After being let down last month, August turned out to be a record breaking month for Lake Norman’s single family home sales; up an impressive 18%. The new norm here seems to be an every other month record breaking high (June and August) or sadly weak month (May and July). I have used mercurial to describe our 2016 real estate market and August served to underscore this characteristic. 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 3.6% of Lake Norman’s total home sales. With just 7 distressed closed sales for the entire month it is safe to say they really didn’t play a role in August at all. Distressed active listings currently comprise 1.3% 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.
- Waterfront homes continue to under perform but they are selling more quickly and prices are increasing. Waterfront properties represented only 31.6% of our August closed sales. At the same time they currently comprise 44.5% of our active listings. The average sales price of a waterfront home in August was $1,004,070 which is up from last month’s $912,446 and June’s 870,498. This number has been increasing every month since early this year. The average price per square foot came in at $240.13. This is the highest number since 2008. It took on average 96 days for a waterfront home to sell and they sold for 96% of the listing price. We currently have 81 waterfront homes under contract comprising 28.1% of our total homes under contract. Our waterfront homes’ months of inventory dropped to 7.0 so overall they are still in a buyer’s market but this varies quite a bit by price range. While the number of active listings vs solds is still out of balance in favor of buyers, the increasing average sales price and average price per square foot do reflect increasing prices despite higher inventory.When really nice waterfront properties hit the MLS they are actually selling quickly.
- 32 new construction homes closed in August 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 70 new construction homes under contract in the MLS. The average sales price in August logged in at $468,683. The months of supply of active listings based on August sales stands at 6.2 so overall new construction homes are actually in a balanced market favoring neither buyers nor sellers.
- 46.6% of Lake Norman’s August single family home sales were under $400,000 which is about equal to last month’s.
- 56.4% of Lake Norman home sales in August were under $500,000, also about equal to last month’s.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 288 is down from last month’s 325 but it is still the highest number for this exact day in the past two years. (See below). Clearly last month’s exceptionally high number did translate to very high closings in August.
A closer look at the chart:
- The number of Active Listings today in Lake Norman for the fourth month in a row is slightly higher than last year’s at the same time. That said, they are down from last month’s 985 and June’s 1033 so it looks as if our inventory levels of active listings have peaked for 2016. Our absorption rate/months of supply of active listings dropped to 5.0 from 6.4 which puts Lake Norman overall in a buyers’ market for the first time this year. 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 13% versus this time last year! The average price of our new contracts is just about equal to last year’s and the average time an UCS listing was on the market at 91 days is actually identical to last year’s. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. What baffles me is that pretty consistently in 2016 we have had high numbers of Under Contract Show properties yet they don’t seem to translate into high closed sales in a predictable period of time. Normally, these newer sales should represent future closed sales most likely in October or November but this year it has been very hard to predict when or even if they will close.
- Pending/Under Contract No Show sales were down again this month but only by 5%. These listings went under contract on average in only 69 days and the average price is down 18% 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 lower number I think we will again see lower closed sales in September with perhaps a better October. Up and down we go!
- Lake Norman’s closed August home sales in our MLS as of today and as stated above, were up a whopping 18% compared to 2015! 193 closed sales in August is second only to August 2005. As in June, when we had a good month, it seems we tend to have a record breaking month followed by an under-performing month. Our total sales for the first 8 months of 2016 are now half of 1% higher than 2015’s. Thanks to August we are back on track with 2015 despite the ups and downs. More good news: the average sales price in August was up 28% versus last year and the average home took 82 days to sell which is about equal to last August’s. So, good properties are selling in less than 3 months and for more money yet our average active listing has been on the market for over 4 months. This is the crux of at least one of the problems in our Lake Norman housing market. Stale, over-priced listings or listings with weaknesses are sitting and buyers are pouncing on good new listings.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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
- October 4, 2014: 275
- September 6, 2014: 272
Here is a breakdown by price-range of our August 2016 closed sales in Lake Norman
- $69,900 – $99,999: 3
- $100,000 – $199,999: 14+
- $200,000 – $299,999: 30
- $300,000 – $399,999: 43++
(These price ranges represented 46.6% of our August home sales compared to 41.2% in July)
- $400,000 – $499,999: 19
- $500,000 – $599,999: 16
(These price ranges represented 18.1% of our August home sales compared to 23.5% in July)
- $600,000 – $699,999: 19++
- $700,000 – $799,999: 11-
- $800,000 – $899,999: 10-
- 900,000 – $999,999: 9++
(These price ranges represented 25.3% last month’s compared to 28% of July’s sales.
