What words best describe Lake Norman’s May real estate sales? Amazing, shocking, jaw-dropping, astounding, unprecedented, awesome; chose any or all of these. I am almost speechless (which never happens). While the dynamics of our Lake Norman real estate market have been impressive all year and even with such high numbers of properties under contract I don’t think anyone expected May to be the second best May in the history of Lake Norman home sales and the 10th highest month for home sales ever. Wow. Once the late comers input their sales into the MLS my guess is that we will have closed about 165 contracts last month. (NOTE, I updated these two charts on June 13th as we are now up to 163 closed sales compared to 159 when I first wrote this post on the 6th.)
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 May 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* 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. Contingent Sales are now joined with Conditional sales in my reports.
Some significant additional statistics for you:
- “Distressed sales” ( Foreclosures (REOS), defaults, Short Sales) comprised a record low of 10.7% of Lake Norman’s total home sales down from 14% last month, 20.4% in March, 16.9% in February and January’s 29%. The average price for distressed single family home sales was $342,321 indicating that these sales were primarily in our lowest price ranges. Distressed active listings comprise only 3.1% of our total inventory of Lake Norman homes for sale! According to a recent article on Trulia the “normal” delinquency and foreclosure rate for the US is 5.25%. The most recent US distressed home sales stood at 21%.
- 27 %, of our closed sales were waterfront homes which is down from 34% last month. The average sales price of Lake Norman waterfront homes in May was $778,045 and the average price per square foot was $210 which was actually down slightly from last month but still higher than the $202 per square foot in February and $199 per square foot in January. 25 of the 43 sales were under $700,000 and 6 were above $1 million. Clearly higher priced waterfront properties are not enjoying the same improvement as the rest of our Lake Norman housing market.
- 10 new construction homes sold which was just one more than last month. While this number is not really impressive, we currently have 62 new construction single family homes under contract in Lake Norman. These represent 21.2% of all Lake Norman homes under contract and the average listing price vs sales price is 102%! Clearly there isn’t a lot of wiggle room on prices of new homes. It is important to note that many of the new construction homes you will see driving around the lake are custom homes so will not be included in our Multiple Listing Service numbers.
- 49% of Lake Norman’s May home sales were under $400,000…this number is dropping.
- 64.8% of our May home sales were under $500,000, slightly lower than last month’s but significantly lower than February’s 81.7%, 81% in January, 74 % in December, 75% in November, and 67% in October. While our lower price ranges are still dominating our Lake Norman housing market this is the third month in a row that they have declined since October 2012.The trade-up buyers are jumping off of the fence which is one reason I feel there are so many more showings right now. There are simply more buyers out there looking.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total dropped 7% from last month’s record high. It looks like our sales for the next few months will remain high but the Lake Norman housing market may be either slowing down a bit or has taken a breather during the Memorial Day/Graduation celebrations and vacations. This is an important trend to watch!
A closer look at the chart:
- The number of Active Listings in Lake Norman dropped 3% compared to last May’s. Thanks to our record sales, our absorption rate/months of supply of active listings today has dropped to a post recession low of 5.9 which puts us at the lower end of our goal of a balanced 6-8 months of supply in the Lake Norman area (MLS area 13). However, the national number today is 4.7 months of supply. To put this in perspective of our post recession Lake Norman housing market, in January of 2009 we had 52.5 months of inventory. However, to sustain the 6-month supply of home for sale we will need to maintain our 150+ sales per month which I think is unrealistic.
- Conditional Sales, which are now called Under Contract Show, increased for the 16th month in a row, but this time by only 9%. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late June/July. Based upon these numbers we should continue to see stronger sales this summer than in 2012 but perhaps not as high as this month’s.
- Pending/Under Contract No Show sales are a healthy 48% higher than May 2012’s however this number also dropped from last month’s whopping 73% higher than April 2012’s. These are the contracts that are past inspections and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. I am pretty darn confident that we will again exceed last June”s sales of 118. Will May be our peak for 2013?
- The number of closed home sales in Lake Norman in May as of today are very impressive 36% higher than last May’s and the best May EVER with the exception of May 2006!!!! They are also 45.5% higher than last month’s. If you look at my Annual Sales Chart below you will see that at 163 this May is the 10th highest month in Lake Norman’s history!
The total number of Lake Norman homes under contract (but not yet closed) in the first week of each month are as follows:
- June 6, 2013: 293 (The second highest)
- 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: 134 (the lowest ALL year)
Here is a breakdown by price-range of our April 2013 closed sales in Lake Norman’s area 13-1 to 13-5:
- $24,000 – $199,999: 20
- $200,000 – $299,999: 26
- $300,000 – $399,999: 32
(These price ranges represented 49% of our May sales compared to 58.4 % in April%.)
- 400,000 – $499,999: 25
- $500,000 – $599,999: 17
(These price ranges represented 26.4% compared to 15.1% last month)
- $600,000 – $699,999: 14
- $700,000 – $799,999: 4
- $800,000 – $899,999: 12
- 900,000 – $999,999: 2
(Solds for $600,000 – $1 million = 20.1% up from 18.9% and 3.4% in March )
- $1,000,000 – $1,499,999: 4
- $1,500,000 – $1,999,999: 1
- $2 million+ : 2
(Solds $1 million+ = 4.4% compared to 7.5% last month)
The most improved price ranges in May were the $300,000 – $399,999, the $400,000 – $499,000 and the $800,000 – $899,999.
