* All data is from the Carolina Multiple Listing Service.
So, despite pretty strong under contract and pending sales on last month’s market report, our Lake Norman home sales in July were not only 7% below July 2018’s but they were also 16.9% below last month’s. July was the second month in a row that our Lake Norman home sales were below last year’s. After a great start to 2019 we are definitely experiencing a softening of our housing market. Despite these drops, we are still 2.8% higher for the first 7 months of 2019 compared to 2018. My numbers below should provide some deeper insight into where we are headed as well as details regarding this month’s sales.
Here are what I feel to be the biggest takeaways from July’s Lake Norman real estate sales data:
- Our current month’s of supply (absorption rate) is only 3.97. We are still very much in a seller’s market. (A balanced market is 6 months of inventory).
- Lake Norman’s first 7 months of 2019 were 2.8% above the same period in 2018 despite our drop in June and July.
- At 187 sales, this July ranks below 2018’s but equal to 2017’s.
- The average sales price was up 5% over last year’s. Our most notable price range sales in July were in the $100,000’s, $400,000’s, and our luxury market from $1,000,000 – $1,499,999.
- Our inventory of active listings is significantly lower than last year’s. (-6% or a whopping 50 fewer than last year’s!). Normally our inventories in the summer months might be slightly below the prior peak months but there is no doubt that this year’s numbers are quite low for this time of year.
- Our newest contracts (UCS) are up 7% but pending sales (UCNS) are down 3%. It looks like the slowdown in June/July might extend into August but our robust new sales might lead to an uptick in September/October.
- Waterfront home sales moved back into a balanced market but on the cusp of a buyer’s market as their month’s of supply of active listings went back up to 6.6. This important niche remains weaker than our overall Lake Norman real estate market.
- Is new construction taking on an increasing share of our market? They now represent 34.5% of our new contracts.
Let’s take a closer look:
Some significant additional statistics for you:
- Waterfront homes moved back on the cusp of a buyer’s market based upon July’s months of supply of listings which increased to 6.6 months after dropping to 4.98 months of supply last month. (A balanced market of 6 months favors neither buyers nor sellers.)
- Waterfront sales in July represented only 22.4% of Lake Norman’s total sales while comprising 37.3% of our active listings and only 21.5% of our under contract listings.
- The average price per square foot of our waterfront homes dropped slightly to $283.71. It is important to note that this is the second month that our average price per-square-foot for our waterfront homes exceeded 2007’s peak average of $283.16. Despite relatively weak sales, have our waterfront home prices finally recovered from the recession? This will be important to watch in the months ahead!
- It took on average 71 days for a waterfront home to sell and they sold on average for 94% of their listing price. So they are selling quickly but are making concessions on price to do so.
- 38 new construction homes closed in July through our MLS. We have 125 under contract which represents 34.5% of all of Lake Norman’s homes under contact/pending today. Of course, 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. The average listing price vs sales price of new construction single family homes remained at 98%. It is still hard to negotiate prices with builders. That said, always give negotiating a try and don’t forget to ask builders for upgrades as they usually prefer upgrades over price reductions. The average sales price in July was $368,852. The months of supply of active listings using July’s sales is 4.1 months which is very much a sellers’ (builders’) market.
- There were only 3 distressed sales (Foreclosures (REO’S), defaults, Short Sales) in all of Lake Norman in July. We have 4 under contract and only 3 distressed active listings as of today. Distressed homes remain insignificant in our overall picture.
- 45.5% of Lake Norman’s July single family home sales were under $400,000.
- 65.2% of Lake Norman home sales in July were under $500,000.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total today is 362. This is 4.3% higher than last year at this time but slightly below 2017’s 364. I predict we will see weak sales in August compared to last year because we are up against a HUGE 238 sales in August 2018. Yikes!
A closer look at the chart:
- The number of Active Listings as of today in Lake Norman is down 6% when compared to last year’s at this time. Today we have only 743 single family homes for sale in all of Lake Norman which is slightly below last month’s 753. Not only are our numbers of homes for sale historically very very low but they have remained at about 750 during these past few months when they traditionally peak. Our absorption rate/months of supply of active listings is 3.97 which indicates we remain very much in a sellers’ housing market. Keep in mind, however, within specific price ranges there are dramatic swings from a buyer’s market to a balanced to a seller’s market. The average listing price of active listings is down 6% and the days on market is up 2% when compared to July 2018.
- Under Contract Show (conditional) sales are up 7% from this time last year. The average price of our new contracts is down 11% and the days on market is down a whopping 14%! UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should translate to improved closed sales but not until September or even October.
- Pending/Under Contract No Show sales are down 3% compared to last year’s. The average price of our pending sales is up 4% and these listings/sellers successfully negotiated a purchase contract 3% faster 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 this month or September. These numbers provide further substantiation of my prediction that we will see some weaker sales numbers in Lake Norman for the next month or two.
