What a great way to start out 2017. Our Lake Norman real estate sales were 29% higher than last January’s AND, for the first time in 13 years, they even exceeded our record set in 2005! While there are a few dark spots in our numbers, it looks like our momentum from last year has carried over into January. What’s next? 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 21.3% of our January closed sales,. At the same time they currently comprise 38.9% of our active listings. The average sales price of a waterfront home in January was $1,073,960 which is quite high but that is because we had three sales over #2 million which highly impact the average sale price since we only had 22 total sales. . The average price per square foot of our waterfront homes came in at $249.86 which is also very high but again due to the 3 $2 million+ sales. 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 108 days for a waterfront home to sell (verses 69 for all Lake Norman homes)and they sold for only 96% of the listing price. We currently have 73 waterfront homes under contract comprising 32.2% of our total homes under contract which shows some improvement. Our waterfront homes’ months of inventory was up to 13.5 based upon only 22 sales but this will improve significantly in the next few months based upon our new contract numbers. Waterfront home sales are still in a buyer’s market so it remains 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.
- 28 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.) The average listing price vs sales price of new construction single family homes was 100%. There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 81 new construction homes under contract in the MLS. The average sales price in January logged in at $441,218. The months of supply of active listings based on January sales stands at 7.5 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 2.9% of Lake Norman’s total home sales. With just 3 distressed closed sale for the entire month it is clear they didn’t play a role in January at all. Distressed active listings currently comprise 1.7% 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.
- A whopping 64.1% of Lake Norman’s January single family home sales were under $400,000 which is well above last month’s.
- 71.8% of Lake Norman home sales in January 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 227 is once again higher than that past two years at this same date. We have 9.7% more properties under contract than at the same time in 2016 and 11.2% more than February 6, 2015. We are on pace to have a good first quarter of 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. After declining steadily since peaking in last June. we are once again slowly increasing our new listings. Today we have 766 single family homes for sale in all of Lake Norman up from 737 last month but lower than the 778 in November, 841 in October, September’s 909 and well below June’s 1033. We are following a very common season trend in numbers of active listings. We should see them increase all Spring into early summer. Our absorption rate/months of supply of active listings rose to 7.4 which puts Lake Norman overall slightly in a buyer’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 30% versus this time last year! The average price of our new contracts is also up 24% and the days on market remained steady at 97. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent strong future closed sales most likely in March/April.
- Pending/Under Contract No Show sales are down quite dramatically again at 25% lower than January 2016’s. These listings went under contract on average in 73 days which is 14% faster than last year. This is one of the dark spots I was referring to above. We may in fact have a dip in closed sales this month and then pick up steam next month based upon our newest contract numbers. Another weak spot is the average sales price which, at only $377,940, was 25% below last January’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.
- Lake Norman’s closed January home sales in our MLS as of today and as stated above, were up an impressive 29% compared to January 2016. 103 closed sales in January is higher than all Januarys’ sales since was 2005! There is more good news in that the average sales price in January was up 21% versus last year and the average home sold in only 69 days which is 22% faster than last January’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 152 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:
- February 6, 2017: 227
- 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
Here is a breakdown by price-range of our December 2016 closed sales in Lake Norman
- $77,000 – $99,999: 2-
- $100,000 – $199,999: 11++
- $200,000 – $299,999: 17
- $300,000 – $399,999: 23-
(These price ranges represented 51.5% of our January home sales compared to 50.0% last month)
- $400,000 – $499,999: 13-
- $500,000 – $599,999: 8-
(These price ranges represented 20.2 of our January sales compared to 30.5% last month)
- $600,000 – $699,999: 6+
- $700,000 – $799,999: 6
- $800,000 – $899,999: 5+
- 900,000 – $999,999: 3+
(These price ranges represented 19.4% of January’s sales compared to last month’s 10.9%)
- $1,000,000 – $1,499,999: 4-
- $1,500,000 – $1,999,999: 2+
- $2 million+ : 3=
(#Solds $1 million+ = 8.7% of January’s sales compared to 8.6% in December)
The stand out price ranges in January, were partially in our lowest price ranges especially the $100,000’s but then we saw some real improvement in our trade-up price ranges including the $600,000’s, $800,000 and $900,000’s. and the $1 million – $1,499,999. While the majority of sales (71.7%) are still under $600,000 there was market improvement in our trade-up price ranges ( $600,000-$999,000) but second month in a row of relatively good sales in our luxury price ranges. It it important to note that we had 2 sales above 2 million and 1 sale above $3 million again this month!
Higher-end home sales in Lake Norman
While not stellar, it is nice to see 3 sales above $2 million for the second month in a row. This is a niche that has not recovered from our recession but there are signs of improvement for the first time. 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 two months, 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. See my Waterfront Home Sales 2005-2016 analysis.
As of today we have 73 waterfront properties under contract compared to 49 last month. Our months of supply based on January sales went back up to 13.5 but that will improve based upon our 73 properties under contract. Overall, however, Lake Norman waterfront homes are 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.
13-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.
Wow, I can’t believe I just added a 13th column to this chart! What a fascinating look at our highs and lows and an awesome beginning to 2017. 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. I can’t wait to fill in more numbers in our 13th column :-).
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Our first month in 2017 broke the record for January closed sales!
- Thanks to the last 5 months of 2016, Lake Norman logged in 113 more sales than 2015. Every year since 2009 we have exceeded the prior year’s sales. This past month we beat the record highs of 2005.
- Our Under Contract 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!
- Our trade-up and luxury home sales are seeing some upward movement
- 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
- Our low Pending/UCNS numbers today indicate we might have a dip in closed sales this month
- Mortgage interest rates, while down a bit in the past few weeks, have gone up and there is much speculation as to where they are headed. I have read that economists don’t expect the Federal Reserve to raise their rate in March but there are prediction that they will 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 to reach a full recovery.
- 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. See my price range analysis for the 4th quarter of 2016.
For the first time even the experts are unsure of the future of the US housing market due to the many unknowns with the new 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). Will easing of regulations impact affordability? With a potential increase in spending and inflation, how high will interest rates rise and how quickly? Will affordability become a greater issue for first-time home buyers due to interest rate increases? 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 looks like it will continue in early 2017 with a possible dip in February. At the same time, I am uncertain about the direction of our trade-up, luxury and waterfront home sales.
Buyers in 2017 should be prepared 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 if your lender recommends so, and be more flexible about locations based upon our limited inventory.
Sellers should watch a lot of HGTV and be prepared to do painting, flooring and staging to attract buyers!
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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