Thanks to another strong month, our Lake Norman real estate market ended 2016 with a healthy 6.8% increase in single family home sales versus 2015 and the highest number of annual home sales since 2005! While our December sales only beat out last December’s by single digits, we still ended with 6 of the 7 final months of 2016 beating 2015 numbers handily. The cherry on top again this month is that the number of new contracts once again are higher than the past two years indicating that we should begin 2017 in the black. 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 despite Lake Norman’s overall high sales numbers. Waterfront properties represented only 26.6% of our December closed sales,. At the same time they currently comprise 40.7% of our active listings. The average sales price of a waterfront home in December was $886,643 which is slightly higher than the past 2 months but well below August’s $1,040,070, July’s $912,446. Our overall luxury housing market remains soft as well which is linked closely to our waterfront market. The average price per square foot of our waterfront homes came in at $226.00 down from last month’s impressive $252.94 and October’s $237.98. This number is best averaged over a longer period of months because it only takes one or two really expensive sales ($2- 3 million+) to skew any given month. It took on average whopping 162 days for a waterfront home to sell (verses 108 last month)and they sold for only 93% of the listing price compared to 96% last month. We currently have only 49 waterfront homes under contract comprising 26.7% of our total homes under contract. Our waterfront homes’ months of inventory actually dropped down to 8.8 compared to 11 last month. Waterfront home sales are still in a buyer’s market. These numbers certainly indicate that now would be a good time to by a waterfront home. That said, this varies quite a bit by price range, location and quality of water. Don’t be complacent because when really nice waterfront properties hit the MLS as they are actually selling quickly.
- 29 new construction homes closed in December 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 75 new construction homes under contract in the MLS. The average sales price in December logged in at $391,829. The months of supply of active listings based on December sales stands at 7.1 so overall new construction homes are technically in a buyer’s market but again this varies greatly by location and price range.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented 1.5% of Lake Norman’s total home sales. With just 2 distressed closed sale for the entire month it is clear they didn’t play a role in December at all. Distressed active listings currently comprise 2.1% of Lake Norman’s current total inventory of single family homes for sales. Distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- 50.0% of Lake Norman’s December single family home sales were under $400,000 which is about equal to last month’s.
- 68.8% of Lake Norman home sales in December were under $500,000, which is a bit higher than last month’s.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 183 is once again higher than that past two years at this same date but not as much of a difference than prior months this fall. We have 4% more properties under contract than at the same time in 2015 and 18.8% more than January 6, 2014. We are on pace to have a relatively good start to 2017.
A closer look at the chart:
- The number of Active Listings today in Lake Norman, is up slightly compared to last year’s at this time. Our inventory has declined steadily since peaking in June at 1033. Today we have 737 single family homes for sale in all of Lake Norman down 778 last month, 841 in October, September’s 909 and well below June’s 1033. After enjoying decent levels of inventory we are now seeing steady declines which is the case in much of the US. Our absorption rate/months of supply of active listings dropped to 5.7 which puts Lake Norman overall slightly in a seller’s market. 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), are up 18% versus this time last year! The average price of our new contracts is slightly lower than last year’s but the days on market dropped 17%. 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 February/March.
- Pending/Under Contract No Show sales are down quite dramatically at 15% lower than December 2015’s. These listings went under contract on average in 68 days which is 24% faster than last year. This is a great example of our overall market. Good properties are selling very quickly! The average price is down 3% 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 weak number I think we may see a dip in our January sales then picking back up in February.
- Lake Norman’s closed December home sales in our MLS as of today and as stated above, were up 8 % compared to 2015. 128 closed sales in December is about equal to the highest December in the past 12 years which was 2005! There is more good news in that the average sales price in December was up 8% versus last year and the average home took 90 days to sell which is 4% slower than last December’s. So, good properties are still selling in less than 3 months. At the same time, despite low inventory, our active listings have been on the market 161 days. 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:
- January 6, 2017: 183
- December 6, 2016: 237
- 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
Here is a breakdown by price-range of our December 2016 closed sales in Lake Norman
- $28,000 – $99,999: 5++
- $100,000 – $199,999: 4–
- $200,000 – $299,999: 21++
- $300,000 – $399,999: 34
(These price ranges represented 50.0% of our December home sales compared to 50.8% last month)
- $400,000 – $499,999: 24++
- $500,000 – $599,999: 15
(These price ranges represented 30.5 of our December sales compared to 25.3% last month)
- $600,000 – $699,999: 4-
- $700,000 – $799,999: 7-
- $800,000 – $899,999: 3
- 900,000 – $999,999: 0-
(These price ranges represented 10.9% of December’s sales compared to last month’s 19.8%)
- $1,000,000 – $1,499,999: 7++
- $1,500,000 – $1,999,999: 1
- $2 million+ : 3
(#Solds $1 million+ = 8.6% of December’s compared to 4% in November)
The stand out price ranges in December, were in our lowest price ranges especially the $200,000’s, $400,000’s and the $1 million – $1,499,999. Clearly with over 80% of Lake Norman sales under $600,000 the action was in the lower to mid price ranges. There was a dramatic drop in our trade-up price ranges ( $600,000-$999,000) but a nice uptick in or luxury price ranges. It it important to note that we had 2 sales above 2 million and 1 sale above $3 million.
