My May numbers, both closed sales and new contracts, indicate that our Lake Norman real estate market is still very much in a consistent streak of very strong activity. 197 closed sales is the best month this year and the 5th highest monthly sales in all of Lake Norman since 2005! As you can see below, our 2017 May sales were 31% higher than last May’s. And, our combined total of under contract properties is 7.6% higher than last year’s. 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 almost equal percentage despite Lake Norman’s overall dynamic sales numbers. Darn it! Waterfront properties represented only 26.9% of our May closed sales. At the same time they currently comprise 40.5% of our active listings. The average sales price of a waterfront home in May was $825,798 down from last month’s $891,388 and down from our high of $1,073,960. The average price per square foot of our waterfront homes came in at $259.33 which is up from last month’s 249.49. 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 110 days for a waterfront home to sell (verses 81 for all Lake Norman homes)and they sold for 94% of the listing price. We currently have 109 waterfront homes under contract comprising 29.5% of our total homes under contract. On the bright side, our waterfront homes’ months of inventory dropped to 7.3. 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.
- 43 new construction homes closed in May 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 actually dropped from 100% to 97% which indicates there may be some wiggle room with some new construction homes. (AND, ask for all those great upgrades!) We currently have 118 new construction homes under contract in the MLS. The average sales price in May logged in at $406,959. The months of supply of active listings based on May’s sales stands at 5.4 so overall new construction homes are technically in a seller’s market but again this varies by location and price range.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented .005% of Lake Norman’s total May home sales. With just 1 distressed closed sale for the entire month it is clear they didn’t play a role in May at all. Distressed active listings currently comprise less than 1% 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. One side note: of the 8 distressed active listings four are over $1 million and 5 of the 10 UCS listings are over $700,000. Interesting insight into our high-end market!
- 49.7% of Lake Norman’s May’s single family home sales were under $400,000 which is slightly below last month’s.
- 62.9% of Lake Norman home sales in May were under $500,000, down from 64.7% in April.
- Here is where the good news continues: our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 370 is second only to last month’s since I have been keeping these records! We have 7% more properties under contract than at the same time in 2016 and 22.7% more than May 6, 2015! Surely this will translate into some exceptionally high numbers for the next several months.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is down 4% compared to last year’s at this time. While increasing since the seasonal lows in January our number of active listings right low is actually lower than last year’s which is not good as we need more fresh inventory. Today we have 950 single family homes for sale in all of Lake Norman up from last month’s 906, April’s 836, March’s 844, February’s 824, and 766 in January. Our peak inventory in 2016 was June’s 1033. We should continue to see it increase into early summer. Our absorption rate/months of supply of active listings sits at 4.8 which is most definitely a seller’s market. 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 were up a healthy 17% versus this time last year. The average price of our new contracts was down 3% and but the days on market was up 4% compared to last May’s. 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 July/August.
- Pending/Under Contract No Show sales, down 10%, were our only weak spot this month. These listings went under contract on average in 70 days which is 25% more days than last year. Coupled with our strong Under Contract Show numbers, these numbers indicate that for the next few months we should log some strong numbers compared to last year. 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 July.
- Lake Norman’s closed May home sales in our MLS as of today and as stated above, were an impressive 31% higher than last May’s and the best May since and including 2005. The average price was up 2% compared to last year but our days on market was 3% slower than last year’s.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- June 6, 2017: 370
- May 6, 2017: 391
- April 6, 2017: 351
- 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
Here is a breakdown by price-range of our April 2017 closed sales in Lake Norman
- $18,000 – $99,999: 5
- $100,000 – $199,999: 14
- $200,000 – $299,999: 40++
- $300,000 – $399,999: 39
(These price ranges represented 49.7% of our May home sales)
- $400,000 – $499,999: 26
- $500,000 – $599,999: 21
(These price ranges represented 23.9% of our May sales compared to 25.3% last month)
- $600,000 – $699,999: 16+
- $700,000 – $799,999: 9
- $800,000 – $899,999: 6
- 900,000 – $999,999: 8+
(These price ranges represented 19.8% of May’s sales compared to last month’s 18%)
- $1,000,000 – $1,499,999: 7
- $1,500,000 – $1,999,999: 2
- $2 million+ : 4+++
(#Solds $1 million+ = 6.6% of May’s sales compared to 6% in April)
Now these numbers tell us exactly where our growth was and was not. We saw impressive activity in the $200,000’s, $600,000’s and $2,000,000+. To have 4 sales over $2 million is quite rare and certainly good to see. The majority of sales (73.6%) are still under $600,000. Our trade-up price ranges and luxury market are still under performing despite some monthly gains.
