Mercurial is the word that comes to mind when describing our 2016 Lake Norman real estate market. After being teased with strong “under contract” and pending sales statistics but disappointing closed sales numbers all spring, it all turned around in June with a record high 210 closed sales only to suffer a 12% drop in closed sales in July! Once again we have record high numbers of properties “under contract” but when will they translate into closed sales? 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 less than half of 1% of Lake Norman’s total home sales. With just 2 distressed closed sales for the entire month it is safe to say they really didn’t play a role in July at all. Distressed active listings currently comprise 1.3% of Lake Norman’s current total inventory of single family homes for sales. Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market. (Interesting note: of the 13 distressed active listings 4 are above $1 million and 10 are above 500,000.)
- Waterfront homes continue to under perform but they are selling more quickly and prices are increasing. Waterfront properties represented only 34% of our July closed sales. At the same time they currently comprise 44.7% of our active listings. The average sales price of a waterfront home in July was $912,446 which is up from last month’s $870,498 and May’s 769,242. The average price per square foot came in at $236.78. It took on average 108 days for a waterfront home to sell and they sold for 97% of the listing price. We currently have 108 waterfront homes under contract comprising 32.2% of our total homes under contract. Our waterfront homes’ months of inventory rose to 8.5 so overall they are still in a buyer’s market but this varies quite a bit by price range. When really nice waterfront properties hit the MLS they are actually selling quickly.
- 21 new construction homes closed in July 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 read a tax report of all sales in Mooresville several months ago 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 100%! There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 62 new construction homes under contract in the MLS. The average sales price in July logged in at $513,850. The months of supply of active listings based on July sales stands at 8.9 so overall new construction homes are actually in a buyers’ market.
- 41.2% of Lake Norman’s July single family home sales were under $400,000 which is about equal to last month’s.
- 54.2% of Lake Norman home sales in July were under $500,000, also about equal to last month’s.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 325 is not only higher than last month’s but the third highest in the past two years. (See below). This would certainly indicate some closed sales…the question is when?
A closer look at the chart:
- The number of Active Listings today in Lake Norman for the third month in a row is actually slightly higher than last year’s at the same time. That said, they are down from last month’s 1033 so it looks as if our inventory levels of active listings have peaked for 2016. Our absorption rate/months of supply of active listings is 6.4 which puts Lake Norman back in a balanced market favoring neither buyers nor sellers over all. 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), were UP are whopping 32% versus this time last year! The average price of our new contracts is 9% higher than last year’s and the average time an UCS listing was on the market dropped to 79. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. What baffles me is that pretty consistently in 2016 we have had high numbers of Under Contract Show properties yet they don’t seem to translate into high closed sales in a predictable period of time. Normally, these newer sales should represent future closed sales most likely in September or October but this year it has been very hard to predict when or even if they will close.
- Pending/Under Contract No Show sales were down 12%. These listings went under contract on average in only 83 days and the average price is actually 32% HIGHER than last year’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. Given this lower number I think we will again see lower closed sales in August with perhaps a strong September. But, I predicted the same thing last month so why aren’t our pending numbers higher?
- Lake Norman’s closed July home sales in our MLS as of today and as stated above, were down 12% compared to 2015. While 153 sales is a respectable number when comparing all July’s since 2005 (See chart below) we weren’t able to match last year’s high number. Our total sales for the first 7 months of 2016 are 2.7% below 2015’s. The good news is that the average sales price in July was up 9% versus last year and the average home took 84 days to sell which is 6% faster than last July’s. So, good properties are selling in less than 3 months and for more money yet our average active listing has been on the market for over 4 months. This is the crux of at least one of the problems in our Lake Norman housing market. Stale, over-priced listings or listings with weaknesses are sitting and buyers are pouncing on good new listings.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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
- January 6, 2015: 154
- December 6, 2014: 204
- November 6, 2014: 221
- October 4, 2014: 275
- September 6, 2014: 272
- August 6, 2014: 261
Here is a breakdown by price-range of our July 2016 closed sales in Lake Norman
- $69,900 – $99,999: 2
- $100,000 – $199,999: 7-
- $200,000 – $299,999: 30-
- $300,000 – $399,999 24–
(These price ranges represented 41.2% of our July home sales)
- $400,000 – $499,999: 20-
- $500,000 – $599,999: 16–
(These price ranges represented 23.5% of July’s sales)
- $600,000 – $699,999: 11-
- $700,000 – $799,999: 15=
- $800,000 – $899,999: 13+++
- 900,000 – $999,999: 4=
(These price ranges represented 28% of July’s sales compared to 22.2% of June’s sales)
- $1,000,000 – $1,499,999: 4-
- $1,500,000 – $1,999,999: 4
- $2 million+ : 3=
(#Solds $1 million+ = 7.2% of our total July sales compared to last month’s 9.4%)
The stand out price ranges in July were most definitely our trade-up price ranges, especially the $700,000,$800,000’s and $900,000. This is fascinating because this niche price-range has been very slow to recover but has been impressive in the past few months.
