Lake Norman’s 4th Quarter 2009 Housing Market Overview

 While my monthly and bi-weekly market reports for Lake Norman Real Estate provide a good pulse of our housing market, my quarterly summary (as above) and price range analysis (see below)  provide some invaluable insight into important trends that aren’t readily available. 

As you can see, our Lake Norman 4th quarter 2009 numbers are dramatically different from a year ago: 

• The number of active listings decreased by 20%  while our number of sales of single family homes increased by 19%.  This resulted in a drop of our months of supply of  active listings to 16.8 from 25.1.  Obviously, if this trend continues our buyer’s market will ultimately transition to a more balanced market. (A balanced market is 6-8 months of supply). 
• The average price of homes that went Conditional, Pending and Sold  this past quarter increased for the first time in many months.  While our market was driven by the first-time buyer price ranges there has been some movement in our luxury and waterfront homes as well. 
• The number of contingent, conditional and pending sales, which are a barometer of our future month’s closings, increased substantially compared to 2008.  While we are up against a very weak first quarter 2008, it does look as if we will see significant improvement in our housing market in the first quarter of 2010 compared to 2009. 

Inventory Down + Sales UP =  an improving Lake Norman real estate market.  This is the exact opposite of what I reported for the 4th quarter 2008.  The big question is: 

Is this a false bottom and will our market drop further in 2010 or are we beginning what is likely to be a slow and bumpy recovery?

 Lake Norman 4th Quarter Sales Analysis by Price Range  

If  you can take the time to really study  it, this chart will provide you with some incredibly detailed insight into our Lake Norman housing market.  I have to manually compile these numbers using our Charlotte Regional Multiple Listing Service’s data.  This is particularly meaningful to buyers and sellers because you can isolate your price range rather than use the broad-brush approach thus allowing you to size up your competition and better position yourself. 

How to read this report: 

• First choose a price range.  (column 1-3)
• The next column provides that actual number of listings sold in this price range in the 4th quarter
• This is followed by the percentage this price range represents of the total number of listings sold
• Next is the number of active listings in this price range
• This is followed by the percentage this price range represents of the total number of active listings
• The next column represents the average number of days on the market for listings sold in this price range.
• Finally, the last two columns represent the absorption rate or the number of months of supply for each price range based upon the number of listings divided by the number of sales.

Findings:

• Sales of homes up to $300,000 reflect the strongest price niche.  However, compared to last year, our Lake Norman market saw a marked improvement of our trade-up price ranges up to $800,000. 
• Sales of homes that fall within the FHA conforming loan rate of $417,000 represented about 60% of our overall Lake Norman home sales.
• 90% of our home sales were under $800,000.
• Of the remaining 14 higher priced sales, 2 sold for over $3 million and 5 over $2 million.  While still weak, our high-end luxury home market has vastly  improved over last year.
• Homes price at or above $900,000 represented 7.6% of our sales while they make up 27% of our inventory.  A significant number of luxury homes have been withdrawn from the market this past fall.  The big question is:  are the remaining sellers running out of time and going to become distressed sales, will we see significant price reductions in the $800,000+ listings or will these sellers simply wait out the market?
• Observation:  The uptake in the trade-up price ranges includes many short sales and foreclosures of homes that were originally price at or above $900,000 and ended up selling for hundreds of thousands of dollars less than their initial asking price.  Will this trend continue?  It depends on how many of the remaining sellers of listings at or above $900,000 are facing financial difficulties.

As a buyer, this chart will show you where you might face the stiffest competition and at what price ranges you might see opportunities.  As a seller, you can look at the activity by price range and if you are right on the cusp of, for example, a $900,000 listing price, it would clearly be very important to price your home in the $800,000’s  or even lower depending on your neighborhood comparable sales as you will find more buyers are willing to buy in these price ranges and you may be significantly over priced. 

In Part 3 of this series I will provide annual sales statistics for Lake Norman real estate and take a stab at making some predictions for 2010.

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Lake Norman Real Estate’s Fourth Quarter Sales Analysis 2008

Lake Norman Real Estate’s Waterfront Home Sales Analysis November 2009

Lake Norman Real Estate:  What do recent sales in The Point tell us? 

 Lake Norman Real Estate:  Why is it so hard to buy a home right now?

Lake Norman, Our Inland Sea 

Lake Norman Relocation Resources 

Take a look at our statistics compared to December 2008:

Lake Norman’s December  2009 Housing Statistics

• Active Listings dropped a whopping 20%.  . As I have written many times, getting our number of active listings down is critical to our Lake Norman housing recovery so this is a very good sign!  I know that more and more sellers are taking their homes off the market.  It will be interesting to see if they bring them back on in the spring.  Again, note the average price of our active listings when compared to the average price of our solds this past month are still quite a bit higher. But, they are much closer than last year.  Our high-end market in Lake Norman is still suffering however I am seeing a definite  increase in activity due, in part, to foreclosures and short sales.

