Lake Norman’s overall real estate market is still extremely active despite entering into our seasonally slower months. 4 of the past 5 months have beaten the same months in 2015 and 3 of the 4 by double digits! In October we closed 17% more home sales than last October and based upon our new contracts it looks like this momentum is going to continue throughout the next several months at least. Mercurial has been emphatically replaced by momentum as my favorite adjective to describe our current Lake Norman real estate market. 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 which is baffling to me. Waterfront properties represented only 28.7% of our October closed sales (identical to last month). At the same time they currently comprise 43% of our active listings. The average sales price of a waterfront home in October was $780,493 which is slightly higher than last month’s $729,319 but well below August’s $1,040,070, July’s $912,446 and June’s $870,498. This drop indicates a softening of our overall luxury housing market. The average price per square foot came in at $237.98 up from last month’s $227.41. It took on average 91 days for a waterfront home to sell and they sold for 97% of the listing price. We currently have 74 waterfront homes under contract comprising 26.9% of our total homes under contract. Our waterfront homes’ months of inventory bumped back up to 9.5 from 7.9 so overall they are still very much in a buyer’s market. That said, this varies quite a bit by price range. Don’t be complacent because when really nice waterfront properties hit the MLS they are actually selling quickly.
- 18 new construction homes closed in October 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 was 99%. There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 91 new construction homes under contract in the MLS. The average sales price in October logged in at $385,892. The months of supply of active listings based on October sales stands at 11.1 so overall new construction homes are very much back in a buyer’s market.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented 1.5% of Lake Norman’s total home sales. With just 2 distressed closed sales for the entire month it is safe to say they really didn’t play a role in October at all. Distressed active listings currently comprise 1.7% of Lake Norman’s current total inventory of single family homes for sales. Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- 47.7% of Lake Norman’s October single family home sales were under $400,000 which is slightly lower than last month’s.
- 62.9% of Lake Norman home sales in October were under $500,000, which is also lower than last month’s.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 275 is truly impressive. Not only is it slightly higher than last month’s but we have 24% more properties under contract than at the same time in both 2015 and 2014. We are on pace to have an exceptional last two months of 2016 and even into January 2017.
A closer look at the chart:
- The number of Active Listings today in Lake Norman, for the first time in 6 months is actually slightly below last year’s at this time. Our inventory plummeted to 841 from last month’s 909 and well below June’s 1033. After enjoying decent levels of inventory we are now seeing sharp declines. Our absorption rate/months of supply of active listings increased slightly to 6.3 from 5.3 which means Lake Norman is overall in a balanced market favoring neither buyers nor sellers. 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 whopping 27% versus this time last year! The average price of our new contracts is also up 14% and the days on market dropped 8%. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. While not always true this year, normally, these newer sales should represent future closed sales most likely in December/January.
- Pending/Under Contract No Show sales were were also up by an impressive 17% versus October 2015. These listings went under contract on average in 90 days but the average price is down 9% from last year’s. 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 in the next few weeks. Given this relatively strong number I think we will see higher closed sales in November and beyond. Up, up and away we go!
- Lake Norman’s closed October home sales in our MLS as of today and as stated above, were up a healthy 17% compared to 2015! 132 closed sales in October is second only to October 2014’s 167. Our total sales for the first 10 months of 2016 are now 4% higher than 2015’s. Thanks to 4 of the past 5 months we are now ahead of 2015 despite earlier ups and downs. Unfortunately, the average sales price in October was down 1% versus last year but the average home took 80 days to sell which is 12% faster than last October’s. So, good properties are selling in less than 3 months but our average prices are down which is an indication that our higher priced home sales have slowed. You will see this broken down below.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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
- May 6, 2015: 313
- April 6, 2015: 272
- March 6, 2015: 228
- February 6, 2015: 204
- January 6, 2015: 154
- December 6, 2014: 204
- November 6, 2014: 221
Here is a breakdown by price-range of our October 2016 closed sales in Lake Norman
- $50,500 – $99,999: 2
- $100,000 – $199,999: 10-
- $200,000 – $299,999: 20-
- $300,000 – $399,999: 31=
(These price ranges represented 47.7% of our October home sales compared to 49.7% last month)
- $400,000 – $499,999: 20=
- $500,000 – $599,999: 14=
(These price ranges represented 25.8% of our October sales compared to 25.1 last month)
- $600,000 – $699,999: 11
- $700,000 – $799,999: 8
- $800,000 – $899,999: 3–
- 900,000 – $999,999: 4-
(These price ranges represented 19.7% of October’s sales compared to last month’s 18.7%)
- $1,000,000 – $1,499,999: 8
- $1,500,000 – $1,999,999: 1
- $2 million+ : 0
(#Solds $1 million+ = 6.8% of October’s compared to 6.4% in September)
The stand out price ranges in October, as were predicted by our drop in the average sales price, were in our lowest price ranges especially the $300,000’s. This break down by price range underscores a marked shift from the last few months when our trade-up and luxury markets had relatively strong numbers. In October the strongest price ranges were all under $600,000 although the $600,000-$799,999 performed relatively well as did the $1,000,000 – $1,499,999.
