Unfortunately, the number of Lake Norman home sales that closed in July underscores the impact of the housing tax credit expiration. Not only did our volume of homes sold fall significantly short of last month’s 104, they also came in lower than July 2009. In fact, July 2010 was actually the weakest July in Lake Norman home sales in at least the past 6 years!
- The total number of Lake Norman single family homes under contract on July 31, 2010 dropped to 157 or 7% when compared to the end of June’s 169 which was a drop of 15.5% when compared to the 200 at at the end of May. This is the third month in a row that our total combined sales contracts dropped when compared to the prior month. This would further substantiate my prediction from last month that our closed sales have peaked for this season and perhaps for the rest of 2010. This peak can most certainly be attributed to the home-buyers tax rebate program that initially expired on June 30th. While the deadline was extended by Congress to September 30th, this only helps currently active contracts that were opened by April 30th.
Let’s take a look at the details:
- Active Listings dropped 10% from a year ago. However, they were up 1% from last month. Based upon our July sales, we now have 18.4 months of inventory. At a time when our sales are slowing down our number of active listings is creeping upward. We are moving farther away from our goal of a truly balanced housing market of 6-8 months of supply. To reach these numbers given our current inventory levels we will need to sell about 175 homes per month! Clearly we need to have a combination of increased sales and decreased levels of active listings in order to return to a balanced market. Note that the average price of our active listings dropped 7% compared to July 2009. We continue to see a number of price reductions.
- Contingent Sales declined. A 61% drop in these isn’t that significant in itself but it does appear that sellers, whether banks or homeowners, are less willing to accept an offer when it is contingent upon a buyer’s home selling.
- Conditional Sales increased 44% this month compared to June 2009 but were equal to last month. These are homes that just went under contract and still have financial and inspection conditions. The good news is that these are not sales related to the tax credit so we may see slightly improved sales when compared to last year either this month or next month. (Last August we sold only 67 homes in all of Lake Norman).
- Our pending sales represented a 10% decrease from a year ago. These are the contracts that are past inspections and are just waiting to close. Pending sales are usually the best indication of future sales and help substantiate that we will be lucky to meet our August and September 2009 sales numbers.
- The number of closed sales were 14% lower than July 2009 and a whopping -27% drop from last month.
Note that our average sales price decreased 6% compared to 2009. Unlike the past few months, we experienced a drop in the average price of conditional home prices as well. Because of the nature of our Lake Norman housing market, we really can’t use the average sales price to determine if our prices are increasing or decreasing because our inventory ranges from under $100,000 to $9 million. Our average prices vary with the prices of the homes sold. A few luxury home sales can skew our average prices substantially.
Here is a breakdown by price-range of our June 2010 closed sales:
- $42,000 – $199,999: 10
- $200,000 – $299,999: 9
- $300,000 – $399,999: 14
- $400,000 – $499,999: 9
- $500,000 – $599,999: 11
- $600,000 – $699,999: 9
- $700,000 – $799,999: 6
- $800,000 – $899,999: 1
- $900,000 – $999,999: 3
- $1,000,000 – $1,999,999: 3
- $2 million+ : 0
43% of our Lake Norman home sales were under $400,000 compared to 51% last month. 70% were under $600,000. After seeing 3 sales over $3,000,000 last month, we closed only 3 sales over $1 million this month.
6-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.
**I have made an adjustment of the totals reflecting the ACTUAL sales every month in 2009 and 2010 and the totals in the prior calendar year. The columns may not add up but I do my best with whatI have to work with!
*** Our Charlotte Regional MLS converted our entire data base over to a new version of TEMPO program this past month. Because of the confusion related to this conversion, July’s data may have more inaccuracies than usual.
I love this chart because it truly tells the whole story. What can I say? This past July was the slowest in over 6 years. After 9 months of year over year increases, this is the first month we have fallen below our prior year’s sales.
This past month we saw a dip in our first-time home-buyer price ranges which is most likely due to the end of the tax credits. Foreclosures, shortsales and other distressed sales are still playing a big role in our Lake Norman housing market. However, relative bargains are also inspiring higher priced buyers to jump off of the fence. I am seeing multiple offers or very fast sales of some distressed AND non-distressed sales. There is still a serious disparity between the prices of many of our closed sales when compared to similar active listings. But, I have noticed more sales at slightly higher prices than the prior foreclosure/shortsale lows.
Lake Norman is not alone in our housing slowdown. A recent article like this one: ” Real Estate Market: Worse than expected” in Inman News pretty much sums it up. And, the June pending sales nationwide fell to a new record low according to the National Association of Realtors.
I think we are in for a rocky ride through the rest of 2010 and 2011. The million dollar question is how long is it going to take to truly see real signs of a sustained recovery both nationally and here in Lake Norman?
One last note: 30-year fixed conforming loan rates are as low as 4.1%! Hopefully, these low rates will inspire more buyers to jump off the fence and into the lake!
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