Higher-end home sales in Lake Norman
Our luxury housing market fell back to a more predictable level in July after a spike in June. I was talking with luxury agents while showing homes priced up to $2 million and they all commented that business was slow in this niche.
Lake Norman’s Waterfront Housing Market
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 are definitely going up despite rather tepid sales. My buyers are now willing to increase their price range when they realize how much better the options are when they do so. This may be reflected in the significant improvement in the $700,000 – $900,000 price ranges. Buyers who used to be able to find an acceptable waterfront property in the $500,000 and $600,000’s are now looking in the higher price ranges. There is no doubt that new listings with good water are selling more quickly than in the past. The improvement is slow but steady and the average $ per square foot is now at $236.78. 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. For more details: Lake Norman Waterfront Home Sales 2005 – 2015, Some Interesting Insights.
As of today we have 108 waterfront properties under contract compared to 96 last month. Our months of supply based on July sales is up slightly to 8.5 from 7.7 last month. Lake Norman waterfront homes over all remain in a buyer’s market. That said, the cream of the crop waterfront properties sell relatively quickly in all but the very high-end luxury price ranges. With our current market momentum 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.
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 all of Lake Norman’s 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 much we have recouped. 2015 exceeded all years back to 2006 so in sheer number of homes sold our Lake Norman housing market truly has recovered.
With 7 months in the books, our 2016 home sales are now 2.7% below last year’s. As you can see above, in August we are once again up against relatively high 2015 sales. We certainly have enough properties under contract to match that number however given the lower pending numbers and the pattern so far this year I am not sure whether we will reach it. Based on our very high UCS numbers I do feel that we should see some strong closed sales but perhaps not until September or even October. Our Lake Norman housing market has been a little more erratic this year compared to 2015. So far in 2016 we have exceeded 2015 sales 4 of the 7 months but the three months that we were below 2015 we were WAY below.
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Thanks in part to Brexit and myriad other factors, interest rates are still amazingly low and are expected to stay that way through the end of 2016!
- 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.
- June and July showed some much needed improvement in our trade-up and luxury markets.
- Economists are predicting stronger sales in the south this 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.
- Waterfront prices are going up forcing potential buyers to consider raising their price ranges and acting more quickly.
- While not quite matching 2015 closed sales there is no doubt that 2016 has been a good year for our Lake Norman real estate market.
- The number of days on the market has been dropping consistently and the average prices have been slowly increasing.
- Lake Norman is in a balanced market today and the lower price ranges are hot!
- Our luxury price ranges, while showing signs of life, are still very much in a buyer’s market.
- 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.
- Finding the perfect home has become more difficult as sales improve. 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 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.
I must admit I have been frustrated and perplexed by Lake Norman’s 2016 erratic and sometimes contradictory statistics. We have had unusually unpredictable and mixed signals with strong numbers of under contract properties but some disappointing closed sales. June certainly made up for some of this but the drop in July further underscores it. I am still lacking complete confidence in the rest of 2016. My best guess is that we will have lower closed sales in July and perhaps even August but then a month or two of strong closings. Overall our real estate market is experiencing consistently strong activity but with modest if any gains and up and down months.
As I wrote last month but I think is still valid: 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 near all time lows and prices rising it is still a great time to buy. With less than 1% 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 the activity. Our market is ever evolving!
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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