Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s May 2018 Market Report

After the ups and downs of the first 4 months of 2018, our Lake Norman home sales for May indicate that we are in for some consistently strong sales through summer.  We matched last May’s home sales which were a record-breaking month.  And, at the same time, we posted a 19.2% increase over last month’s home sales.  Overall our market has stabilized and our current momentum bodes well for the summer months.

Here are what I feel to be the biggest takeaways from last month’s Lake Norman real estate sales data:

  • May’s strong home sales reflect a strengthening of our overall Lake Norman housing market after a roller coaster ride at the beginning of the year.
  • Our inventory of active listings remains alarmingly low (100 fewer than last year!) and it is not increasing as it should at this time of year yet we are still logging strong sales.  It is hard to quantify but there is no doubt that low inventory does have a negative impact on our Lake Norman’s home sales.
  • We currently have a record-breaking number of “under contract” or “pending” homes which indicates we will see very strong closed sales in the next few months.
  • Our trade-up and luxury markets posted some good numbers supporting my feeling that these niches are finally recovering from the recession.
  • I want to share with you this great interactive calculator for determining rent vs. own costs from the New York Times!

Let’s take a closer look:

Lake Norman Real Estate sales analysis for May 2018

All data is from the Carolina Multiple Listing Service.

Some significant additional statistics for you:

  • Waterfront homes remain in a more balanced market in May increasing just slightly to 6.7 months of supply favoring neither buyers nor sellers. (A balanced market of 6 months favors neither buyers nor sellers.)
    • Waterfront sales in May represented 22.8% of Lake Norman’s total sales (down from last month’s 28.6) while comprising 36% of our active listings and 25.1% of our under contract listings. These rather weak numbers reflect a consistent struggle in the waterfront niche.
    • The average price per square foot of our waterfront homes increased to $256.23 which is an improvement over the last 3 months however below January’s $271.81.   
    • It took on average 90 days for a waterfront home to sell and they sold for 96% of their listing price.
    • Overall, these numbers are pretty consistent with the past year or so.  The one improvement was the shorter days on market. That said, their smaller percentage of our total Lake Norman sales vs the percent of our total inventory is very concerning.  Don’t be fooled however. There are HOT waterfront properties.  I sold one this past month over asking that had 5 offers in the first week but it was a great lot for a great price.
  • 39 new construction homes closed in May through our MLS but this does not reflect a totally accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. The average listing price vs sales price of new construction single family homes for the first time dropped down to 97% from 100% where it has been for months. This suggests there may be some wiggle room with builders so give negotiating a try! (And, don’t forget to ask builders for all those great upgrades!) We currently have 128 new construction homes under contract in the MLS. The average sales price in May was $534,646 up from $426,080 in April.  The months of supply of active listings based on May’s sales is 5.38 which not surprisingly puts them in a seller’s market.
  •  There were 4 closed distressed sales (Foreclosures (REO’S), defaults, Short Sales) in all of Lake Norman in May.  We have 4 under contract and only 3 distressed active listings as of today. One interesting note: the average price of distressed properties was $565,625 so these properties are not in our lower price ranges. Clearly, distressed sales continue to play an insignificant role in our Lake Norman real estate market. 
  • 42.3% of Lake Norman’s May single family home sales were under $400,000.
  • 60.7% of Lake Norman home sales in May were under $500,000.
  • One extremely impressive number is our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 406 which is a historic high since I have been writing these reports. This puts our current purchase contracts 9.7% higher than last year at this time and 4.3% higher than last month’s. It looks like we are going to be in for a big summer!

A closer look at the chart:

  • The number of Active Listings today in Lake Norman is down a significant 10% compared to last year’s at this time.  At this time of year we should see significantly more new listings. As has been the case for over a year, buyers in hot price ranges and locations should act quickly when an especially good property hits the MLS.  Today we have only 853 single family homes for sale in all of Lake Norman. Our absorption rate/months of supply of active listings dropped to 4.2. This means that Lake Norman as a whole is definitely in a seller’s marketKeep in mind, however, within specific price ranges there are dramatic swings from a buyer’s market to a balanced to a seller’s market.  The average price is 1% higher than last year’s.
  • Under Contract Show (conditional) sales are 14% higher than this time last year.  This is particularly impressive when you consider that last year was HOT! The average price of our new contracts is down 2% and the days on market is down 13%.  We have more homes under contract and they are selling faster. 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 in July/August.
  • Pending/Under Contract No Show sales are equal to last May’s after three straight months of low numbers.  The average price of our pending sales is up 16% and these listings have been on the market 4% longer than last year’s. These numbers indicate that in the next month or so we should be able to at least match 2017’s hot numbers and perhaps even beat them.  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 basically equal to last May’s which makes it tied for the best May since 2005. The average price of our homes sold were up 9% and it took on average 7 fewer days to sell a home in May 2018 vs 2017.