Higher-end home sales in Lake Norman
After stepping up in August, our luxury housing market has consistently weakened. That said, after only 5 sales above $1 million in November logging in 11 sales above $1 million and 3 over $2 million shows there is still life in our luxury market. Our luxury market has struggled to recover since the recession and it is clear we are not out of the woods yet and sales are erratic but they are happening.
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 buyers 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 when they can’t find something desirable in their price range. It is also true that new listings with good water are selling more quickly than in the past while 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. *** I will be doing a comprehensive analysis of Lake Norman’s 2016 waterfront sales later this month so keep checking back!
As of today we have 49 waterfront properties under contract compared to 55 last month. Our months of supply based on December sales dropped back down to 8.8 from 11 but this still puts 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 in what used to be referred to as “Area 13 – Lake Norman). 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.
How fun. A full 12-year chart of sales by month. What a fascinating look at our highs and lows. We ended 2016 higher than every year but 2005 with over double the total sales of our low in 2009! We definitely struggled a bit in the first half of 2016 but then took off by August and never looked back.
We ended 2016 a healthy 6.8% increase in sales compared to 2015. Now we look to 2017 with more questions than answers. I will be doing a separate analysis in the coming weeks about our annual sales and predictions for 2017.
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Thanks to the last 5 months of 2016, Lake Norman logged in 108 more sales than 2015.Every year since 2009 we have exceeded the prior year’s sales and we are now matching the record highs of 2005 in some months.
- Our Under Contract/Pending numbers continue to be higher than previous years at the same time period indicating we are in for a decent early 2017.
- 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!
- Forbes ranks North Carolina second on best states for business list
- Bankers and economists indicated that the Charlotte are economy will ramp up in 2017. Wells Fargo is forecasting at 2.1% growth in GDP next year compared to 1.5 this year. “We will continue to see folks and businesses moving here,” according to Mark Vitner, senior economist at Wells Fargo
- Mortgage interest rates have shot up .5% since the election, the Federal Reserve raised its’ rate in December and is predicted to increase them 3 more times in 2017. Economists can’t seem to agree on much of anything about 2017 because of all of the unknowns related to the election so it remains to be seen where interest rates will be in 12 months.
- Inventory levels are low. Will they pick up as they always to in the spring?
- Lake Norman’s waterfront and luxury home sales continue to struggle.
- 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. Here is another big unknown related to our incoming administration. Some think there will be deregulations that will ease the mortgage loan process, especially for first-time buyers.
- Finding the perfect home has become more difficult as sales improve and the number of homes for sale drops. 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!
- 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.
For the first time even the experts are unsure of the future of the US housing market due to the many unknowns with the incoming administration. Will the flat tax, long the single greatest issue fought by organized real estate groups, finally be a serious consideration? (Removal of mortgage tax deductions). With a potential increase in spending and inflation, how high will interest rates rise and how quickly? Will affordability become a greater issue for home buyers? What is the future of Freddie Mac and Fannie Mae if they are privatized? This list goes on and only time will tell.
Despite all of these potential challenges, I am still upbeat about our overall Lake Norman real estate market. Our momentum finally gained some consistency in the second half of 2016 which , while slowing, looks like it will continue in early 2017 with a possible dip in January. At the same time, I am very disappointed to see the continuing struggles of our trade-up, luxury and waterfront home sales.
Buyers in 2017 need to: be more flexible, be willing to do some work on their newly purchased home and do their own updating if possible, lock in interest rates as soon as you are ready to buy, and on be more flexible about locations based upon our limited inventory.
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 rising sharply along with prices rising it is not time to sit on the fence. 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 this before interest rates go higher. Our market is ever evolving!
My Mantra as always: 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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