Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s November 2013 Home Sales Analysis: Did the Grinch steal our momentum?

Our Lake Norman real estate market set a record in November but unfortunately not a positive one!  For the first time since December 2011 Lake Norman home sales did not exceed the same month a year prior. As of today, our November closed sales are 10% below November 2012’s.  That said, they are still the second highest November since 2007.  While disappointing,  this is not a surprise based upon the softening trends I have noted consistently for the past several months.  Within the overall Lake Norman housing market there are some interesting trends that will be examined below so 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 November 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:

Lake Norman real estate home sales analysis for November 2013 including waterfront homes

Lake Norman Real Estate’s November 2013 Sales Analysis Chart

* 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.

Some significant additional statistics for you:

  • “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) comprised 14.8%  of Lake Norman’s total home sales which is up from  11.3% last month. Prior months were: 15% in September, 9.4% in August, 11.3% in July, 6.9% in June, 10.6% in May , the 14% in April, 20.4% in March, 16.9% in February and January’s 29%. We only had 13 distressed home sales in November. The average price for distressed single family home sales was $241,588 compared to an earlier low of $252,526. Distressed active listings comprise only 2.7% of our total inventory of Lake Norman homes sale! 
  • 26.1 % of our closed sales were waterfront homes which is about equal to last month but well below September’s 34.6%. The average sales price of Lake Norman waterfront homes in November was $696,900 compared to $662,850 last month and September’s $738,972, August’s $709,753, July’s $874,988 June’s $990,693 and May’s $778,045. What is really interesting to note is that the average price per square foot actually increased for the second month in a row to $216.15 compared to $211.11 last month and $215.43 in September after peaking at $229. Our waterfront home sales above $700,000 remain sluggish but the homes that are selling are getting relatively strong offers based upon their size.
  • 11 new construction homes sold in November. The average listing price vs sales price of new construction single family homes remains 101%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 49 new construction homes under contract. The average sales price in November was up, logging in at $448,564 compared to $359,018 last month and$406,596 in September. 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.
  • 56.8% of Lake Norman’s October home sales were under $400,000.
  • A whopping 73.86 % of the entire Lake Norman home sales in October were under $500,000 which is down slightly from last month’s 75.25% but up from 66.3% in September and more in line with February’s 81.7%, 81% in January, 74 % in December and 75% last November. After seeing an upswing in both the trade-up price ranges and our Lake Norman luxury homes over the late spring and summer, we have now had several pretty weak months in a row of sales in our trade-up and luxury housing markets.
  • Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 197 was the seventh month in a row of decline after April’s record high of 319 . At 197, we dropped down from last month’s 207  but are now equal to last year’s 197. It appears that the bleeding has stopped and our  Lake Norman housing market may have stabilized but it doesn’t look like we will see double digit sales increases again any time soon.

A closer look at the chart:

  • The number of Active Listings in Lake Norman is still 7% higher than last November’s but they did decline significantly this month which is good news. Our absorption rate/months of supply of active listings today is equal to last month’s 9.6 but well above May’s post recession low of 5.9. For the third month in a row our Lake Norman market is above the nationally defined goal of a balanced 6-8 months of supply. In contrast, in the entire Charlotte MLS there is currently only a 5.6 month supply. Low inventory has played a significant role in Lake Norman’s housing recovery as it has nationally and is what has been driving the price increases nationally so we need to get our months of supply back down for the sake of the health of our Lake Norman real estate market. One bit of good news is that the average number of days an active listing has been on the market dropped again, this time by 16%.
  • Under Contract Show (conditional sales), increased for the 21st month in a row when compared to the same month of the prior 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 December/January. Based upon these numbers I expect us to maintain slightly higher sales or at least match last years sales for the next few months but I highly doubt we will see the double-digit increases we experienced in late spring and early summer until spring 2014 if then.
  • Pending/Under Contract No Show sales were LOWER than last November’s making this the third month in a row of decline. These are the contracts that are past their inspection/due diligent periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon this I predict that we will not exceed 2012 closed sales numbers again this month.
  • The number of closed home sales in Lake Norman in November as of today and as stated above, was -10% compare to last year’s. On a positive note, howeverthe average sales price increased slightly and the average days the homes were on the market dropped an impressive 20% which is good news. So, yes, like October, November’s  numbers do  have some positive’s but they are honestly a mixed bag which definitely reflect some weaknesses and areas of concern!

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

  • December 6, 2013: 197
  • November 6, 2013: 207
  • October 6, 2013: 207
  • September 6, 2013: 218
  • August 6, 2013: 264
  • July 6, 2013: 271
  • June 6, 2013: 293
  • 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, 2012: 134 (the lowest ALL year)

Here is a breakdown by price-range of our August 2013 closed sales in Lake Norman’s area 13-1 to 13-5:

  • $37,500 – $199,999: 19+
  • $200,000 – $299,999: 14-
  • $300,000 – $399,999 18- (vs 26 last month)

(These price ranges represented 57.95% of our November home sales.)