The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:

  • June 8, 2018: 406
  • May 8, 2018: 389
  • April 8, 2018: 334
  • March 8, 2018: 280
  • February 8, 2018: 244
  • January 8, 2018: 206
  • December 8, 2017: 264
  • November 6, 2017: 282
  • October 6, 2017: 301
  • September 6, 2017: 346
  • August 6, 2017: 364
  • July 6 2017: 350
  • 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

Here is a breakdown by price-range of our  2018 closed sales in all of Lake Norman

  • $1,000 – $99,999: 4+
  • $100,000 – $199,999: 8-
  • $200,000 – $299,999: 34+
  • $300,000 – $399,999: 39+

        (These price ranges represented 42.3% of our May home sales compared to 47.8% last month)

  • $400,000 – $499,999:  37+++
  • $500,000 – $599,999: 21++

       (These price ranges represented 28.9% of our May sales compared to 19.9% last month)

  • $600,000 – $699,999: 16
  • $700,000 – $799,999: 9++
  • $800,000 – $899,999: 11-
  • 900,000 – $999,999: 4+

       (These price ranges represented 19.9% of our May sales compared to 21.1% of our April sales, 12.7% of our March sales, 14.3% of February sales, 20.4% of our January sales, 14,5% of December’s sales, November’s 22.1%, October’s 13.2%, September’s 23.7% and August’s 24.4%)

  • $1,000,000 – $1,499,999: 10++
  • $1,500,000 – $1,999,999: 3–
  • $2 million+ : 5-

       (#Solds $1 million+ = 9% of our May sales, 11.2% of our April sales 7.4% of our March sales, 8.9% of February sales, 7.1% of January’s sales, 6% of December’s sales, 7.86% in November, 7.8 % in October, 9.3% in September, 6.3% of August’s sales,10.6% of July’s and 6.2% in June)

In my opinion, this price range breakdown is one of the most important resources in my market reports because it truly highlights our specific strengths and weaknesses each month. In May our stand out price ranges were the $400,000’s, $500,000’s, $700,000’s, and $1,000,000 – $1,499,999. It is interesting to look at how each group of prices did compared to last month. The most significant drop was in the $100,000’s and $800,000’s. While the majority of Lake Norman’s sales (71.2%) were still under $600,000, within those price ranges we saw significant upswings in the highest price ranges of  $400,000 – $600,000. While the $700,000’s increased over last month they really just regained their more typical market share after a dip in April.  Overall the numbers for our “trade-up” price ranges of $400,000 – $999,000 performed remarkably well and trended up while our lowest price ranges just remained steady or declined slightly.  As I have said so many times, with our Lake Norman real estate market you really need to know specifics about your price niche because there is such disparity within price range sales.

Higher-end home sales in Lake Norman

Properties above $1 million did relatively well despite being up against record-breaking sales over $2 million in April. I am quite impressed that we had 5 closed sales over $2 million in May and a substantial bounce back of the $1 million – $1.5 million after a dip last month. If you look at my list of luxury home sales for prior months back to last June you can see that at 9% we actually did quite well. I am beginning to believe we are seeing a long-awaited recovery of our luxury housing market. It will be interesting to watch this niche over the summer.

Lake Norman’s Waterfront Homes

As I wrote above, waterfront homes remained in a more balanced market in May increasing just slightly to 6.7 months of supply. (A balanced market of 6 months favors neither buyers nor sellers.)

  • Waterfront sales in May represented 22.8% of Lake Norman’s total sales (down from last month’s 28.6) while comprising 36% of our active listings and 25.1% of our under contract listings.
  • The average price per square foot of our waterfront homes increased to $256.23 which is an improvement over the last 3 months however below January’s $271.81.   
  • It took on average 90 days for a waterfront home to sell and they sold for 96% of their listing price.
  • Overall, these numbers are pretty consistent with the past year or so.  The one improvement was the shorter days on market. That said, their small percentage of our total Lake Norman sales vs the percent of our total inventory is very concerning.  Don’t be fooled however. There are HOT waterfront properties.  I sold one this past month over asking that had 5 offers in the first week but it was a great lot for a great price.

Annual Sales by Month

Lake Norman real estate home sales analysis for May 2018

* 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. ***Our MLS just merged with two other’s so all of the total sales numbers have changed slightly.  I did update the entire 2017 year so that this year’s numbers will be comparing apples to apples. However, I am not going to go back to prior years and adjust.

What a fascinating look at our highs and lows, especially now that we are 5 months in to 2018.  Our combined total of 712 is now only 1.7% lower than the first five months of 2017 and is higher than all other prior years since 2005. As you can see, we are up against some strong numbers for the rest of 2017 but based upon our very high number of new contracts I think we will see strong sales numbers as we enter summer. Despite very low inventory of active listings, 2018 seems to be gaining momentum!

