While never in agreement, most economists and pundits do seem to conclude that 2016 will see only modest gains in the US housing market. Here in Lake Norman, after booking a healthy 7.3% increase in home sales in 2015 over 2014, we have launched 2016 with a solid 10%+ gain over last January and logged the best January sales since 2007. This is doubly impressive given our continued extremely low inventory of active listings. But where are we trending for the next few months? 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 5.2% of Lake Norman’s total January home sales. We had just 4 distressed sales with an average price of $200,888. (The highest closed sale price was $331,900). Distressed active listings currently comprise only 2.4% 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 continue to struggle. They represented only 23.7% of our January closed sales. At the same time they currently comprise 40.9% of our active listings. The average sales price of a waterfront home in January was $901,444. We have an exceptionally low number of waterfront homes for sale under $1,000,000 on the market at this time so it doesn’t surprise me that prices have increased. The average price per square foot rose to an impressive $251.07. It took on average 81 days for a waterfront home to sell and they sold for 94% of the listing price. We currently have 45 waterfront homes under contract. Our waterfront homes’ months of inventory at 16.9 puts them very much in a buyer’s market but this varies considerably by price range. What I find so fascinating about these numbers is how quickly the homes sold and for such a high price per square foot. Buyers are starving for fresh inventory but clearly when a good property comes on the market they act quickly and are willing to pay more for it.
- 18 new construction homes closed in January 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. I just read a tax report of all sales in Mooresville, for example, and 1/3 of them were builders selling directly to buyers.). The average listing price vs sales price of new construction single family homes was 98%. Once again, there is little wiggle room in new home prices. We currently have 65 new construction homes under contract in the MLS. The average sales price in January logged in at $369,387. The months of supply of 10.7 actually puts this group in a buyer’s market overall.
- 68% of Lake Norman’s January single family home sales were under $400,000…this is way more than usual!
- A whopping 76.3% of Lake Norman home sales in January were under $500,000.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 207 is actually greater than the same period for the past two years. Given that we are up against some strong numbers in 2015 this is a great indication that our momentum will continue for at least a month or more and that we will at least keep pace with 2015.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is 5% below last year’s. Our absorption rate/months of supply of active listings rose to 9.8 which puts Lake Norman back in a buyers’ market overall. But, given that January is always our lowest month for sales by next month we should head back towards a balanced market 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 UP 5% 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 February/March. This number would indicate that we should at least match if not exceed 2005’s sales in the next few months.
- Pending/Under Contract No Show sales are up 1%. These listings went under contract on average in only 64 days. Again, good, new listings are selling much faster than properties that are less desirable or overpriced. 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. These would indicate that we should see some strong closed sales in February.
- Lake Norman’s closed January home sales in our MLS as of today and as stated above, are 10% above last year’s. (Keep in mind that we should have about 3 or 4 more sales added as slower agents input their sales so we may come closer to matching last year’s). Some positive signs: these closed in only 88 days or 19% faster than last year’s. Good properties are selling in less than 3 months yet our average active listing has been on the market for 162 days. This is the crux of the problem in Lake Norman. Stale, over-priced listings or listings with weaknesses are sitting and buyers are pouncing on new listings.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- February 6, 2016: 207
- Januuary 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
- 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
Here is a breakdown by price-range of our Januray 2016 closed sales in Lake Norman
- $0,000 – $99,999: 4++
- $100,000 – $199,999: 11
- $200,000 – $299,999: 17-
- $300,000 – $399,999 20=
(These price ranges represented 68.4% of our January home sales)
- $400,000 – $499,999: 6–
- $500,000 – $599,999: 6-
(These price ranges represented only 15.8% of January’s sales)
- $600,000 – $699,999: 3
- $700,000 – $799,999: 3
- $800,000 – $899,999: 3
- 900,000 – $999,999: 1
(These price ranges represented only 13%)
- $1,000,000 – $1,499,999: 2-
- $1,500,000 – $1,999,999: 0
- $2 million+ : 2+
(#Solds $1 million+ = 5.3% of our total January sales )
The stand out price ranges in January in all of Lake Norman were clearly our very lowest price ranges up to $200,000, the $300,000’s, and our two luxury sales over $2 million.