Higher-end home sales in Lake Norman
After our luxury housing market stepped up in August it certainly fell short these past two months. With only 9 sales above $1 million compared to last month’s 11, and August’s 19 they represented only 6.8% of our total sales. And, we had NO closed sales over $2 million! Our luxury market has struggled to recover since the recession and it is clear we are not out of the woods yet.
Lake Norman’s Waterfront Housing Market
As I wrote last month, 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 buyer 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. It is also true that new listings with good water are selling more quickly than in the past. Good properties with good water are selling rather quickly but 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. For more details: Lake Norman Waterfront Home Sales 2005 – 2015, Some Interesting Insights.
As of today we have 74 waterfront properties under contract compared to 78 last month. Our months of supply based on October sales jumped back up to 9.5 putting Lake Norman waterfront homes over all very much in a buyer’s market. That said, the cream of the crop waterfront properties sell relatively quickly. With our current market it is more important than ever to know your price niche! Waterfront home buyers in the lower price ranges are going to have to lower their expectations and/or be willing to be more flexible. Keep in mind that the only finite property Lake Norman has is waterfront so supply and demand should drive prices up consistently in the future. I seriously believe that waterfront buyers should pounce when they find a good property with good water. Remember, good water trumps a good house on bad water.
12-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 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.
I love this now 12-year chart of all of Lake Norman’s sales by month as it really gives us a good sense of where we are today and where we have been over the past 12 years. Look at those recession numbers and you can see just how far we fell and just how much we have recouped. 2015 exceeded all years back to 2006 so in sheer number of homes sold our Lake Norman housing market truly has recovered.
With 10 months now in the books, our 2016, home sales are 4% ABOVE last year’s. Looking forward, you can see that we are up against some lower sales in the last two months of 2015. Given our very high number of properties currently under contract I have confidence that we will end 2016 above 2015 it is just a matter of by how much.
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Thanks to 4 out of 5 great months, Lake Norman has now logged in 56 more sales year-to-date than 2015.
- Our Under Contract/Pending numbers continue to be higher than previous years at the same time period indicating we are in for a strong 4th quarter and even into early 2017.
- Mortgage interest rates are still amazingly low. Economists seem to agree that the Feds will raise their rates in December but there doesn’t seem be to be any concern of significant raises in the mortgage interest rates.
- 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.
- 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 within days of hitting the MLS. But, really nice homes in the higher price ranges are selling quickly as well. In July I listed a home in The Point for $775,000 and we had a full price offer within 24 hours of it hitting the MLS and we are already closed!
- Economists are predicting stronger sales in the south this year and Realtor.com even ranks Charlotte as the #8th hottest market in 2016. They predict a 10% increase in sales and a 6.5% increase in the median prices.
- Lake Norman is overall back in a balanced market but tilting towards a buyer’s market.Our trade-up and luxury price ranges slowed significantly in September and October and are overall in a buyer’s market
- Inventory levels are low and still dropping
- 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.
- Strict loan standards implemented during the recession are still making it more difficult for buyers to qualify despite some easing and modifications.
- Finding the perfect home has become more difficult as sales improve. 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!
- Affordability is now becoming a factor in our area as it has been in many parts of the country.
- 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 must admit I am extremely upbeat about our overall Lake Norman real estate market. After a bumpy start, it looks like we are going to end 2016 on a very high note with at least 6 or 7 months of strong sales in a row. Our momentum has finally gained some consistency. At the same time, I am very disappointed to see the decline in our trade-up and luxury home sales and our waterfront sales which really go hand-in-hand.
As I wrote last month but I think is still valid: 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 near all time lows and prices rising it is still a great time to buy. 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 the activity and before we hit our seasonally slow months over winter. Our market is ever evolving!
My Mantra: 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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