- Lake Norman’s closed July home sales in our MLS as stated above, were 7% lower than last July’s. The average price of our homes sold was up 5%. It took on average only 64 days to sell a home in July which is 11% faster than July 2018. One interesting side note about days on market: our MEDIAN days on market was 32 which means that half of our total sales took less than 32 days and half took longer. Interesting! Keep in mind that we always get a few more sales reported to our MLS after I do this report each month.
The total number of Lake Norman homes under contract (UCS + UCNS) at the end of the first week of each month are as follows:
- August 8, 2019: 362
- July 8, 2019: 355
- June 9, 2019 383
- May 9, 2019: 386
- April 9, 2019: 363
- March 10, 2019: 318
- February 8th, 2019: 268
- January 6, 2019: 225
- December 6, 2018: 251
- November 8, 2018: 255
- October 8 2018: 281
- September 8, 2018: 310
- August 8, 2018: 347
- July 8, 2018: 345
- June 8, 2018: 406
- May 8, 2018: 389
- April 8, 2018: 334
- March 8, 2018: 280
- February 8, 2018: 244
- January 8, 2018: 206
- December 8, 2017: 264
- November 6, 2017: 282
- October 6, 2017: 301
- September 6, 2017: 346
- August 6, 2017: 364
Here is a breakdown by price-range of our July 2019 closed sales in all of Lake Norman:
- $1,000 – $99,999: 3+
- $100,000 – $199,999: 8+
- $200,000 – $299,999: 29–
- $300,000 – $399,999: 45=
(These price ranges represented 45.5% of our July home sales which is slightly higher than last month’s)
- $400,000 – $499,999: 37+
- $500,000 – $599,999: 14–
(These price ranges represented 27.3% of our July sales which is about equal to last month’s)
- $600,000 – $699,999: 15=
- $700,000 – $799,999: 9–
- $800,000 – $899,999: 6=
- 900,000 – $999,999: 4–
(These price ranges represented of 18.2% of our July sales compared to 20.7 last month, 19.0% in May, 16.2% in April, 17.2% in March, 14.4% in February, 16.5% of our January sales, 20.7% of our December sales, 21.1% of our November sales, 20.7% of our October sales, 25% in September, 21.1% in August sales, 23.6% in July, 19.1% in June, 19.9% in May, 21.1% 2018)
- $1,000,000 – $1,499,999: 11+
- $1,500,000 – $1,999,999: 3–
- $2 million+ : 3–
(These $1 million+ sales represented 9.1% of our July sales, 9.9% of our June sales, 8.6% of May sales, 10.1% in April, 4.6% in March, 6.7% in February, 7.3% of our January sales, 13.2% of our December sales, 14.7% of our November sales, 6.7% of our October sales, 12.3% in September, 10.8% in August, 6.2% in July, 8.1% in June, 9% in May, 11.2% in April, 7.4% in March, 8.9% in February, 7.1% in January, 6% in December 2017, 7.86% in November, and 7.8 % last October.)
In my opinion, this price range breakdown is one of the most important resources in my market reports because it goes deeper to define our specific strengths and weaknesses each month. In July our strongest improvement in sales were in the $100,000’s, $400,000’s, and our luxury market from $1,000,000 – $1,499,999. The neat and tidy group strengths of June went away and we are back to random strong and weak price ranges. Please note that the symbols next to each number ( +, -, = are my way of letting you know how each price range compared to last month’s). As always with our Lake Norman real estate market, you really need to know specifics about your price niche because there is such disparity within price range sales trends.
Higher-end home sales in Lake Norman
We have had some ups and down in the past months in our luxury home niche. After a particularly strong April, our luxury home sales above $1.5 million disappeared in May only to come back in June with a whopping 15 sales. Then they dropped down to 6 sales in July. To put these numbers in perspective I included the percentage the luxury home niche represented each month for the past 18 months. While an improvement over the early 2019 months, we are not seeing consistent strength in our luxury housing market and we have yet to fully recover from the recession.
Lake Norman’s Waterfront Homes
As I wrote above, Waterfront homes moved back on the cusp of a buyer’s market based upon July’s months of supply of listings which increased to 6.6 months after dropping to 4.98 months of supply last month. (A balanced market of 6 months favors neither buyers nor sellers.)
- Waterfront sales in July represented only 22.4% of Lake Norman’s total sales while comprising 37.3% of our active listings and only 21.5% of our under contract listings.
- The average price per square foot of our waterfront homes dropped slightly to $283.71. It is important to note that this is the second month that our average price per-square-foot for our waterfront homes exceeded 2007’s peak average of $283.16. Despite relatively weak sales, have our waterfront home prices finally recovered from the recession?
- It took on average 71 days for a waterfront home to sell and they sold on average for 94% of their listing price. So they are selling quickly but are making concessions on price.
Annual 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. ***Our MLS just merged with many others over the past several years so all of the total sales numbers have changed slightly. I did update the entire 2017 year so that the past two years’ numbers will be comparing apples to apples. However, I am not going to go back to prior years and adjust.
I love being able to see this overview which puts our current sales in context with prior years and provides monthly trends to help better understand Lake Norman’s seasonal trends, peaks and valleys.