  • $400,000 – $499,999: 7-
  • $500,000 – $599,999: 7- (9 last month)

(These price ranges represented 12.9% compared to 21.6% last month)

  • $600,000 – $699,999: 7+ (5 last month)
  • $700,000 – $799,999: 4 ( Compared to 3 for the past 2 months, 5 in August and 12 in July)
  • $800,000 – $899,999: 7+ (Compared to 4 last month, 2 in September, 4 in August and 7 in July)
  • 900,000 – $999,999: 1  (Compared to 0 for the past 2 months and 3 in August)

(These price ranges represented 21.59% compared to 12.3% last month and 14.4% in September and 18.75% in August)

  • $1,000,000 – $1,499,999: 2 (Compared to 1 last month,  2 in September, 4 in August and 8 in July)
  • $1,500,000 – $1,999,999: 0
  • $2 million+ : 2 (High sale was $3,665,000)

(#Solds $1 million+ = 4.5% compared to 3.1% last month, 5.7% in September, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April)

The most improved price ranges in November were our  very lowest price ranges up to $199,999 and our trade-up price ranges of $600,000 to $899,000.

Higher-end home sales in Lake Norman

Wow, what happened to our elusive luxury housing market? After two really strong months in June and July we have lost ground not just in the $1 million+ homes but also the $900,000 – $999,999. Yikes! With no sales once again in the $900,000’s and only 4 homes priced over $1 million in all of Lake Norman our higher and highest priced niches are truly struggling to recover.

Waterfront Homes

We currently have 319 waterfront homes actively listed for sale. With 23 closed sales in November that means Lake Norman has a 13.87 months inventory of homes for sale which is quite a bit higher than the overall 9.6 and well above a balanced housing market. I am honestly baffled by the slowdown in waterfront and higher priced homes in Lake Norman but there is no doubt that they have been weak for several months. We currently have 54 waterfront homes under contract 11 of which are listed above $1 million so we should see improvement in closed waterfront home sales in the next few months.

9-Year Comparison of Lake Norman Home Sales By Month

Lake Norman real estate sales chart by month for the past 9 years

Lake Norman real estate sales chart by month and year for the past 9 years

 

* 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 11 months of 2013 exceeded 2012’s by 19.9% and were the best since 2007.  In fact, we are only 10% below the number of Lake Norman home sales in the first 11 months of 2007. There is no doubt 2013 has been a great year overall despite the 4th quarter slowdown.

Summary and My Insight

Good signs/news:

  • Lake Norman’s single family homes average sales price per square foot has increased about $4.00 or 3% in 2013.
  • The average number of days a Lake Norman property took to sell was down significantly and the average price was up sightly.
  • Our inventory of active listings is dropping consistently as it should during this time of year.
  • There are still pockets of “hot” home sales in the greater Lake Norman area, notably the off-water popular and moderately priced communities in Huntersville, Cornelius and to a lesser extent Mooresville where inventory is very low and multiple offers are not uncommon.
  • The number of distressed homes for sale are so low they are almost irrelevant in 2013 and the numbers are still dropping. According to a recent Charlotte Observer article Charlotte foreclosure activity dropped 46% in September which is better than the national rate. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.
  • New construction is definitely back. While we only sold 11 new homes last month through the MLS, we have 49 under contract and this doesn’t include custom homes and homes to be built in subdivisions. New housing communities as well as custom and smaller groups of spec homes are popping up all over Lake Norman. As I noted above, new construction homes are selling on average for 101% of the listing price! (Interesting note: Builders are more likely to build homes in existing subdivisions at slightly LOWER prices than the existing homes to ensure quick sales).
  • Interest rates remain low.
  • Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
  • Homeowners who went through short sales several years ago are now re-entering the market.
  • Economists at UNC Charlotte say that they expect North Carolina to have a strong 2014 in terms of both housing and jobs.
  • Charlotte remains North Carolina’s top metro on economic-vitality index by “On Numbers”.  Factors they consider are private-sector job growth, unemployment, earnings, housing price appreciation and construction and retail activity.
  • Charlotte regional experts expect a 4-4.5% improvement in our GDP in 2014 led by transportation and real estate.
  • Freddie Mac economists recently said that they expect that a “much stronger economic recover will take hold next year, led by a resurgent housing sector.”
  • Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.

Challenges/Weaknesses:

  • I just took another bullet point out of our Good News section above after removing 5 in the past two months. This is not a good sign!
  • While the average price of a closed home sale in Lake Norman in November increased 4%, this is more a reflection of what price points are selling than increasing home prices overall. There are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market.
  • In most price ranges, our existing inventory contains the leftovers that have issues/weaknesses or properties that are overpriced.  The majority of our sales are new/newer or reduced listings.
  • Our inventory of active listings in Lake Norman is too high despite the recent drop. This coupled with decreasing sales has led to an absorption rate of 9.6 months which puts us back in a buyers market. At the same time our entire Charlotte MLS has 5.6 months of supply and the national average is 4.9 months of supply.
  • Our trade-up and luxury housing niches seem to have all but disappeared after having a few good months.
  • Our “bargains” are gone due to the disappearance of distressed sales and very high levels of inventory. Gone are the great waterfront homes I sold in the $600,000’s, and even $700,000’s in 2010/11 and the great waterfront teardowns in the $300,000’s I sold in the last year or two. Nice, newer move-in condition homes with good, deep water are really hard to find under $1,000,000 on the east side of Lake Norman. Denver, Sherrills Ford as well as Troutman and Statesville have not yet fully caught up to the strong sales of Mooresville, Cornelius and Huntersville.
  • Finding the perfect home has become more difficult, particularly under $600,000, because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
  • On the flip side, higher-end properties are simply taking much longer to sell.
  • I also have concerns for Lake Norman home buyers. 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 picked over inventory or you might not.

My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floor-plan is good, perhaps having to do some painting, new flooring etc. is your best option. 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 prices low but rising it is a great time to buy. With less than 3% of Lake Norman’s current listings being “distressed sales” don’t expect a “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.

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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