- $1,000,000 – $1,499,999: 10++
- $1,500,000 – $1,999,999: 4
- $2 million+ : 5+
(#Solds $1 million+ = 9.8% of last month’s compared to 7.2% of our total July sales)
The stand out price ranges in August were the $100,000’s, $300,000’s, $600,000’s, $900,000’s and our luxury home price ranges. This break down by price range is always so interesting. Last month for the first time we had very strong sales in our trade-up price ranges of $600,000-$899,000. This month we once again saw a return to strong sales in our entry level prices but also in the $600,000’s, $900,000’s and luxury price ranges which historically have been relatively weak.
Higher-end home sales in Lake Norman
Our luxury housing market really stepped up in August. With 19 sales above $1 million they represented almost 10% of our total sales which is higher than they have been since the recession. And, 5 sales over $2 million may be a hopeful signal that our highest end buyers are back. This is one trend we will continue to watch closely.
Lake Norman’s Waterfront Housing Market
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 are definitely going up despite rather tepid sales. My buyers are now willing to increase their price range when they realize how much better the options are when they do so. This may be reflected in the significant improvement in our higher price ranges. Buyers who used to be able to find an acceptable waterfront property in the $500,000 and $600,000’s are now looking in the higher price ranges. There is no doubt that new listings with good water are selling more quickly than in the past. The improvement is slow but steady and the average $ per square foot is now at $240.13 which is the highest since the recession. 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 81 waterfront properties under contract compared to 101 last month. Our months of supply based on August sales is down slightly to 6.98 from 8.5 last month. Lake Norman waterfront homes over all remain in a buyer’s market. That said, the cream of the crop waterfront properties sell relatively quickly. With our current market momentum 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 8 months in the books, our 2016 home sales are now .005% ABOVE last year’s. Looking forward, you can see that we are up against some lower sales in the last quarter of 2015. We just have to match September’s 151 sales and Lake Norman’s real estate market should be on target to end the year at least equal to 2015.
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Thanks to August, overall Lake Norman has now logged in 6 more sales year-to-date than 2015.
- Our Under Contract numbers continue to be higher than previous years at the same time period.
- Mortgage interest rates are still amazingly low. There is some discussion of the Feds raising rates either this month or in December but most economists feel December is more likely.
- 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. And, this is also happening now in higher price ranges. I just listed a home in The Point for $775,000 and we had an accepted offer within 24 hours of it hitting the MLS!
- August saw some renewed activity in our luxury market which may be signs that this buyer is coming back to Lake Norman.
- 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.
- Based on July’s national pending numbers the National Association of Realtors is now forecasting a 2.8% jump in existing home sales in 2016. I think we can match that as well.
- Waterfront prices are going up forcing potential buyers to consider raising their price ranges and acting more quickly.
- The number of days on the market has been dropping consistently and the average prices have been slowly increasing.
- Lake Norman is overall tilting towards a seller’s market overall today and the lower price ranges are hot!
- Our luxury price ranges, while showing signs of life, are still very much in a buyer’s market.
- 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 happy to see these great August numbers after having been frustrated and perplexed by Lake Norman’s 2016 erratic and sometimes contradictory statistics. There is no doubt in my mind that the Lake Norman estate market is experiencing consistently strong activity and overall strong sales despite our up and down months. While we don’t usually follow the national trends, this year the US housing market also saw high sales in June and a drop in July as did the greater Charlotte area. Our 28% increase in the average price of homes sold in August, while remarkable, isn’t a realistic number to apply to our entire market but it certainly indicates that prices are going up here as they are in the US.
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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