• Contingent Sales are down 27% compared to the 11 in December 2008.  These are the homes under contract that are contingent upon the buyer’s home selling.  Sellers are less willing to accept contingent offers than they were last year.

• Conditional Sales increased an incredible 200%!  These are homes that  just went under contract and still have financial and inspection conditions.  People were definitely out buying in December.  I know that I showed property all month including Christmas Eve and New Year’s Eve.

• Pending sales also increase substantially @ 42%.    This is another indication that our future sales will be significantly higher than the same month in 2009.  It is important to note that January 2009 was the worst month for Lake Norman home sales in over 5 years.  It looks like we will start 2010 with some substantial improvements over 2009.

• The number of closed sales increased by 9% compared to December 2008.  This means that we have had sales increases compared to 2008 for three consecutive months.  While we have an absorption rate (number of months of inventory of homes for sale) of 18.4 months, this isdown from 2008′s 25-month supply.  Remember that 6-8 months of inventory reflects a balanced market.  The average price of our properties sold in December actually increased 31% compared to last year.  This is not because prices are going up but rather that buyers are beginning to buy in the higher price ranges that were practically dormant last year.

 5-Year Comparison of Lake Norman Home Sales By Month

* Please note that all of my numbers 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 and the totals in the prior calendar year.  The columns may not add up but I do my best with what I have to work with!

Summary

What immediately stands out is that for the past three months our Lake Norman sales of existing homes have been higher than the same months in 2008.  It is important to remember that these were the months in 2008 when the financial crisis hit our US economy.  While we are not going to equal the total number of sales of 2008 this year, if you look at our trends since January there is an obvious trend of improving home sales, especially in our 4th quarter.

However, if you compare our 2009 monthly sales to 2007 we are still coming up significantly short every month until this past December.  While I highly doubt we will come close to January 2007′s sales numbers, we might meet or beat January 2008 and we will definitely see a significant improvement to January 2009! 

This report Part 1 of a three-part series.  Part 2 will be our 4th quarter sales analysis by price range.  Part 3 will be a summary of the Lake Norman real estate sales for 2009 compared to 2008 as well as some insight into what I predict for our 2010 Lake Norman real estate market.

Related Articles

Lake Norman Real Estate’s Waterfront Home Sales Analysis November 2009

Lake Norman Real Estate:  What do recent sales in The Point tell us?

Lake Norman Real Estate:  Why is it so hard to buy a home right now?

Lake Norman, Our Inland Sea

Lake Norman Relocation Resources

What concerns me is that this type of news will encourage more optimism in our local Lake Norman real estate sales at a time when we most need to focus on being realistic. A good number of our sellers are “upside-down” or have negative equity in their homes.  They simply can’t afford to sell their homes at our current market value.  These are future short sales and foreclosures.  In states like California where they were hit early and hard, they are experiencing multiple offers…but on FORECLOSURES not regular inventory.  While I don’t think we will get to that point, I do think we are sitting on a lot of inventory of homes that will need to be reduced more than the sellers are able.

While the national focus is on June, let’s look at our JULY numbers:

Lake Norman July 2009 Sales Analysis

 Active Listings remained just under 1600 for the third month in a row.  Note the average price of our active listings when compared to those that are under contract.

Contingent Sales  also remain about flat for the past few months.  These are the homes that are sold but they are contingent upon the buyer selling their home…very weak contracts that could go on indefinitely

Conditional Sales are actually slightly below where we were at the end of May when we had 56 conditional sales.  This is a sign that sales may have peaked for the season.  Note that these homes have been on the market an average of 215 days.  This doesn’t include homes that have been taken off the MLS and re-listed.

Pending Sales are also down slightly for the past few months.  Another sign that future sales will be trending slightly lower

The number of Closed Sales  dropped 13% compared to July 2008.  88 sales represent the highest one month of sales in 2009 but since this is our busiest season one would expect sales to trend upward.  The big question in my mind is “have our sales peaked for 2009?”

Let’s put these numbers into historical context:

 5-Year Comparison of Lake Norman Home Sales By Month 

* Please note that all of my numbers come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.

**While my totals on this chart for 2008 sales is 870, when I search on our MLS for the entire year they give me a slightly higher number of 916 so I will use that as our official number for the sake of this analysis.

Clearly our Lake Norman home sales peaked last year in the month of June.  Based on our current number of conditional and pending sales, my bet is that we have also peaked this past month for 2009.  Right now, with 88 sales and 1563 active listing we have 17.8 months of inventory of homes compared to a balanced market of 6-8 months of supply.  While this is a tremendous improvement from our winter highs of 35 months, if sales trend back down this fall and winter we will be back to those high inventory numbers.

One final observation:  note that the average price of a home sold in July actually increased compared to July 2008.  Yes, we have had some luxury home sales recently but they numbers will knock your socks off: 

• 18440 Harbour Light in The Peninsula was listed at $1,699.000 and closed on this past Friday for $1,200,000.  This is a 29% reduction from list to sales price and it was on the market for 690 days!
• 108 Conway Court in The Point was listed at $4,100,000 and closed this past Thursday at $3,100,000 or a 24% reduction from listing price to sales price.

