Wow, Lake Norman’s February home sales were stunning, but not in a good way: they were DOWN a whopping 34% compared to last February and the worst February since 2012, The only thing that I can say is that if you have been reading my market reports you know this drop was anticipated but I honestly didn’t think our closed sales would come in quite so low. Not to fret, however, this is not the whole story. What’s next? Let’s take a closer look:
* All data is from the Carolina Multiple Listing Service.
Some significant additional statistics for you:
- “Waterfront homes continue to under perform at an equal percentage despite Lake Norman’s overall up and down sales numbers. Waterfront properties represented only 26.9% of our February closed sales. At the same time they currently comprise 39.8% of our active listings. The average sales price of a waterfront home in February was $702,479 down from last month’s high of $1,073,960. The average price per square foot of our waterfront homes came in at $224.55 also down from last month’s $249.86. This is in large part due to an absence of any sales over $1.5 million. This number is best averaged over a longer period of months because it only takes one or two really expensive sales ($2- 3 million+) to skew any given month. It took on average 102 days for a waterfront home to sell (verses 91 for all Lake Norman homes)and they sold for 97% of the listing price. We currently have 77 waterfront homes under contract comprising 39.5% of our total homes under contract which actually shows some improvement. Our waterfront homes’ months of inventory was up to 19.3 (yikes!) based upon only 17 sales but this will improve significantly in the next few months based upon our new contract numbers. Waterfront home sales are still overall in a buyer’s market so it remains a good time to buy a waterfront home IF you can find a good one. Keep in mind that this varies quite a bit by price range, location and quality of water. Don’t be complacent because when really nice waterfront properties hit the MLS they are actually selling quickly.
- 16 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.) The average listing price vs sales price of new construction single family homes was 100%. There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 101 new construction homes under contract in the MLS. The average sales price in February logged in at $372,062. The months of supply of active listings based on February sales stands at 14.3 so overall new construction homes are technically in a buyer’s market but again this varies greatly by location and price range.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented 4.8% of Lake Norman’s total home sales. With just 3 distressed closed sale for the entire month it is clear they didn’t play a role in February at all. Distressed active listings currently comprise 1.6% of Lake Norman’s current total inventory of single family homes for sales. Distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- 54% of Lake Norman’s February single family home sales were under $400,000 which is slightly below last month’s.
- 69.8% of Lake Norman home sales in February were under $500,000, which is about equal to last month’s.
- Here is where the good news sets in: our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 295 is significantly higher than the past two years on this same date. We have 26% more properties under contract than at the same time in 2016 and 29% more than March 6, 2015! So while our closed sales in February were abysmal, our numbers should pick up dramatically by April.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is up 10% compared to last year’s at this time. After declining steadily since peaking in last June. our number of active listings are now increasing at a higher rate than last year. Today we have 824 single family homes for sale in all of Lake Norman up from 766 last month, 737 in December, 778 in November, but lower than the 841 in October, September’s 909 and well below June’s 1033. We are following a very common season trend in numbers of active listings. We should continue to see them increase all spring into early summer. Our absorption rate/months of supply of active listings rose to an ugly 13.1 which puts Lake Norman overall very much in a buyer’s market. This is the highest in quite some time. Keep in mind, however, within specific price ranges there are swings from a buyer’s market to a balanced to a seller’s market.
- Under Contract Show (conditional sales), are up a whopping 45% versus this time last year! The average price of our new contracts is also up 10% and the days on market dropped 3% to 92. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent strong future closed sales most likely in April/May.
- Pending/Under Contract No Show sales are down 5% compared to February 2016’s. These listings went under contract on average in 87 days which is 4% longer than last year. While our future looks bright thanks to our new Under Contract Show numbers, these relatively weak Pending numbers indicate we may have one more month of lukewarm closed sales and then pick up steam the following month. Another weak spot is the average sales price which, at only $419,223, was 5% below last February’s. 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 this month or early April.
