After a tough fall and winter, Lake Norman’s real estate market seems to be coming to life simultaneously with the arrival of spring temperatures. Perhaps we actually can blame our weak housing market on the weather and the tightened mortgage requirements like the national pundits are doing. That said, we can’t blame it on a lack of inventory like parts of the US. All I know is that it is such a relief to see a marked increase in real estate activity here in Lake Norman after such a bad spell! March seems to be the “bottom” of our mini housing dip with 17% fewer closed sales than last March. However new contracts are nearly up to last year’s for the first time in months.
Let’s take a look at the March 2014 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* All data is from the Charlotte Regional Multiple Listing Service
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) represented 11.25% of Lake Norman’s total home sales which is up from last months 5.6 but lower than February’s 13.6% and significantly lower than last January’s 29%. We only had 9 distressed home sales in March. The average price for distressed single family home sales was $309,396. Distressed active listings comprise only 2.7% of our total inventory of Lake Norman homes sale. Clearly distressed sales no longer play a significant role in our Lake Norman real estate market and this is very good news!
- Only 25% of our March closed sales were waterfront homes but this is up from 20% last month. The average sales price of Lake Norman waterfront homes in March was $1,008,891; significantly higher than last month’s $805,203 and even topped last summer’s high of $990,693 in June due in part to a $4.85 million sale. In March our closed luxury housing sales remained weak but they have improved significantly in the past weeks. Our average price per square foot, at $221.14, is still below our peak of $229 last summer but is rising. Lake Norman’s waterfront home sales above $700,000 are also improving.
- 13 new construction homes closed in March representing 16.25% of our total sales. I believe 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,99%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 51 new construction homes under contract in the MLS. The average sales price in March logged in at $451,415. With 132 new construction active listings Lake Norman actually has a 10.2 months supply of new homes listed in the MLS.
- 53.75% of Lake Norman’s February home sales were under $400,000.
- 67.5 % of the entire Lake Norman home sales in March were under $500,000. Clearly our lower price ranges are still dominating our housing market.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 243 shot up from last month’s 187. At 243 Lake Norman has 16.2% FEWER homes under contract compared to last year’s 290 at this exact date. This is the highest number since last August. Considering this and the improvement from last month’s -26.6% it looks like we have stopped the bleeding and are on the mend.
A closer look at the chart:
- The number of Active Listings in Lake Norman is 15% higher than last March’s. Our absorption rate/months of supply of active listings today is 12.2 which is about equal to the past two months but higher than last December’s 8.08. Last May 2013 Lake Norman hit our post recession low of 5.9 months of supply. Using the nationally defined goal of 6-8 months of supply for a balanced housing market, March’s lower sales and increasing inventory definitely keeps Lake Norman in the buyer’s market status. Low inventory has played a significant role in Lake Norman’s housing recovery as it has nationally. While buyers want to see more new listings one of the keys to a successful 2014 will be maintaining relatively low numbers of active listings. Now that more homeowners are “above water” due to rising prices I have already noticed a number of new listings of homes that had been leased for several years. Hopefully this won’t overwhelm our Lake Norman housing market. One bit of good news is that the average number of days an active listing has been on the market dropped again by 1%.
- Under Contract Show (conditional sales), fell 9% when compared to this same time last year but increased 32.7% over last month! These are homes that just went under contract (have an accepted offer) and still have financial and inspection conditions. They represent future closed sales most likely in late April/May/June. This number would indicate that our closed sales will log in below 2013 numbers for the next few months but are most definitely improving.
- Pending/Under Contract No Show sales are -28% below last March’s making this the seventh month in a row of declines. These are the contracts that are past their inspection/due diligent periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon this I predict that we will definitely not exceed 2013 closed sales numbers this month. FYI, Pending home sales are down throughout the US as well.
- The number of closed home sales in Lake Norman in March as of today and as stated above, was down 17% compared to last year’s. The average sales price was actually up 17% thanks in part to some high-end sales.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- April 6, 2014: 243
- March 6, 2014: 187
- February 6, 2014: 185
- January 6, 2014: 155
- December 6, 2013: 197
- November 6, 2013: 207
- October 6, 2013: 207
- September 6, 2013: 218
- August 6, 2013: 264
- July 6, 2013: 271
- June 6, 2013: 293
- May 6, 2013: 316
- April 2, 2013: 290
- March 5, 2013: 255
- February 7, 2013: 219
- January 6, 2013: 184
- December 6, 2012: 197
- November 7, 2012: 214
- October 8, 2012: 218
- September 6, 2012: 206
- August 6, 2012: 228
- July 6, 2012: 234
- June 6, 2012: 235
- May 7, 2012: 246
- April 1, 2012: 227
Here is a breakdown by price-range of our January 2014 closed sales in Lake Norman’s area 13-1 to 13-5:
- $140,000 – $199,999: 8-
- $200,000 – $299,999: 15
- $300,000 – $399,999 20++
(These price ranges represented 53.75% of our March home sales.)
- $400,000 – $499,999: 11-
- $500,000 – $599,999: 7
(These price ranges represented 22.5% compare to 28.5% last month and 31.8 in February)
- $600,000 – $699,999: 8+
- $700,000 – $799,999: 3-
- $800,000 – $899,999: 0_
- 900,000 – $999,999: 1_
(These price ranges represented 15% with the bulk in the $600,000’s)
- $1,000,000 – $1,499,999: 3+
- $1,500,000 – $1,999,999: 2+
- $2 million+ : 2+
(#Solds $1 million+ = 8.75% compared to 4.3% last month, 6% in January, 9.5 % in December, 4.5% in November, 3.1% in October, 5.7% in September, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April 2013)
The most improved price ranges in March were the $300,000’s, 600,000’s and the $1 million+.
