6, 2015: 202
- November 6, 2015: 222
- October 6,2015: 209
- September 7, 2015: 268
- August 6,2015: 286
- July 6, 2015 287
- June 6, 2015: 304
- May 6, 2015: 313
- April 6, 2015: 272
- March 6, 2015: 228
- February 6, 2015: 204
- January 6, 2015: 154
- December 6, 2014: 204
- November 6, 2014: 221
- October 4, 2014: 275
- September 6, 2014: 272
- August 6, 2014: 261
- July 7, 2014: 268
- June 5, 2014: 262
- May 6, 2014: 274
- April 6, 2014: 243
- March 6, 2014: 187
Here is a breakdown by price-range of our Januray 2016 closed sales in Lake Norman
- $38,200 – $99,999: 1-
- $100,000 – $199,999: 11=
- $200,000 – $299,999: 16=
- $300,000 – $399,999 20=
(These price ranges represented 51.1% of our February home sales)
- $400,000 – $499,999: 17+++
- $500,000 – $599,999: 7=
(These price ranges represented back up to 25.5% of February’s sales)
- $600,000 – $699,999: 3=
- $700,000 – $799,999: 7 ++
- $800,000 – $899,999: 2
- 900,000 – $999,999: 2
(These price ranges represented 14.8% up from 13% last month)
- $1,000,000 – $1,499,999: 5++
- $1,500,000 – $1,999,999: 0
- $2 million+ : 3+
(#Solds $1 million+ = 8.5% of our total February sales )
The stand out price ranges in February in all of Lake Norman were $400,000, the $700,000’s, and the $1,000,000 – $1.5 million.
Higher-end home sales in Lake Norman
We saw some improvement in our trade-up and luxury housing markets in February. With 19 sales in all of February over $700,000 compared to only 8 last month, this certainly is a positive trend. I want to see this trend continue!
Lake Norman’s Waterfront Housing Market
So, this continues to be the reality of Lake Norman’s waterfront housing market: We have relatively few good, lower priced, waterfront homes, even tear-downs, and very few are coming one the market. Gone are the great tear-downs or good but distressed homes in the $300,000-$600,000 price ranges. The good news is that for the first time in a long time I am seeing some good waterfront listings coming on the market in the $700-950,000 price ranges. It is important for potential waterfront buyers to understand that there are fewer and fewer good options in the lower and trade-up price ranges. While our waterfront market hasn’t fully recovered from its peak, it has improved enough that the bargains of the recession are gone. The lowest priced listings are mostly at the end of coves, can’t have docks or are in less desirable locations. I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that doesn’t suit them or needs too much work. My gut is telling me that when spring arrives and new listings come on the market they are going to be at higher price ranges because the demand is there. Prices are going up out of circumstances rather than overall market trends. For more details: Lake Norman Waterfront Home Sales 2005 – 2005, Some Interesting Insights.
As of today we have 57 waterfront properties under contract compared to 32 last month. Our months of supply based on Februay sales is 12.7. This puts Lake Norman waterfront homes very much in a buyer’s market. However, it is important to note that these active listings have been on the market on average 165 days while the properties under-contract-show were on for only 97 days and pendings only 77 days and their median days on market was only 28 days! Can you say stale inventory? Waterfront sellers need to be very realistic about the current market. Overpriced listings are sitting until reduced to within 5% of market value. Know your price niche! Waterfront home buyers are going to have to lower their expectations and/or be willing to be more flexible. Keep in mind that the only finite property Lake Norman has is waterfront so supply and demand should drive prices up consistently in the future. Seriously, buy as soon as possible…this spring, if you find a waterfront property with good water in an acceptable price range.
12-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 Carolina 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. ***With our new MLS Matix program there are some variances in numbers but I am not going to go back to prior years and adjust.
I love this now 12 year chart of our sales by month as it really gives us a good sense of where we are today and where we have been over the past 12 years. Look at those recession numbers and you can see just how far we fell and just how far we have come. 2015 exceeded all years back to 2006 so in sheer volume our Lake Norman housing market has recovered. The good news is that so far in 2016 our closed sales have actually beaten 2015’s. However, we are coming up against some very large numbers so it will be very interesting to see if we can keep up this positive trend. I think we will at least match 2015 but it really depends on inventory, interest rates and demand.
Summary and My Insight
Good signs/news remains about the same as last month:
- Interest rates are currently near all time lows!
- Lake Norman’s historically low inventory of active listings puts pressure on demand and plays a role in firming up prices.
- The number of distressed homes for sale remain so low that they are truly irrelevant and did not play any perceptible role in our Lake Norman housing market.
- New construction is definitely back. Custom and smaller groups of spec homes are popping up all over Lake Norman. Builders are telling me that they could built twice as many as they are if it weren’t for the shortage of qualified labor.
- New listings in the lower price ranges that are in good condition and in desirable locations are selling within days of hitting the MLS.
- Economists are predicting stronger sales in the south this year and Realtor.com even ranks Charlotte as the #8th hottest market in 2016. They predict a 10% increase in sales and a 6.5% increase in the median prices.
- Lake Norman’s low inventory is comprised of a lot of stale inventory. Good fresh new listings are selling quickly so our low inventory is even worse when you consider the number of listings that have been sitting due to price, location, condition or age.
- Waterfront tear-downs and lots are selling but are also disappearing. More buyers are willing to build or do major renovations if they can get “good” waterfront lots but with such low inventory it can be frustrating and some find it tough to accept that prices are going up.
- Our trade-up and luxury price ranges are still very much in a buyer’s market.
- Lake Norman home prices are increasing in a rather inconsistent pattern and in different locations and price ranges. At the same time, according to economists, home prices in the entire US in 2016 will see only modest gains.
- Existing home sales are being challenged by new construction! In head to head competitions new construction usually wins which hurts resale homes in the same or similar communities.
- While easing a bit, strict loan standards are still making it more difficult of buyers to qualify despite some easing and modifications.
- 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 very quickly. Watching the “hot sheet” is once again a part of the buying process for some price ranges and locations. Don’t procrastinate when considering a new listing because they are selling quickly!
- On the flip side, most higher-end properties are simply taking much longer to sell.
- No matter how hard I try to provide you with the most accurate and insightful data, 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/or picked over inventory or you might not.
If you are looking in a “HOT” neighborhood and price range be prepared to make an offer quickly. No matter what, have your pre-approval letter in hand before even looking at homes. This is particularly important due to the new TRID closing process that took effect Oct. 2nd 2015. The new mandatory waiting periods during the loan process mean your lender has to be ready to go the minute you sign a contract on a property. I can’t emphasize this enough! Ask your lender and Realtor if they have experienced and are prepared to close using all of the new forms and deadlines. Then get your lender everything they need as soon as possible!
I like what I am seeing so far in 2016. Sales are up slightly and look to be continuing this trend for the next month or two.
The real estate market in Lake Norman is extremely diverse. Make sure you know what is happening right now in your market niche. 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 rising it is still a great time to buy. With less than 2% of Lake Norman’s current listings being distressed (foreclosures, short sales etc.) don’t expect a “bargain” to come along at an unrealistic price.If you read my post: Really Cool Real Life Examples of Home Values Trends in Lake Norman you will know that a lot of our new listings are selling VERY quickly and at higher prices. I feel that we have two different markets right now in Lake Norman. There are new listings that are priced right that are selling in just a matter of days and then there are the older listings and high-end luxury estates that are still struggling.
My Mantra: 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 sell in the future really isn’t a bargain at all. Be smart!
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