Higher-end home sales in Lake Norman
January was not a good month for our trade-up and luxury housing markets. With only 8 sales in all of January over $700,000 it is clear that this home buyer has jumped back on the fence. While I can justify the up to $1.3 million a bit due to lack of good inventory of active listings, we have a large inventory of high-end luxury homes so that isn’t an excuse for this niche. That said, we did have a closed sale at $4.5 million which is the highest sale in quite a few months. Mercurial once again comes to mind!
Lake Norman’s Waterfront Housing Market
So, this continues to be the reality of Lake Norman’s waterfront housing market: We are essentially running out of good lower priced waterfront homes, even tear-downs, and very few are coming one the market. Gone are the great tear-downs or good but distressed homes in the $300,000-$800,000 price ranges. I work with a number of waterfront buyers and honestly there aren’t even many good properties on the market right now up to $1.3 million on the southeast side of the lake. Unfortunately, waterfront buyers come to Lake Norman expecting to find good options in the lower and trade-up price ranges many times leave disappointed. We still have some, but they are mostly at the end of coves, can’t have docks or are in less desirable locations. I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that doesn’t suit them or needs too much work. My gut is telling me that when spring arrives and new listings come on the market they are going to be at higher price ranges because the demand is there. Prices are going up out of circumstances rather than overall market trends.
As of today we have 32 waterfront properties under contract and our months of supply based on the January sales is 16.9. This puts Lake Norman waterfront homes very much in a buyer’s market. However, it is important to note that these active listings have been on the market on average 226 days while the average days on market for waterfront home sales in January was only 112. Can you say stale inventory? Another issue: 20% of our active waterfront listing are over $900,000 and yet this niche represented only 6.6% of our sales in January. Waterfront home buyers 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. Seriously, buy as soon as possible…this spring, if you find a waterfront property with good water in an acceptable price range.
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 our 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 far we have come. 2015 exceeded all years back to 2006 so in sheer volume our Lake Norman housing market has recovered. Overall 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, until the 4th quarter. What will 2016 look like? If we get more inventory I think we will at least match 2015 but it really depends on inventory, interest rates and demand.
Summary and My Insight
Good signs/news remains about the same as last month:
- Lake Norman’s historically low inventory of active listings puts pressure on demand and plays a role in firming up prices.
- 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.
- New listings in the lower price ranges that are in good condition and in desirable locations are selling within days of hitting the MLS.
- Interest rates, while rising, are still below earlier predictions for 2015. This may change in 2016!
- Economists are predicting stronger sales in the south next 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.
- Interest rates are going up.
- Lake Norman’s low inventory is comprised of a lot of stale inventory. Good fresh new listings are selling quickly so our low inventory is even worse when you consider the number of listings that have been sitting due to price, location, condition or age.
- Waterfront tear-downs and lots are selling but are also disappearing. More buyers are willing to build or do major renovations if they can get “good” waterfront lots but with such low inventory it is frustrating and it is tough to accept that prices are going up.
- Our trade-up and luxury price ranges are still very much in a buyer’s market.
- 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 in 2016 will see only modest gains.
- 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 for some price ranges and locations. 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.
If you are looking in a “HOT” neighborhood and price range be prepared to make an offer quickly. No matter what, have your pre-approval letter in hand before even looking at homes. This is particularly important due to the new TRID closing process that took effect Oct. 2nd. The new mandatory waiting periods during the loan process mean your lender has to be ready to go the minute you sign a contract on a property. I can’t emphasize this enough! Ask your lender and Realtor if they have experienced and are prepared to close using all of the new forms and deadlines. Then get your lender everything they need as soon as possible!
January is officially our slowest month of the year for closed sales but the beginning of the signs of spring. (See annual chart above). Now that the holidays are behind us buyers are out looking again. By February inventories will start to grow and by March things should be hopping.
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 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.
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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