Well, I have good news and I have bad news….which would you like to hear first? Okay, let’s go with the good news: June home sales in our Lake Norman area are closing at a very brisk pace. As a matter of fact, we are trending at about 30% higher than a year ago when we closed 87 sales in June 2009. Will we break the 100 mark for the first time since July 2008 by the end of this month? I’m betting we will based upon the numbers below and what I am hearing from our stressed out closing attorneys. Everyone wants to close by June 30th!
That brings me to the bad news. Even if Congress extends the closing deadline for the Federal tax rebate that is currently set to expire on June 30th, the opportunity to open a new contract and qualify for a rebate is gone. The honeymoon will be over for our housing market and reality will set in just as we enter our seasonally slower fall months.
Lake Norman Real Estate’s Two-Week Hot Sheet
The above chart is a summary of today’s “Hot Sheet” from the Charlotte Multiple Listing Service for single family homes in all of Lake Norman (area 13). These numbers represent a real time snapshot of the past two week’s activity. (June 6-20th). As always, I have included the past 5 months so that you can put these numbers in perspective.
Below is the 2009 chart for the same period for your reference.
June 12, 2009 Hot Sheet
- New listings: The number of new listings coming on the market in Lake Norman is creeping back up. At the end of May we had 1365 active listings and as of today we have 1396. As you probably know if you follow my reports, we need to get our inventory down to about 8 months of supply in order to be considered a balanced market. This will ultimately be achieved by a combination of a significant increase in sales coupled with a decrease in the number of active listings. Even if we break the 100 mark for sales this month, we will still have almost 14 months of inventory. While a vast improvement over the past months and even years, we are still very much in a buyers’ market here in Lake Norman while many areas of the country have already brought their housing inventories down to 8 months or less.
- The number of properties that came back-on-the-market, most likely due to cancelled contracts remained steady when compared to last month but were well below our 2009 numbers. The combination of the challenges related to short-sales and successfully getting home loans has added to the number of conditional and pending sales that are canceled. Banks continue to make real estate transactions extremely challenging! We currently have 88 properties “under contract” (adding both conditional and pending sales) and in the last two weeks 43 properties came back on the market. So, for every two properties that go under contract one is likely to fall through.
- The number of price changes increased almost 20%. As I watch our daily hot sheets I am seeing a number of price reductions both on bank-owned and owner-occupied properties.
- Pending home sales increased 13% when compared to the same two-week period last month but actually dropped when compared to the same two-week period in 2009. These are contracts that are likely to close in the next few weeks. On May 31st we had 111 pending sales and today we have a total of 93 pending sales in Lake Norman. The million dollar question is have we peaked for our 2010 selling season?
- The number of closed sales in the past two weeks increased a substantial 27% compared to last month and compared to May 2009. So far this month 63 sales have been reported to our Charlotte Multiple Listing Service. Again, my prediction is that we will meet or exceed 100 closed sales for this June when all is said and done. (A little more good news!)
- Contingent and Conditional sales remain flat when compared to the past 3 months. These represent the most recently accepted offers. This may be an indication that our tax rebate bump has ended and that our sales may peak in June and then drop back down a bit through summer and into fall.
If you share my fondness for data, you may have read about the most recent analysis of “shadow inventory”* in the top 20 major US markets published by Standard & Poor’s Rating Services. Their analysis outlined the time needed in each of the 20 markets to clear their “shadow inventory”. The results ranged from a low of 18.5 months in the metro Phoenix area to a high of 103 months in the greater New York City area. Charlotte fell about in the middle at 44.3 months.
I have confidence that our sales volume has hit bottom but all indications are that our prices may have further to fall before we can say we have hit bottom. It isn’t that all of our housing prices must drop, but rather that the over-priced listings will continue to reduce their prices until they are at the same level as the most recent sales. There still exists a disparity between the median price of our closed sales and the median price of our active listings. Baby steps…
* Shadow inventory is defined as “homes that are 90-plus days delinquent, in foreclosure, or bank-owned (REO) but not yet on the market. The report also assumed that 70% of recently “cured” loans would ultimately re-default”.