So here is the good news: Lake Norman squeaked by last September’s total home sales by 2% making it the 9th month in a row where we beat 2014 closed sales. The bad news? October is really going to be ugly. Unfortunately, last October we had a particularly strong month and there is just no way we are going to be able to match those numbers this month given our low number of pending and newly under contract sales. Our inventory of active listings is insanely low (11% below last year’s) which will also serve as another challenge to the rest of 2015 sales. If there is a silver lining it is that after October our sales in 2014 dropped significantly so there is a chance we can pull out ahead of last year again in November and December. And, our year-to-date 2015 closed single family home sales are 14% higher than 2014’s. For the first time since the recession, Lake Norman’s housing market has been consistently strong every month in 2015. Unfortunately, it has been trending downward in the last few months and is now looking rather feeble. Let’s take a closer look:
* All data is from the Carolina Multiple Listing Service.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented only 2.8 % of Lake Norman’s total September home sales. We had just 4 distressed sales with an average price of $483,125 (The highest closed sale price was $1,077,500 which skewed the numbers). Distressed active listings currently comprise only 1.9% of our total inventory of Lake Norman homes for sale. Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market and this is very good news!
- Waterfront homes represented 30.8% of our September home sales while they currently comprise 38.7% of our active listings. What an improvement from the past few months! The average sales price of a waterfront home in September was $882,512 compared to $775,058 in August. And, the average price per square foot was a record post recession high of $261.40. It took on average 140 days for a waterfront home to sell and they sold for 95% of the listing price. We currently have 73 waterfront homes under contract. Our waterfront homes’ months of inventory dropped down to a respectable 7.8. These numbers are a vast improvement over the past few month so put this in the good column!
- 16 new construction homes closed in September 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 100%. Clearly there isn’t a lot of wiggle room on prices of new homes! We currently have 63 new construction homes under contract in the MLS. The average sales price in September logged in at $369,735. The months of supply of 11 puts this group back in a buyer’s market. Too many spec homes going up? Definitely something to watch but Lake Norman really needs the inventory of new homes!
- 45.5% of Lake Norman’s September single family home sales were under $400,000 which was down 10% from last month’s.
- 64.3% of Lake Norman home sales in September were under $500,000.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 209 are my greatest concern. Last year on this date we had 275 under contract and in 2013 we had 207. If we presume we are on track to match October 2013 sales that would be only 104 compared to October 2014’s 166. Whether this is a serious downward trend or just a blip on the radar screen remains to be seen.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is a substantial 10% lower than last year’s. Our absorption rate/months of supply of active listings remains at 6.2 which puts Lake Norman back in to a balanced housing market overall favoring neither buyers nor sellers. Within specific price ranges, however, there are swings from a buyer’s market to balanced to a seller’s market. Lake Norman is not alone as throughout the country economists have noted the low inventory of active listings and how this is impacting sales volumes.
- Under Contract Show (conditional sales), are down 18% versus this time last year.These are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. They represent future closed sales most likely in late October/November. This number would indicate that our October closed sales will drop compared to last year’s and possibly November’s will as well. So far in 2015 our Lake Norman’s housing market has performed at it’s most consistently strong pace since the recession despite the lack of a good number of fresh new listings. However, the tides have turned but is this just a twist in the road or a major turn?
- Pending/Under Contract No Show sales are down a whopping 34%. These listings went under contract on average in only 60 days. Pending sales are the 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. Clearly we are not going to reach last year’s numbers in October and perhaps November as well. But, the fact that these properties went under contract in only 60 days tells me that good listings that are priced right are selling very quickly compared to the rest of the inventory. Buyers are jumping when good properties come on the market!
- Lake Norman’s closed home sales in our MLS as of today and as stated above, were 2% higher than last year’s. (Don’t forget that this number will go up a bit as slower agents log in their sales.) So, while okay, not impressive. The average price was up 8% and the days on the market was up slightly.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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
- October 4, 2014: 275
- September 6, 2014: 272
- August 6, 2014: 261
- July 7, 2014: 268
- June 5, 2014: 262
- May 6, 2014: 274
- April 6, 2014: 243
- March 6, 2014: 187
- February 6, 2014: 185
- January 6, 2014: 155
- December 6, 2013: 197
- November 6, 2013: 207
- October 6, 2013: 207
Here is a breakdown by price-range of our September 2015 closed sales in Lake Norman
- $90,000 – $99,999: 2-
- $100,000 – $199,999: 10
- $200,000 – $299,999: 29
- $300,000 – $399,999 24–
(These price ranges represented 45.5% of our September home sales which is down from last month’s.)