Summary and My Insight

Good signs/news for 2018:

  • With five months in the books we are almost on track with 2017’s exceptional numbers after a bit of a struggle at the start of this year.
  • 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 had another listing sell within the first few days with multiple offers. As with last year’s sales, I need to emphasize that in every case my sellers have been willing to spend the necessary money staging their homes including, refinishing or new hardwood floors in main living areas, fresh paint in the popular grays and white, new carpet and spruced up landscaping and curb appeal.  One huge continuing success is painting wood kitchen cabinets white. When combined with the fresh gray walls and staging they look like model homes!
  • Multiple offers do exist in our waterfront properties.  I was involved in one and I know of at least one other in the past month.
  • 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. Note that lumber prices are sky high which is causing construction costs to go up as well.
  • New listings in the lower price ranges that are in great condition and in desirable locations are selling with multiple offers within days of hitting the MLS.
  • Move-in condition, updated listings in the trade-up price ranges and homes on exceptional waterfront lots are selling quickly.
  • Fannie Mae & Freddie Mac  has increased their Conventional Loan Limit to $453,100 from the current $424,100!

Challenges/Weaknesses for 2018:

  • Mortgage interest rates are higher and and there are concerns about the future pace of these increases and potential inflation based on announcements by the Federal Reserve.
  • Supply and demand are mismatched. Inventory levels are still very low and not increasing as they usually do by this time of year. This shortage does negatively impact sales and will continue to do so if they don’t increase substantially as is typical here in the spring/early summer.
  • The new tax bill according to a recent NY Times article is “Messy” and is predicted to negatively impact our country’s housing market. “Overall Moody’s Analytics estimates that the tax law will reduce home transaction prices by 4%, a number that reflects both the direct impact of tax changes and higher interest rates caused by larger deficits.”
  • The big picture: “Even as the housing market is chugging forward, hamstrung by low inventory…NAR thinks 2018 will be challenging. The group revised its 2018 forecast to show that sales will be flat compared to 2017.”
  • Locally, our waterfront homes are still struggling a bit and remain in a buyer’s market overall.
  • Our trade-up and luxury home sales, while improving, continue to be erratic unlike the lower price ranges.
  • 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.  Much of our housing inventory is becoming more and more dated so it will be incumbent upon sellers to do more significant updating and staging to compete with new homes.  Of course, the alternative is to drop their sales price but most buyers are not willing to buy a home here that needs a lot of work.
  • 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 now a necessary part of the buying process for some price ranges and locations.  Don’t procrastinate when considering a really good 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.  I will be writing my 1st quarter 2018 price range analysis in a few weeks.  In the meantime, See my price range analysis for the 1st quarter of 2018.   

Final thoughts: 

As I wrote the past three months:

My family moved to Lake Norman from California in 2005 seeking a better quality of life and a lower cost of living.  I have watched our area grow immensely over the past 13 years. There is no doubt that Lake Norman is still a very appealing destination for folks from all over the country. We now can compete with many trendy cities throughout the country with our amazing number of new restaurants, breweries and entertainment.  But, with this growth has come increased traffic which is now just a fact of life on I-77. With the passing of time, our pre-recession “new” homes are now a bit dated and will be needing new HVAC sysems, water heaters and roofs. With a complete halt to new construction during the recession years we are now lacking the number and type of homes that appeal to many of today’s buyers.  For this reason new construction and remodeled homes are selling more quickly than ever.  It is more of a challenge for our “dated” homes and subdivisions where open floor plans are rare and kitchens and bathrooms are in less appealing woods and materials.  The result has been the need for sellers to do updating before listing and buyers, especially waterfront, need to be more willing to do remodeling after they purchase IF they found a home on a great waterfront lot or in a great location. Today, the bottom line comes down to price, location, condition, updates and proximity to desired amenities.

Buyers today need to know their price range’s.  Are they in a buyer’s or seller’s market? If you are in a seller’s market, be prepared to act fast when a new listing that has been updated comes on the market. Or, if you want a more affordable option in any price range, be prepared to be more flexible.  This means a willingness to do your own updating if you can’t afford an updated home, and, if possible, be more flexible about locations based upon our limited inventory.  At the same time, if you really love the home, be aggressive  with your offer! Come in high and with very clean terms. My Mantra as always: Don’t focus just on the price but also 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!  

Sellers should watch a lot of HGTV and, if possible, be prepared to do painting, new flooring, painting kitchen cabinets white when feasible and staging to attract buyers.  As I wrote above, I listed and sold another home with multiple offers which can be completely attributed to the renovations and staging.  How do I know this?  The seller had it listed last year is it’s dated condition with no staging and it sat on the market.  We are under contract about $20,000 above where they were before! Also, remember that buyers can be reluctant to buy a home knowing they will need to replace a roof, the AC and heating etc. in the first few years they are living there so, if possible, put on that new roof, replace the HVAC units while you are updating.  ALWAYS offer home warranty plans to buyers!

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