Higher-end home sales in Lake Norman
Signs of life! What I found really fascinating is that of the 7 $1 million+ properties that sold, 2 were in Denver, 3 were in Cornelius and 2 in Mooresville down Brawley School RD. While largest segment of Lake Norman’s luxury housing market fall in Cornelius (in and around The Peninsula) and Mooresville (in and around The Point) for the second month in a row Denver has a good percentage of these sales.
As goes our higher end sales so goes our waterfront home sales. We currently have 397 waterfront homes actively listed for sale. With only 20 closed sales of waterfront homes in March that means Lake Norman currently has 19.85 months of inventory of waterfront homes for sale. Yikes! This is more than double that of a balanced housing market. While I still baffled by the erratic nature of our waterfront and higher priced home sales in Lake Norman, I feel like this recent upswing will continue through our traditionally strong spring and early summer months. It is hard to know very much farther in the future.
10-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 Charlotte Region 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.
As you can see in our Lake Norman sales by month and year chart above, Lake Norman’s home sales for the 2013 exceeded 2012’s by 19.7% and were only -7.0% below 2007’s. There is absolutely no doubt that 2013 has been a great year overall for the Lake Norman real estate market despite the 4th quarter slowdown.
Unfortunately, our March sales were back to 2011 levels. Given our increase in new contracts I think that while we may not exceed April 2013 sales we should be a close second. So far in 2014 we are 11.7% below 2013 sales.
Summary and My Insight
- After 5 or so rather disappointing months our Lake Norman real estate market has jumped back to life in step with the improving weather. I honestly didn’t think we could blame the weather on our slow sales like the northern states did but now I am beginning to believe weather was a significant factor in the past few months.
- 2013 was a very good year overall for Lake Norman with a 19.7% increase in sales.
- Lake Norman’s single family homes average sales price per square foot increased to $147.41 which is 6.7% higher than March 2013.
- The average price of a closed home sale in Lake Norman increased by 17% in March compared to March 2013.
- The average number of days a Lake Norman property took to sell was down 1%.
- Because our price per square foot has increased, our Lake Norman home values are stable and slowly improving overall. There are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market. In addition, the lack of distressed sales has led to higher overall average prices. The “bargains” are all but gone. What I want to see is measurable increases in Lake Norman home sales in ALL price ranges.
- There are still pockets of “hot” home sales in the greater Lake Norman area, notably the off-water popular and moderately priced communities in Huntersville, Cornelius and to a lesser extent Mooresville where inventory is very low and multiple offers are not uncommon.
- The number of distressed homes for sale are so low they are truly irrelevant and will not play much of a role in our Lake Norman 2014 sales. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.
- New construction is definitely back. While we only sold 13 new homes last month through the MLS, we have 51 under contract and this doesn’t include custom homes and homes to be built in subdivisions. New housing communities as well as custom and smaller groups of spec homes are popping up all over Lake Norman. As I noted above, new construction homes are selling on average for 99%.
- Charlotte’s 2013 impressive home price gains have been linked to a significant number of investors taking advantage of low prices in “middle class neighborhoods” and turning them into rentals. They therefore have “inflated” prices. Since Lake Norman didn’t enjoy this surge, our sales are more reflective of a truly stable and slowly improving real estate market based on owner-occupied rather than investors and we are already standing on our own.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Homeowners who went through short sales/foreclosures several years ago are now re-entering the market.
- Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.
- Because prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move than in the past 5 years.
- I am seeing a number of new listings on the market that have been leased for several years as sellers waited for prices and the overall Lake Norman real estate market to improve. As this segment of homeowners re-enter the market they may lead to higher than desireable numbers of active listings.
- Based upon some of their listing prices and recent negotiations I have experienced, I am concerned that these Seller’s confidence may exceed the reality of our market.
- I am also concerned that some buyers are too focused on older statistics from the recession and are too fearful of paying our current market value. I experienced this back in the mid-1990’s in California as well. Buyers who had lost money and or their homes due to that recession were very nervous about making good offers and in come cases lost out for a year or more before finding the confidence to actually make a successful offer.
- Interest rates are expected to continue to rise in 2014 with some economists predicting they will reach 5% or higher by the end of the year.
- Tightening credits, tougher loan standards and increasing interest rates are expected to impede home sales in 2014
- The national housing market also fell in February according to the National Association of Realtors and national pending home sales declined for the 8th straight month in February In other words, we have good company. March numbers are not out yet nationally.
- Our overall inventory of active listings in Lake Norman is high relative to our rate of sales. Today Lake Norman is in a buyers market unlike the greater Charlotte area and many parts of the country where the last number reported was 4.9 months of supply in January.
- Lake Norman’s average days a listing takes to sell, while dropping, is double the national average of 56 days.
- Our trade-up and luxury housing niches are still erratic and have yet to recover unlike the lower price ranges.
- Finding the perfect home has become more difficult because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
- On the flip side, higher-end properties are simply taking much longer to sell.
- I have concerns that many Lake Norman home buyers will see weak overall numbers and misinterpret them. 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.
My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floor-plan is good, perhaps having to do some painting, new flooring etc. is your best option. 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 low but rising it is a great time to buy. With less than 3% of Lake Norman’s current listings being “distressed sales” don’t expect a “bargain” to come along at an unrealistic price. Low-balling, except on distressed properties, really isn’t a great strategy nor will it result in a lower price. On the contrary, it usually serves to offend the sellers and gets the negotiations off on the wrong foot.
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 resale, really isn’t a bargain at all. Be smart!
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