Okay, so my concerns about our Lake Norman real estate market last month have proved to be unfounded; SERIOUSLY unfounded. Not only did our Lake Norman’s strong February home sales increase our streak to 14 months in a row in which we exceeded sales from the same month in the prior year and all years since 2008, but our number of residential homes under contract today stand at a truly remarkable 255. This means that more homes are under contract today than at any time in at least the past 3 years which is when I started recording these numbers!
Let’s take a closer look at the numbers to glean some insight into the short term future and exactly where the Lake Norman housing market stands right now.
Here are the February 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* Note that the Charlotte Regional Multiple Listing Service has created two new categories, Under Contract Showings (UCS) to continue and Under Contract no showings (UCNS). These replace the Contingent, Conditional and Pending categories. Contingent Sales are now joined with Conditional sales in my reports.
Some significant additional statistics for you:
- “Distressed sales” ( Foreclosures (REOS), defaults, Short Sales) comprised only 16.9% of our total sales down substantially from last month’s 29% and to February 2012 when they represented 31% of our Lake Norman single family home sales. The average price for distressed sales was $512,458 indicating that these sales are no longer primarily in our very lowest price ranges. Distressed active listings currently make up only 5.5% of our inventory of Lake Norman homes for sale. Clearly we are not being bombarded by foreclosures and shortsales as some had predicted. While buyers are looking for bargains they simply don’t exist in the numbers we experienced in the past several years and are now primarily in the lowest price ranges.
- 31% of our closed sales were waterfront homes which was about equal to the past several months. The average sales price of waterfront homes in February was $926,488 or $202 per square foot compared to 704,020 or $199 per square foot last month.
- We had 8 new construction homes sold compared to only 3 in February of 2012. It is important to note that many of the new construction homes you will see driving around the lake are custom homes so will not be included in our Multiple Listing Service numbers. I counted 11 single family homes under construction on Barber Loop on the Brawley School Rd. peninsula alone!
- 69% of Lake Norman’s February home sales were under $400,000 compared to 71% last month.
- A whopping 81.7% of our February home sales were under $500,000 compared to 81% last month, 74 % in December, 75% in November, 67% in October, 70% in September, 66% in August, 60% in July, 72 % in June, 70% in May, 49% in April, 61% in March sales. Clearly our lower price ranges are still dominating our Lake Norman housing market.
- Our “Under Contract Show” AND “Under Contract No show”/Pending numbers are truly remarkable. Not only are they up substantially from last February’s (35% and 62% respectively, see chart above) but they are the highest since I have been keeping records and probable the highest since the recession! Clearly our Lake Norman’s housing market is headed for record-setting spring sales.
- As of today, the number of active listings for all of Lake Norman total 815, up from 756 last month and 708 in December, 790 in November, 834 in October, 876 in September and are 5% lower than the same time last year. Considering how low our number of active listings in Lake Norman have been for about a year, I am actually surprised to see they are not higher. If our inventory stays this low through spring the dynamics of our Lake Norman housing market will start swinging towards the sellers. To put this number in even greater context, back in June of 2008 we had 1789 active listings!
A closer look:
- The number of Active Listings in Lake Norman dropped 5% from last February’s. Our absorption rate/months of supply of active listings on March 1 was 11.5, up from 10.8 last month. While this puts our market temporarily above our goal of a balanced 6-8 months of supply in the Lake Norman area (MLS area 13), once our robust sales numbers for March and April are recorded I expect to see this number come back down. However, the national number today is 4.1 months of supply so despite our improvement since January of 2009’s 52.5 months of inventory we are still in a buyer’s market unlike some areas of the country.
- Conditional Sales, which are now called Under Contract Show, increased for the thirteenth month in a row, this time by a strong 35% compared to last year. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late March/April. Based upon these numbers we should see strong closed sales in the next few months.
- Pending/Under Contract No Show sales were a whopping 62% higher than February 2012’s. These are the contracts that are past inspections and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Given that we had 108 pending sales last month as well I am pretty confident that we will exceed last March’s strong closed sales of 91. Not only a great way to start the new year but a continuation and even improvement of our remarkably CONSISTENT sales growth after so many years of erratic ups and downs.
- The number of closed home sales in Lake Norman in February 2013 were 20% above February 2012’s and the best February since 2007. Once the few additional belated sales are reported to our MLS I think we will most like have about 75 sales which will slightly exceed last month’s. While our Lake Norman home sales slowed since the seasonal summer peak they haven’t fallen off as much as we have seen traditionally in past winters.