- Lake Norman’s closed February home sales in our MLS as of today and as stated above, were the lowest of ANY month counting all the way back to February 2012! Top this off with a drop of 14% in the average sales price and we clearly just had a very bad month. Keep in mind that these closed sales reflect buying activity several months ago so we really had a very bad November/December.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- March 6, 2017: 295
- February 6, 2017: 227
- January 6, 2017: 183
- December 6, 2016: 237
- November 6, 2016: 275
- October 6, 2016: 274
- September 6, 2016: 288
- August 6, 2016: 325
- July 6. 2016: 313
- June 6, 2016 344
- May 6, 2016: 340
- April 6, 2016: 297
- March 6, 2016: 234
- February 6, 2016: 207
- January 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
Here is a breakdown by price-range of our February 2016 closed sales in Lake Norman
- $47,000 – $99,999: 3+
- $100,000 – $199,999: 7
- $200,000 – $299,999: 12
- $300,000 – $399,999: 12-
(These price ranges represented 53.9% of our February home sales)
- $400,000 – $499,999: 10
- $500,000 – $599,999: 6
(These price ranges represented 25.3% of our February sales compared to 20.2% last month)
- $600,000 – $699,999: 3
- $700,000 – $799,999: 2
- $800,000 – $899,999: 1-
- 900,000 – $999,999: 2
(These price ranges represented 12.7% of February’s sales compared to last month’s 19.4%)
- $1,000,000 – $1,499,999: 5++
- $1,500,000 – $1,999,999: 0
- $2 million+ : 0
(#Solds $1 million+ = 7.9% of February sales compared to 8.7% in January)
I hate to say it but there was really only one price range in February that stands out and that is the $1 million – $1,500,000 where are numbers actually exceeded last month’s. The majority of sales (79.2%) are still under $600,000 and even slightly higher than last months 71.7%. Our trade-up price ranges ( $600,000-$999,000) suffered as did our luxury price ranges. There was not one closed sale in all of Lake Norman in February over $1,220,000!
Higher-end home sales in Lake Norman
This is a niche simply has not recovered from our recession and experiences pretty wild swings from month to month. After several months with notable sales over $2 million, the absence of any sales above $1.2 million in February is disconcerting! This led me to take a closer look at our current UCS and Pending sales. We only have 5 properties over $1 million Pending(UCNS) right now BUT we have 21 properties over $1 million Under Contract Show including 2 over $2 million. For whatever reason our high-end buyers took a long holiday vacation but seem to be back!
Lake Norman’s Waterfront Housing Market
As of today we have 77 waterfront properties under contract compared to 73 last month. Our months of supply based on February sales shot up to 19.2 which puts this niche very much in a buyers’ market. The problem is in part that fact that much of our current inventory includes older homes that need work and properties with less desirable water and/or locations. That said, the cream of the crop waterfront properties sell relatively quickly. With our current market it is more important than ever to know your price niche! Waterfront home buyers in the lower price ranges 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. I seriously believe that waterfront buyers should pounce when they find a good property with good water. Remember, good water trumps a good house on bad water.
As I wrote last month two months, there is no doubt that Lake Norman’s waterfront homes suffered greatly during the recession. With the disappearance of the foreclosures and short sales during our recovery, there were several years where the greatest action was in the lowest priced waterfront tear-downs that had good water and to a lesser degree nice homes in higher price ranges with good water in good locations that were well priced. As this market evolves, prices have gone up despite rather tepid sales but have not fully recovered. Almost all of my waterfront buyers have had to increase their price range when they realize how much better the options are when they do so. But, I wonder if this is the reason waterfront home sales are still struggling. There may be many buyers who simply can’t increase their price range so have to turn to off-water options instead when they can’t find something desirable in their price range. It is also true that new listings with good water are selling more quickly than in the past while the rest are languishing. It is important for potential waterfront buyers to understand that there are fewer good options in the lower and trade-up price ranges so watch for new listings and act quickly. The lowest priced listings are mostly at the end of coves, can’t have docks or are in less desirable locations. Just as an FYI, I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that didn’t suit them or needed too much work. Prices are going up out of circumstances rather than overall market trends. See my Waterfront Home Sales 2005-2016 analysis.
