Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s June 2012 Sales Analysis; Best First Half of a Year since 2007!

Strong June housing numbers for Lake Norman mean we have had a full 6 months in a row of sales above the prior year.  Gone, for now at least, is the term “erratic” which I have been using regularly for several years when describing our Lake Norman real estate market.  Not only did our June sales beat June 2011 which was a relatively strong month in 2011 but we have already matched the June 2010 numbers which were elevated by the housing rebate program. As always a few more agents will be late in recording their sales so when all the numbers are in we will have had the best June since 2007.

Despite positive numbers, I wasn’t sure we would record this many sales in June.  Can we sustain this trend through the rest of 2012 and beyond?  While there are signs of a bit of a slowdown it looks like the next several months will maintain higher sales than all prior months since 2007.  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 June 2012 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:

 

 

Some significant additional interesting statistics for you:

  • “Distressed sales” ( Foreclosures (REOS), defaults, Short Sales) comprised only 16.6% of our closed sales  in May compared to the US average of 26%. The price range of these distressed sales was $116,900 – $559,000,000.  Our percentage of distressed active listings dropped to 6.4% form 7.1% .Our number of distressed properties continue to drop which is very encouraging.  We are not being bombarded by foreclosures and shortsales so far in 2012 as some had predicted.
  • 28% of our closed sales were waterfront homes which is slightly lower than last month but about average.
  • 56% of Lake Norman’s June home sales were under  $400,000 compared to 53% last month.
  • 72 % of our June sales were under $500,000  compared to 70% in May, 49% in April, 61% in March sales. Clearly our lowest price ranges are driving our current market and our luxury housing market is very weak.
  • With the exception of Conditonal lisitngs,  our average prices were down all the way across the board. (See chart above). While this may seem bad, it indicates to me that our prices are bottoming out, not just that our lowest priced listings are driving this market upswing.
  • Our average days a home is on market was down all the way across the board as well.  This is very good news. Properties are selling more quickly.
  • As of today, the number of active listings for all of Lake Norman totaled 967 so they have begun to decline after a peak last month which is a typical seasonal condition here in Lake Norman. They are also 20% below June 2011’s.  To put this number in even greater context, back in June of 2008 we had 1789 active listings!

 

A closer look:

  • The number of Active Listings in Lake Norman decreased 2.3% from last month’s and are 20% lower than June 2011.   Our absorption rate/months of supply of active listings stands at 8.9.  Our shrinking inventory and rising sales have brought us so close to a balanced 6-8 months of supply in Lake Norman area (MLS area 13).  But, with a seasonal slowdown of the number of monthly sales in the months ahead I expect this number to trend upward in the fall.  That said, to be this low for two months in a row is an incredible achievement for our Lake Norman housing market which at one time had 52.5 months of inventory!

 

  • Contingent Sales, (sales contracts that are contingent upon the buyer selling their own home)which don’t account for a significant segment of our housing market, have actually been on an upswing.  This could be because sellers are more willing to take a risk because more buyers have homes already under contract before they put in an offer.  I currently have several contracts where the buyers’ properties are under contract and ready to close.  Note the huge decline in the number of days on the market this year compared to June 2011: -60%.

 

  • Conditional Sales increased for the sixth month in a row, this time by a hefty 53% compared to last year.  These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late July/August/September. Based upon these numbers our closed sales this month will be slightly lower than last month’s and should be the best July since 2007. At a time when I expected a seasonal slow down our sales activity remains very active.

 

  • Pending sales were slightly higher than June 2011’s.    These are the contracts that are past inspections and are just waiting to close.  Pending sales are usually the best indication of closed sales in the next few weeks.  Given that we had 87 closed sales last July we will most likely reach 100 sales this month which is excellent.

 

  • The number of closed home sales in Lake Norman in June 2012 were 7%  higher than June 2011’s.  