While this is not good news for our Lake Norman home values, it is a good sign that even the luxury home sellers are getting realistic.  Since this market has been languishing while the first-time-buyer program fuels our lowest end price ranges, sales like these show that there are buyers at every price range willing and able to buy if they feel confident that they are not overpaying for their home.

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Our Lake Norman housing market continues to change rapidly.  What was true even a month ago may not be true today.  That said, here is the summary of Lake Norman single family home sales and statistics for this past May.  (The period ending yesterday):

 Active Listings:  Our total number of active listings decreased slightly.  While they are high, considering this is Lake Norman’s peak selling/listing season at a time when we might expect increased inventory, this is a VERY good sign.  I can’t emphasize enough how important it is for Lake Norman’s inventory to drop.

Contingent Sales:  This represents the number of homes that are under contract but are contingent upon the buyers selling their own homes.  In a buyers market, this is not a strong position for a seller as it may take months for the buyer’s property to sell.  This number is double that of last month which in my opinion indicates the more sellers are willing to take a risk in order to sell their homes

Conditional Sales:  At 56, the number of  homes under contract that are in the early stages of negotiations with conditions for loans and inspections is 51% higher than last month.  This is an indicator of future closed sales.  There most certainly has been an increase in showings so we may see some higher closed sales over the next few months.

Pending Sales:  94 pending sales is 12% higher than last month.  These are sales that are just waiting to close which would indicate that our June closings should be higher than this month.  

Closed Sales:  I must admit I was a bit disappointed to see our closed sales at only 67.  Closed sales actually dropped 3% versus last month.  

Summary versus 2008:   Lake Norman home sales volume dropped 26% compared to May 2008.  The average price of the homes sold dropped 21% compared to 2008 and the average days a home was on the market increased 36%.  The most important of these three numbers is the drop in the average price of the homes sold.  Throughout the country it has been the drop in prices that has resulted in an increase in sales.  Bargains are selling and are what will continue to drive our Lake Norman market until consumer confidence returns.

5-Year Comparison of Lake Norman Home Sales By Month 

* Please note that all of my numbers come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.

**While my totals on this chart for 2008 sales is 870, when I search on our MLS for the entire year they give me a slightly higher number of 916 so I will use that as our official number for the sake of this analysis.

Summary:  With 67 closed sales and 1598 active listings in the Lake Norman area, we still have a 23.8-month supply of homes for sale.  While this is substantially better than the last quarter, a balanced housing market should have about 6-8 months of inventory so we still have a long way to go to achieve a solid housing market.  If you look at the chart above it is a bit sobering to realize we sold three times as many homes in May of 2006 as we did this past month! 

For more insight into the Lake Norman real estate market:

 Lake Norman Real Estate:  Why is it so hard to buy a home right now?

Lake Norman Real Estate’s April 2009 Sales Analysis

Lake Norman Real Estate:  The Big Picture

Above is a chart with today’s “Hot Sheet” numbers from the Charlotte Regional Multiple Listing Service for single family homes in the Lake Norman area (13/1 – 13/5).  These numbers represent a snapshot of the past two weeks of activity. As always I have included prior months so that you can put these numbers into context.

Here are some highlights:

New listings dropped slightly and it appears that they have stabilized at the mid 1600′s.  Since one of the key factors contributing to our declining sales is the excessive number of homes for sale around Lake Norman, let’s hope this trend continues and inventory starts to drop significantly.

The number of homes coming back on the market decreased slightly.  These are homes that were under contracts that were cancelled.  Again, the fact that these numbers are dropping is a good sign but they are still reflecting the volatility in our current market. 

Price changes increased to the second highest number since October of 2008.  Sellers are clearly getting the message and are reducing their prices because of the slow market.  This is an indication of the trend of our home values which are still declining.

The number of pending sales increased.  These are the homes under contract that have gone through all of their inspections, have loan approval and a ready to close.  Based upon this trend we should see a slightly higher number of closed home sales in Lake Norman for the month of May versus April. 

The number of contingent and conditional sales doubled versus the same period last month.  These are the homes that went under contract in the past two weeks and would indicate that our sales are picking up as they do every year at this time.

 So far in May we have had 29 home sales close compared to 39  in the same period last year.  This is a drop of 25.6%.  The average price dropped 8.9%.  Considering that last May’s number of Lake Norman home sales were 41% lower than 2007, we are still trending downward. 

Again, I can’t stress enough how important the number of months of supply of inventory of homes for sale is in determining when we hit “bottom”.  If we end up selling about 75 homes this month, while this is better than last month, this still means we have a 21.8 month of supply of homes and we need to get that number down to about 6-8 months of supply before our market stabilizes. 

RELATED ARTICLES

Lake Norman Real Estate’s April 2009 Sales Analysis

Lake Norman Real Estate’s Friday Hot Sheet 4/17/09

Lake Norman Real Estate’s 1st Quarter Sales Analysis

Lake Norman Real Estate’s Friday Hot Sheet 3/20/09

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