Last week seemed to be one in which every source/pundit of economic news decided to put a positive spin on new data; from our GDP to national June housing sales. For the most part the news was good simply because we didn’t do as badly as predicted. Or, in the case of North Carolina existing home sales, they posted their “smallest decline since August 2007 in June with a 17% decrease in total units sold compared to the previous year” according to the North Carolina Association of Realtors.
What concerns me is that this type of news will encourage more optimism in our local Lake Norman real estate sales at a time when we most need to focus on being realistic. A good number of our sellers are “upside-down” or have negative equity in their homes. They simply can’t afford to sell their homes at our current market value. These are future short sales and foreclosures. In states like California where they were hit early and hard, they are experiencing multiple offers…but on FORECLOSURES not regular inventory. While I don’t think we will get to that point, I do think we are sitting on a lot of inventory of homes that will need to be reduced more than the sellers are able.
While the national focus is on June, let’s look at our JULY numbers:
Active Listings remained just under 1600 for the third month in a row. Note the average price of our active listings when compared to those that are under contract.
Contingent Sales also remain about flat for the past few months. These are the homes that are sold but they are contingent upon the buyer selling their home…very weak contracts that could go on indefinitely
Conditional Sales are actually slightly below where we were at the end of May when we had 56 conditional sales. This is a sign that sales may have peaked for the season. Note that these homes have been on the market an average of 215 days. This doesn’t include homes that have been taken off the MLS and re-listed.
Pending Sales are also down slightly for the past few months. Another sign that future sales will be trending slightly lower
The number of Closed Sales dropped 13% compared to July 2008. 88 sales represent the highest one month of sales in 2009 but since this is our busiest season one would expect sales to trend upward. The big question in my mind is “have our sales peaked for 2009?”
Let’s put these numbers into historical context:
5-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.
**While my totals on this chart for 2008 sales is 870, when I search on our MLS for the entire year they give me a slightly higher number of 916 so I will use that as our official number for the sake of this analysis.
Clearly our Lake Norman home sales peaked last year in the month of June. Based on our current number of conditional and pending sales, my bet is that we have also peaked this past month for 2009. Right now, with 88 sales and 1563 active listing we have 17.8 months of inventory of homes compared to a balanced market of 6-8 months of supply. While this is a tremendous improvement from our winter highs of 35 months, if sales trend back down this fall and winter we will be back to those high inventory numbers.
One final observation: note that the average price of a home sold in July actually increased compared to July 2008. Yes, we have had some luxury home sales recently but they numbers will knock your socks off:
- 18440 Harbour Light in The Peninsula was listed at $1,699.000 and closed on this past Friday for $1,200,000. This is a 29% reduction from list to sales price and it was on the market for 690 days!
- 108 Conway Court in The Point was listed at $4,100,000 and closed this past Thursday at $3,100,000 or a 24% reduction from listing price to sales price.
While this is not good news for our Lake Norman home values, it is a good sign that even the luxury home sellers are getting realistic. Since this market has been languishing while the first-time-buyer program fuels our lowest end price ranges, sales like these show that there are buyers at every price range willing and able to buy if they feel confident that they are not overpaying for their home.