 

The total number of Lake Norman homes under contract (but not yet closed) on the first of each month are as follows:

  • July 6, 2012: 234 (Pretty darn good! Look at last June below)
  • 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)
  • December 1: 147
  • November: 169
  • October: 193
  • September: 183
  • August: 193
  • July: 178
  • June: 199,
  • May:  173
  • April 195,
  • March: 163
  • February: 142

We have clearly experienced a marked increase in sales in the first half of 2012 after a lag at the end of 2011.  This uptick in sales coupled with our low inventory bode well for the overall health of the Lake Norman housing market.

Here is a breakdown by price-range of our June 2012 closed sales in Lake Norman’s area 13-1 to 13-5:

  • $115,000 – $199,999: 22
  • $200,000 – $299,999: 22
  • $300,000 – $399,999: 17

(These price ranges represented 56.5% of June sales  compared to 54% of May’s sales!)

  • 400,000 – $499,999: 17
  • $500,000 – $599,999: 11

(These price ranges represented 25.9% compared to  26.5% last month)

  • $600,000 – $699,999:  7
  • $700,000 – $799,999:  3
  • $800,000 – $899,999: 0
  • 900,000 – $999,999:  3

(Solds for $600,000 – $1mill = 12% compared to 8.8 % last month and  23.8% in May)

  • $1,000,000 – $1,999,999: 6 (compared to 10 last month)
  • $2 million+ : 0

(Solds $1million+ =  5.6 compared to 10.6% last month)

 

8-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 have made an adjustment of  the totals reflecting the ACTUAL  sales  every month in 2009, 2010 and the totals in the prior calendar years.  The columns may not add up but I do my best with what I have to work!  I also adjust past months when I do the monthly update as a few more sales are usually input late by agents.

 

Summary and My Insight

The Positives and the Negatives:

Good signs:

  • Lake Norman home sales year-to-date are up 22.2% over 2011!!!
  • Lake Norman’s inventory of homes for sale remains low and appears to be dropping.
  • The number of properties currently under contracts indicate that our Lake Norman housing market will sustain our good closed sales numbers for the next several months.
  • The number of distressed homes for sale are actually dropping so represent an even smaller percentage of our total inventory and sales.
  • There are a lot of home buyers out looking around all of the Lake Norman area. Properly priced listings are selling more quickly and sometimes with multiple offers.
  • We are seeing more and more new construction popping up (Not spec homes).
  • Interest rates are once again at all time lows at 3.63% for 30-year fixed and 2.89% for 15-year fixed rate loans.
  • Positive national housing news this month including the April Case-Shiller report showing Charlotte up 1.6 from March and .8 from 2011, “Shadow Inventory Drops to 2008 Lows” according to CoreLogic, an Inman News article: “Economists expect 2012 home price rebound”, and, according to an article in DSNews.com home prices in US to rise just under 1% in the second half of 2012 and 1.5% in 2013.
  • The purchase by Donald Trump of The Point Golf and Tennis Club continues to get media attention and seems to have had a positive impact on sales in The Point.

Challenges/Weaknesses:

  • Sales prices remain low (in the US we are down to mid 2002 price levels) and I don’t see any signs of them going up. Rather, properties are selling once they are priced low enough to attract offers and then they may even get multiple offers.
  • Our mid to higher-end property sales are extremely weak.
  • With a shrinking inventory of active listings, buyers have fewer options.
  • Home loans, especially construction loans, are still a very challenging process, particularly underwriting and appraisals.
  • Global economic turmoil and US economic uncertainty.

As I wrote for the past several months:

I am more convinced than ever that our Lake Norman housing market has hit its bottom in terms of annual sales volume.  However, this has not translated to higher sales prices. Prices are low and buyers continue to be very picky; not willing to pay a higher price than past comparable sales.

The gossip among Realtors is how dramatically our activity has increased.  Despite low inventories, the number of buyers out actively looking has increased substantially.  Real estate firms are touting their sales increases and talk as if we are going to sustain these strong numbers. I am a bit more cautious.  While the worst is most likely behind us, we have a long way to go and most expect that it will be a very slow recovery.

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) and floorplan. 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 at all time lows and prices low it is a good time to buy.  With only 6%of Lake Norman’s current listings being “distressed sales” don’t expect the perfect foreclosure or shortsale to come along at an unrealistic price.  If you insist on low-balling, at least have some comparable sales to justify your number.  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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