Higher-end home sales in Lake Norman
The Lake Norman luxury market is REALLY struggling. I have spoken to a number of Realtors who specialize in luxury homes and without exception they all voiced their disappointment and struggles. Homes at or above $1,000,000 comprised only 6.6% of May’s total closed sales. This niche simply has not recovered from our recession and experiences swings from month to month. After several months with notable sales over $2 million, the absence of any sales above 2 million in April was disconcerting and now in May we had 4. No one I have chatted with has any answers as to why this is other than lack of GOOD properties on the market.
Lake Norman’s Waterfront Housing Market
As I wrote above, waterfront homes continue to under perform at an almost equal percentage despite Lake Norman’s overall dynamic sales numbers. Waterfront properties represented only 26.9% of our May closed sales. At the same time they currently comprise 40.5% of our active listings. The average sales price of a waterfront home in May was $825,798 down from last month’s $891,388 and down from our high of $1,073,960. The average price per square foot of our waterfront homes came in at $259.33 which is up from last month’s 249.49. 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 110 days for a waterfront home to sell (verses 81 for all Lake Norman homes)and they sold for 94% of the listing price. We currently have 109 waterfront homes under contract comprising 29.5% of our total homes under contract. On the bright side, our waterfront homes’ months of inventory dropped to 7.3. 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.
As I wrote for the past several 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 five months of this year! We went from a record-breaking high January to an almost record-breaking low in February to a HUGE March, a solid April and then a HUGE May! Lake Norman’s overall real estate market is now 24% ahead of the first 5 months of 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 May closed sales were the best May in Lake Norman since and including 2005.
- 2017 year-to-date we are 24% ahead of the same period last year and 20.5% more than 2015’s first 5 months.
- Our current number of homes Under Contract and Pending indicate we will have strong closed sales in June and July with no slowdown in sight!
- 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.
- Sellers in lower price ranges are making money! I have had 3 listings in the past month where my sellers (formally my buyers) made nice profits on their homes. It is important to note that in every case they spent a great deal of money staging their homes with new carpet, refinished or new hardwood floors in main living areas, fresh paint in the popular grey and white tones and spruced up landscaping and curb appeal. 2 of the 3 painted their old wood kitchen cabinets white and they looked wonderful. All sold for slightly over asking with multiple offers.
- 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 with multiple offers within days of hitting the MLS.
- 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.
- Inventory levels are still relatively low and we are now in our historically strongest months of the year.
- Our trade-up and luxury home sales Under Contract numbers remain very erratic and have not shown consistent improvement since the recession like our lower price ranges.
- Our waterfront properties sales are still under performing compared to the number of active listings and prices have not fully recovered.
- Mortgage interest rates, while down a bit were up to 4% or higher this past week. There is much speculation as to where they are headed. The Federal Reserve did raise their rate in March 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 and international challenges so it remains to be seen where interest rates will be in 12 months.
- 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 except in lower price ranges where there simply isn’t enough inventory.
- 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. There is discussion this week about paring back on the Dodd-Frank Act. Some think removing these regulations 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 1st quarter of 2017.
There is no doubt that Lake Norman is currently is a very dynamic market in the lower price ranges. We truly have 2 very distinct and wildly different markets within our greater Lake Norman real estate market. In the price ranges up to $325,000 or so buyers are experiencing multiple offers and are having to go over the asking price in many cases. At the same time I am seeing price reductions upon price reductions in our waterfront and luxury markets.
Despite all of these potential challenges, I am still upbeat about our overall Lake Norman real estate market. Every year since 2011 we have seen year-over-year growth. Total sales numbers for the first 5 months of 2017 are actually exceeding 2005’s record sales. Our market up to $400,000 is very strong. However, I am extremely uncertain about the direction of our trade-up, luxury and waterfront home sales.
Buyers in 2017 in the lower price ranges should be prepared to act fast when a new listing comes on that suits you. Or, if you want a more affordable option in any price range, prepare to be more flexible, be willing to do some work on your newly purchased home and do your 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! As I wrote above, I just sold several homes with multiple offers where in one case the sellers tripled his investment in staging and preparing his home for the market and all three made money.
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 along with prices 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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