- $400,000 – $499,999: 27+
- $500,000 – $599,999: 12
(These price ranges represented 27.2% which is slightly higher than last month’s )
- $600,000 – $699,999: 14+
- $700,000 – $799,999: 8+
- $800,000 – $899,999: 3-
- 900,000 – $999,999: 3+
(These price ranges represented 19.6% compared to 13.0% last month!)
- $1,000,000 – $1,499,999: 5-
- $1,500,000 – $1,999,999: 3+
- $2 million+ : 3+
(#Solds $1 million+ = 7.6% compared to last month’s 6.6%)
The stand out price ranges in September in all of Lake Norman were the $400,000, $600,000’s, $700,000’s, and to a lesser degree properties over$900,000’s.
Higher-end home sales in Lake Norman
Whew! After a really promising July but an abysmal August, our sales in both the trade-up price ranges of $600,000-900,000 and the $1 million+ luxury market seem to have returned to reasonable numbers relatively speaking. Of the 209 listings currently under contract 44 or 20% (last month =11.9%) are in our trade-up price ranges and 24 or 11.4% (last month =5.5%) are over $1 million. In reality our slowdown has been in the lower price ranges while our higher price ranges are holding steady. Another piece of the silver lining to hang on to this month!
Lake Norman’s Waterfront Housing Market
As goes our trade-up and luxury market so goes our waterfront housing market for the most part. This past month was definitely an improvement over August. As of today we have 73 waterfront properties under contract and our months of supply based on the September sales is 7.8. This isn’t that far off of a balanced market. I have been showing waterfronts in all price ranges and I am noticing quite a bit of activity especially on new listings. While the inventory looks a bit high by the numbers, the selection of good waterfront homes in more affordable price ranges is quite limited. I have 3 waterfront lot contracts right now where my buyers ended up deciding to build because they couldn’t find a home they liked. What will happen once the good lots/teardowns are gone? My guess is we will see more renovations of dated homes on good waterfront lots. 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.
11-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 chart of our sales by month since 2005 as it really gives us a good sense of where we are today and where we have been over the past 11 years. With 9 months now under our belts in 2015 our sales have exceeded all post recession years and are 3.4% higher than the 2007 numbers. (only 6.3% lower than 2006’s). We are still out performing 2014 handily but how will the next several months impact the annual numbers? As the numbers above indicate, there is no doubt that we are in for a slowdown but for how long and how low remains to be seen.
Summary and My Insight
Good signs/news remains the same as last month:
- Lake Norman’s inventory of active listings remains low with only 6.2 months of supply which puts pressure on demand.
- 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. 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.
- Waterfront tear-downs and lots are selling. More buyers are willing to build or do major renovations if they can get “good” waterfront lots.
- New listings that are in good condition and in desirable locations are selling within days of hitting the MLS.
- Interest rates remain under 4% which was unexpected for this late into 2015
- I have personally experienced a marked increase in the number of calls from buyers from out-of-state planning to move to Lake Norman since the early January.Because sales and prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move now than in the past 5 years.
Challenges/Weaknesses also the same as last month:
- Lake Norman’s low inventory is comprised of a lot of stale inventory so while it helps demand it is also hurting sales volume.
- While improving, our waterfront and luxury price ranges are still very much in a buyer’s market.
- Our “trade-up” market is better but erratic.
- Lake Norman home prices are increasing in a rather inconsistent pattern and in different locations and price ranges. At the same time, according to economists, home prices in the entire US are expected to rise about 5%.
- 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.
- While easing a bit, strict loan standards are still making it more difficult of buyers to qualify despite some easing and modifications.
- Finding the perfect home has become more difficult because much of the older inventory has been picked over. 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. Don’t procrastinate when considering a new listing because they are selling quickly!
- On the flip side, most higher-end properties are simply taking much longer to sell.
- 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.
Final thoughts: Officially we are now past the strongest selling season for Lake Norman homes. However, if you look at the green and yellow chart above you will see that historically we can also see some solid sales numbers in the 4th quarter. Our weak under contract and pending numbers seem to indicate that our 4th quarter is going to be a struggle but hopefully sales will pick up just like our lake levels. Our drought is over! With bargains gone and sales up now is the time to act VERY quickly when you find a home that suits you. I have out-of-state buyers who have their “favorites” list planned for their visits only to see a good number of them going under contract before they have a chance to see them. If you are looking in a “HOT” neighborhood and price range be prepared to make an offer quickly. Have your pre-approval letter in hand before even looking at homes.. These are new times so 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 low but rising it is still a great time to buy. With less than 3% 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 feel that we have two different markets right now in Lake Norman. There are new listings that are priced right that are selling in just a matter of days and then there are the older listings and high-end luxury estates that are still struggling.
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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