August was indeed a stellar month for our Lake Norman housing market. (The second best month of closed home sales since August of 2007!) While our number of closed sales were not quite as high in September, all of our numbers indicate strong closed sales this month (October). Our third quarter 2011 sales were 14% higher than 2010 after a drop in both first AND second quarters. Add to this trend our declining inventory and shrinking numbers of disressed properties and I believe we have some strong signs of recovery. Of course, this can change but these are important indicators to watch!
Here are the September numbers from our Charlotte Multiple Listing Service for our Lake Norman area real estate market:
Some significant additional interesting statistics for you:
- Only 10% of our closed sales were “distressed sales” ( Foreclosures (REOS), defaults, Short Sales) compared to 16.8 last month, 18.5% in July, 25% in June and 27% in May. Not only is this a record low since the market tumbled, but unless we experience a new wave of foreclosures which we certainly haven’t seen signs of yet, then I think we can safely say that our Lake Norman market is healing and the worst is behind us.
- 38% of our closed sales were waterfront homes up from 21% last month.
- 52% of our August sales were under $400,000 and 74% were under $600,000.
- Today our active listings stand at 985, the lowest number since I started these reports in 2007
A closer look:
- The number of Active Listings in Lake Norman dipped below 1000 for the first time since at least 2007 and are continuing to drop at a fairly consistent pace. Our absorption rate/months of supply of active listings stands at 12.6. While higher than last month’s 10.0 we keep moving closer to our goal of a truly balanced housing market of 6-8 months of supply in Lake Norman area (MLS area 13). And, only 9.5% of Lake Norman’s current homes for sale are “distressed sales”. If we don’t get a second wave of foreclosures, which we haven’t so far, our housing market is definitely over the hump.
- Contingent Sales, (sales contracts that are contingent upon the buyer selling their own home)which don’t account for a significant segment of our housing market, remain fairly low most likely because sellers are unwilling to take on the risk of waiting for the buyer’s home to sell before closing.
- The combined total of Conditional Sales and our new “Due Diligence” category increased 5% this month when compared to September 2010. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late October/Novembeer. These are the numbers that give me the most encouragement as they indicate our current pace of Lake Norman home sales may be sustained through fall at least. (Please note that I decided to separate Conditional from the new Active Due Diligence category because it has become increasing difficult to provide good insight into the average prices and days on market).
- Our Lake Norman Pending sales are up a whopping 44% from September 2010. These are the contracts that are past inspections and are just waiting to close. Pending sales are usually the best indication of closed sales in the next few weeks. It looks like our October closed sales will be very strong and well over the 2010 numbers. As a matter of fact, we may even match or beat our October 2007 sales of 98! Last October we only closed 68 sales.
- The number of closed home sales in Lake Norman are equal to September 2010’s and will likely end up a bit higher as some agents don’t report sales right away. One important note: The average price of homes sold were 16% HIGHER than last September 2010. It is important to understand that a few very high prices sales contribute to this higher average.
The total number of Lake Norman single family homes under contract (but not yet closed) on the first of each month are as follows:
- October: 193
- September: 183
- August: 193
- July: 178
- June: 199,
- May: 173
- April 195,
- March: 163
- February: 142
Last September we had only 165 so this month’s are 17% higher; another indication that the next few months will be stronger than 201o. More good news!
Here is a breakdown by price-range of our June 2011 closed sales in Lake Norman’s area 13- to 13-5:
- $25,000 – $199,999: 12
- $200,000 – $299,999: 16
- $300,000 – $399,999: 13
(These price ranges represented 53% of August’s sales compared to 57 of August ‘s total sales)
- 400,000 – $499,999: 9
- $500,000 – $599,999: 8
(These price ranges represented 21.7% compared to 25.7% last month)
- $600,000 – $699,999: 7
- $700,000 – $799,999: 3
- $800,000 – $899,999: 3
- 900,000 – $999,999: 2
(Solds for $600,000 – $1mill = 19% compared to 10% last month)
- $1,000,000 – $1,999,999: 3
- $2 million+ : 2 (Highest sale was $3,200,000)
(Solds $1million+ = 6.4% compared to 7% last month)
7-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 have made an adjustment of the totals reflecting the ACTUAL sales every month in 2009, 2010 and 2011 and the totals in the prior calendar years. The columns may not add up but I do my best with what I have to work! I also adjust past months when I do the monthly update as a few more sales are usually input late by agents.
Summary and My Insight
Above is a snapshot of Lake Norman home sales numbers by month for the past 7 years. Our just-completed 3rd quarter posted positive monthly sales numbers compared to the same quarter of the prior year; the first for quite some time.
So, what am I seeing as I am out selling?
- First and foremost, most good properties that had been sitting for several years and were reduced have sold, sometimes with multiple offers! My buyers who have been watching their own niche for years simply don’t have many good options left and are beginning to realize that they are going to have to compromise more and be willing to pay a bit more than the bargains prices of the past.
- With fewer distressed properties, the “screaming bargains” are few and far between. Successful buyers are now concentrating on getting a good price but for the most part are not expecting huge price concessions.
- Once a listing is reduced to an appropriate price it will most likely sell fairly quickly depending on the price-range. The right listing price is the key to a property selling in a reasonable amount of time. I have watched great but over-priced listings for years that once they they hit the right price reduction sell rather quickly.
- With construction loans nearly impossible to get, lots, especially waterfront, are still sitting. That said, we are finally seeing some new construction popping up.
- Prices are inching up in certain price niches particularly in communities like The Farms and The Point now that their distressed sales are nearly gone. There are even new-construction homes available in The Farms.
- Our inventory of homes for sale is shrinking so there are fewer options for buyers that ever before.
In my opinion, overall our home prices may have hit bottom. The future of our Lake Norman real estate market now depends on two main things:
1. How much ”shadow inventory” do we have in our Lake Norman area? Will we see more distressed properties coming on the market later this year or next year? The fact that distressed properties only accounted for 10% of September’s sale shows how this portion of the Lake Norman real estate market continues to shrink. My guess is that while they will continue to exist they will no longer dominate nor drive our Lake Norman housing market.
2. Consumer confidence based upon the national/global economy.
My advice to Lake Norman home buyers at this point is to look for homes that are in good locations and have most of the priorities on your list. Then, to determine a realistic price, use VERY RECENT comparable sales and don’t get caught up thinking about the incredible bargains in the past. Carpe Diem!
Here are two of the first sales analysis I did for our Lake Norman market back in 2007. The numbers are very interesting in the context of today’s. I must admit in hindsight that while I was quick to recognize the signs of a downturn I clearly didn’t predict the severity nor the number of years it has taken to see any signs of improvement:
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