Some of my readers have questioned why these numbers are of value due to the significant increase in the number of homes in our area now versus 15 years ago. But, when you try to assess the Lake Norman housing market, the only numbers that count are the quantity of active listings available, not the number of homes that exist in our area. And, our number of active listings at our peak in 2007 was 1300, almost twice as many as we have today!
Our first 7 months of 2019 put us 2.8% above the first 7 months of 2018. If you look at the subtotals on the gray line under June you will see what a stellar first half of 2019 we had! (The highest number of sales in the first six months since 2005). Take a look at the 2018 August sales (238) and you will understand why I am pessimistic about this month’s sales. After that, starting in September of 2018 our sales dropped significantly so we should end up the year at least matching those numbers.
Summary and My Insight
Good signs/news for 2019:
- How low will mortgage rates go? That’s the question on many consumers’ minds as the benchmark 30-year, fixed-rate mortgage fell to 3.81 percent, down 16 basis points from a week ago, according to Bankrate’s weekly survey of large lenders. The Federal Reserve recently cut their rate which is reflected in our current low rates as well as economic issues like the trade wars.
- Our under contract sales are up 7% indicating positive momentum going into September
- The number of distressed homes for sale is still extremely low so they still don’t play any perceptible role in our Lake Norman housing market.
- In 3 of our 4 four categories (Active, UCS, Pending and Closed) our homes are selling faster than last year and our pending and recently closed properties were on the market for just two months.
- New construction remains strong, representing about 34.5% of our pending contracts. It is clear that there is enough desirable new construction inventory to fill in the gap of our shortage of resale homes. If you drive around Lake Norman it feels like large, lower priced communities as well as custom and smaller groups of spec homes are popping up all over. Builders are telling me that they could built twice as many as they are if it weren’t for the shortage of qualified labor and good buildable lots. Note that lumber prices are sky high which is causing construction costs to go up as well.
- Our overall future is very positive. People are still moving to Lake Norman from all over the country to escape high taxes and cost of living, extreme weather, and myriad other reasons in order to enjoy our beautiful area, mild (?) 4 seasons, vibrant communities and better quality of life.
Challenges/Weaknesses for 2019:
- We have only 743 active listings in our MLS today. There is no doubt that record-breaking low inventory of active listings continues to provide a headwind for our Lake Norman housing market.
- Our pending sales are down 3% which may lead to lower sales in August.
- I have continued concerns about our waterfront niche as well as luxury homes which are generally still under performing overall despite some improvement.
- Much of our housing inventory is becoming more and more dated so it will be incumbent upon sellers to do more significant updating and staging to compete with new construction. Of course, the alternative is to drop their sales price but most buyers here are not willing to buy a home that needs a lot of work. Sellers are having a tendency to initially overprice their homes which leads to price decreases and longer days on the market before they sell.
- New construction is presenting a real challenge to our resale homes, especially the dated homes discussed above.
- Finding the perfect home can be challenging. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are still selling quickly despite our slower market.
- 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 2nd quarter of 2019.
As I wrote the past 10 months:
My family moved to Lake Norman from California in 2005 seeking a better quality of life and a lower cost of living. I have watched our area grow immensely over the past 14 years. There is no doubt that Lake Norman is still a very appealing destination for folks from all over the country. We now can compete with many trendy cities throughout the country with our amazing number of new restaurants, breweries, entertainment and job growth. But, with this growth has come increased traffic which is now just a fact of life on I-77. With the passing of time, our pre-recession “new” homes are now a bit dated and will be needing new HVAC sysems, water heaters and roofs. With a complete halt to new construction during the recession years we are now lacking the number and type of homes that appeal to many of today’s buyers. For this reason new construction and remodeled homes are selling more quickly than ever. It is more of a challenge for our “dated” homes and subdivisions where open floor plans are rare and kitchens and bathrooms are in less appealing woods and materials. The result has been the need for sellers to do updating before listing and buyers, especially waterfront, need to be more willing to do remodeling after they purchase IF they found a home on a great waterfront lot or in a great location. Today, the bottom line comes down to price, location, condition, updates and proximity to desired amenities.
Buyers today need to know their price range’s. Are they in a buyer’s or seller’s market? No matter what, be prepared to act fast when an exceptional new listing that has been updated comes on the market. Or, if you want a more affordable option in any price range, be prepared to be more flexible. This means a willingness to do your own updating if you can’t afford an updated home, and, if possible, be more flexible about locations based upon our limited inventory. At the same time, if you really love the home, be aggressive with your offer! Come in high and with very clean terms. My Mantra as always: Don’t focus just on the price but also 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!
Sellers, while our lack of inventory may help, you may have work to do and DO NOT OVERPRICE your listing! Watch a lot of HGTV and, if possible, be prepared to do painting, new flooring, painting kitchen cabinets white when feasible and staging to attract buyers. Your efforts will pay off with quicker selling times and higher sales prices. Also, remember that buyers can be reluctant to buy a home knowing they will need to replace a roof, the AC and heating etc. in the first few years they are living there so, if possible, put on that new roof, replace the HVAC units while you are updating. ALWAYS offer home warranty plans to buyers!
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