The total number of Lake Norman homes under contract (but not yet closed) on the first of each month are as follows:
- March 5, 2013: 255 (The highest since I have been keep records!)
- February 7, 2013: 219
- January 6, 2013: 184
- December 6, 2012: 197
- November 7, 2012: 214
- October 8, 2012: 218
- September 6, 2012: 206
- August 6, 2012: 228
- July 6, 2012: 234
- June 6, 2012: 235
- May 7, 2012: 246
- April 1, 2012: 227
- March 1, 2012: 178
- February 1, 2012: 155
- January 1: 134 (the lowest ALL year)
Here is a breakdown by price-range of our February 2012 closed sales in Lake Norman’s area 13-1 to 13-5:
- $42,500 – $199,999: 12
- $200,000 – $299,999: 17
- $300,000 – $399,999: 9
(These price ranges represented 53.5% of February’s sales down from 71% of January’s sales.)
- 400,000 – $499,999: 11
- $500,000 – $599,999: 9
(These price ranges represented 28% compared to 13% last month)
- $600,000 – $699,999: 3
- $700,000 – $799,999: 1
- $800,000 – $899,999: 3
- 900,000 – $999,999: 0
(Solds for $600,000 – $1mill = 9.9% compared to 10.1% last month )
- $1,000,000 – $1,499,999: 2
- $1,500,000 – $1,999,999: 2
- $2 million+ : 2
(Solds $1million+ = 8.4% compared to 5.8% last month)
The most improved price range was the $500,000 – $599,999. While our lower price ranges continue to represent a major percentage of Lake Norman home sales, we are seeing more activity in the $400-$500,000’s and a slight improvement in our highest end luxury home market. The $600,000 – $999,000 were anemic in February.
Higher-end home sales in Lake Norman
It is truly stunning how weak sales were in the $500,000- $999,000 range all over Lake Norman in February as they had been for most of 2012. However, a look at our “under contract” Lake Norman homes tells a different story. Of our 255 homes currently under contract, 33 are $700,000- $999,000 compared to 11 last month and 22 are above $1 million compared to 13 last month. It looks like the trade-up buyers have returned to Lake Norman!
9-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 adjust past months when I do the monthly update as a few more sales are usually input late by agents.
Summary and My Insight
- The number of properties currently under contract indicates that our Lake Norman housing market should record strong closed sales numbers for the next several months.
- Lake Norman is experiencing consistently higher closed sales as well as evidence that prices have not only stabilized but are actually increasing in some areas. Our average price of closed sales increased 4% last month.
- The number of distressed homes for sale represents only 5.5% of our overall inventory and the percentage of total Lake Norman home sales is down to 16.9% …clearly no longer playing a significant role in our housing market.
- New construction is back. Not only did we sell 8 new homes last month but as I drive and cycle around I am amazed at how many new construction homes are breaking ground.
- Lots are selling! We sold 19 last month and there are 66 under contract. This is a great sign for new construction as well.
- Serious home buyers are out looking around all of the Lake Norman area. Properly priced listings in very good condition are selling more quickly and sometimes with multiple offers even in our $1 million+ price ranges.
- Lake Norman’s inventory of homes for sale remains low.
- Interest rates remain low despite ticking up a bit and are predicted to remain low in 2013.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Positive national housing reports and economic analysis continue to headline news about the US housing market this year.
- I am concerned that both potential home sellers and Realtors are overly optimistic about our Lake Norman housing market and may fall into our old trap of overpricing listings and having unrealistic expectations of the value of their homes/listings which dominated our weakest years in the past. Sure, our market is improving, but our prices are not going up that much that quickly. When presenting offers these past several weeks I heard from more than one seller/agent that they were sure that they will get their high price once we hit the historically hot spring market. Overpricing is bad no matter what kind of market we are in.
- I have equal concern for Lake Norman home buyers. Many are still in the old mind set that they have plenty of time to consider new listings and also make lower offers. But, right now good properties are selling quickly, sometimes with muliple offers. It is critical to know comparable sales activity in your price range and act quickly if a good listing comes on the market.
- Home loans, especially jumbo and construction loans, are still a very challenging process, particularly underwriting and appraisals.
My advice to Lake Norman home buyers remains this: Look for homes that are in good locations and have most of the priorities on your list. 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 it is a good time to buy. With less than 6% of Lake Norman’s current listings being “distressed sales” don’t expect the perfect foreclosure or shortsale to come along at an unrealistic price. If you insist on low-balling, at least have some comparable sales to justify your number. 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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