13-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers are for single family homes in what used to be referred to as “Area 13 – Lake Norman). 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.
What a fascinating look at our highs and lows, especially the first two months of this year. We went from a record-breaking high January to an almost record-breaking low in February. Our combined total so far in 2017 is 5% lower than 2016. Note that we ended 2016 higher than every year but 2005 with over double the total sales of our low in 2009! We definitely struggled a bit in the first half of 2016 but then took off by August and never looked back. I can’t wait to fill in more numbers in our 13th column :-).
Summary and My Insight
- Our current number of homes Under Contract and Pending indicate we will have strong closed sales by April after this current rather dramatic dip.
- Inventory levels are are picking up at a faster rate than 2016.
- Thanks to the last 5 months of 2016, Lake Norman logged in 113 more sales than 2015. Every year since 2009 we have exceeded the prior year’s sales.
- 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 in a consistent way. 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. But, really nice homes in the higher price ranges are selling quickly as well.
- Our trade-up and luxury home sales Under Contract numbers indicate that we are experiencing an upswing after struggling in February but overall they still remain erratic.
- Forbes ranks North Carolina second on best states for business list.
- Bankers and economists indicated that the Charlotte are economy will ramp up in 2017. Wells Fargo is forecasting at 2.1% growth in GDP next year compared to 1.5 this year. “We will continue to see folks and businesses moving here,” according to Mark Vitner, senior economist at Wells Fargo.
- February closed sales dropped dramatically. As I wrote above, they are they lowest single month of closed sales since February of 2012 which really is shocking!
- Our low Pending/UCNS numbers today indicate we might have one more month of weak closed sales.
- After 2 months our 2017 closed sales are 5% below 2016.
- Mortgage interest rates, while down a bit in the past few weeks, have gone up and there is much speculation as to where they are headed. The Federal Reserve is expected to raise their rate this month and there are predictions that they will increase them 3 more times in 2017. Economists can’t seem to agree on much of anything else about 2017 because of all of the unknowns related to the election so it remains to be seen where interest rates will be in 12 months.
- Lake Norman’s waterfront and luxury home sales continue to struggle to reach a full recovery.
- 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.
- Strict loan standards implemented during the recession are still making it more difficult for buyers to qualify despite some easing and modifications. Here is another big unknown related to our incoming administration. Some think there will be deregulations that will ease the mortgage loan process, especially for first-time buyers.
- Finding the perfect home can be challenging. 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!
- 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. See my price range analysis for the 4th quarter of 2016.
For the first time even the experts are unsure of the future of the US housing market due to the many unknowns with the new administration. Will the flat tax, long the single greatest issue fought by organized real estate groups, finally be a serious consideration? (Removal of mortgage tax deductions). Will easing of regulations impact affordability? With a potential increase in spending and inflation, how high will interest rates rise and how quickly? Will affordability become a greater issue for first-time home buyers due to interest rate increases? What is the future of Freddie Mac and Fannie Mae if they are privatized? This list goes on and only time will tell.
Despite all of these potential challenges, I am still upbeat about our overall Lake Norman real estate market. Our momentum finally gained some consistency in the second half of 2016. After a remarkable January, we experienced a dramatic dip in February but the numbers indicate our pace has picked up which should be reflected in April’s numbers. That said, I am uncertain about the direction of our trade-up, luxury and waterfront home sales.
Buyers in 2017 should be prepared to: be more flexible, be willing to do some work on their newly purchased home and do their own updating if possible, lock in interest rates as soon as you are ready to buy if your lender recommends doing so, and be more flexible about locations based upon our limited inventory.
Sellers should watch a lot of HGTV and be prepared to do painting, flooring and staging to attract buyers!
Always keep in mind that 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 rising sharply along with prices rising it is not time to sit on the fence. 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 have also noticed a growing pace of price reductions. I think listing agents are getting sellers to lower prices more quickly now that the market is stronger in order to take advantage of this before interest rates go higher. Our market is ever evolving!
My Mantra as always: 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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