Higher-end home sales in Lake Norman
Sales just under $1 million are weak although we did see some improvement in the $800,000’s. Sales above $1 Million actually declined in May but we did have 2 sales above $2 million. I keep reading local news articles quoting Lake Norman Realtors expressing that our luxury home market is doing quite well but I am not seeing that in the actual numbers.
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 first five months of 2013 exceeded 2012’s by 29%! This is significantly higher than the national real estate sales trends.
Summary and My Insight
- The Lake Norman real estate market is currently exceeding all expectations in terms of sales volume. And, considering our high number of properties currently under contract, we can expect strong sales to continue into June and July. Given a bit of a slowdown in new contracts I am uncertain whether we will sustain these high sales numbers into late summer and fall. But I have absolutely no doubt that Lake Norman’s housing market hit bottom and is well on its recovery path.
- Lake Norman has been enjoying consistently higher closed sales for well over a year. Prices have not only stabilized but are actually increasing in some areas. However, I can not say that our prices have increased across the board. Rather, there are pockets of strengths and relative weaknesses which result in an overall flat average sales price when combined for all of Lake Norman.
- Lake Norman homes are selling quicker and at higher list-to-sale percentages. With low inventory demand is higher and I would expect all price ranges to slowly improve.
- The number of distressed homes for sale are so low they are almost irrelevant in 2013 and the numbers are still dropping.
- New construction is definitely back. Not only did we sell 10 new homes last month but we have 62 new homes under contract. New housing communities are popping up now as well as custom and smaller groups of spec homes. There is a new Tru Homes subdivision down Isle of Pines in the $300-$500,000 range and Lennar just put up a sign that they will be developing the last phase of The Farms by Woodland Heights Elementary. A great example of the quantity of new construction is in The Farms in Mooresville where a number of builders are buying up lots and building custom and some spec homes as well. Interesting note: New construction homes are selling for 102% of the listing price! And, they are selling on average in 59 days! Lake Norman buyers still love new.
- Lake Norman’s inventory of homes for sale is now down to a 6-month supply. This means overall Lake Norman is leaning towards a sellers’ market. Again, this depends a lot on location and price.
- Interest rates are going up and are now predicted to be as high as 5% in a year. While this seems like bad news, in fact,it will most likely serve as a motivator for buyers who thought they could wait to buy and now need to jump off the fence.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Positive national housing reports continue to headline news about the US housing market this year. The US April sales marked the 22nd consecutive months of monthly sales above their year ago levels. Distressed sales are down in the US housing market 29% versus 2012. Home prices in the US have increased for 15 consecutive months. “Shadow Inventory” nationwide is dropped from 3.0 million in 2010 to 2.2 million in January of this year. According to the Core Logic Case-Shiller Home Price Index, nationally home prices were up 7.3% in 2012 and they expect them to increase 2.5% in 2013. Through the 4th quarter of 2017 home prices are projected to increase an average of 3.9% per year every year. Forbes recently ranked Charlotte the 8th best city in the country for jobs in 2012 up from 19th in 2012. “Virtually every business sector has been on the rebound since 2009, including financial services, despite Bank of America’s continuing troubles. Overall the (Charlotte) economy has added 100,000 jobs since 2001, up almost 13%. According to S&P Case-Shiller Charlotte has joined the cities with monthly gains in home prices and logged a 7.3% increase in the past 12 months.
- Finding the perfect home has become more difficult with so fewer listings to chose from and the fact that the older inventory has been picked over.
- Keeping a property under contract to closing. It is one thing to get a property/home under contract but it is quite another to get it to close these days! My most recent contracts have been some of the most difficult I have experienced in quite some time. This is primarily due to loans but both homebuyers and sellers seem a bit more stressed out in general leading to more distrust and challenges during the negotiations.
- I still have concerns about Lake Norman sellers and listing agents being overly optimistic not only when they initially price their properties but also during negotiations. With the increase in showings many sellers are expecting higher offers so are not as willing to work with good but lower offers by qualified buyers.
- I still have equal concerns for Lake Norman home buyers. A good number are still in the old mind set that they have plenty of time to consider new listings and that they should start really low. Right now good properties are selling quickly, sometimes with multiple offers. It is critical to know comparable sales activity in your price range and act quickly if/when a good listing comes on the market.
- Interest rates are now going up so while this may encourage buyers to get off the fence which is a good thing, this ultimately means buyers will be able to afford less of a home and will have a tougher time qualifying for a loan.
- What can I say about home loans, whether conforming, jumbo or construction, other than that they continue to create unnecessary stress during the sales process and at closing. One of the biggest challenges I have faced is lenders getting appraisal reports in a timely manner, not so much at the purchase price but the actual report being received. Even with “rush” appraisals the appraisal might take almost 2 weeks from the day the appraiser views the property until the appraisal is received by the lender. Because of the new third party laws lenders don’t have the leverage or ability to push appraisers. Appraisal companies today aren’t really accountable to anyone.
- Then there are the tougher guidelines for home loans and the underwriters who, up until the day of closing, many times continue to demand more and more documentation. This is not only the case with challenging buyers but also with very well qualified buyers.
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), 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 rising 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 the “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. Get it in your head that the Lake Norman housing market is the strongest it has been in years and that prices are going up. 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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