So, we saw it coming in my mid-month hot sheet analysis, but the closed sales numbers for this March compared to March 2015’s were down right abysmal as -29%. That said, it is important to consider the fact that last March Lake Norman posted exceptionally high closed home sales. This year’s March numbers are as much about the huge sales we are up against as they are about the fact that we experienced a dip in momentum in late January/February resulting in lower March closed sales. I am positive this dip is short lived because we currently have 297 homes under contract compared to last year’s 272. Clearly we are now on a terror! 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 only 2% of Lake Norman’s total March home sales. With just 2 distressed closed sales for then entire month it is safe to say they really didn’t plan a role in March at all. Distressed active listings currently comprise only 1.6% of our total inventory of Lake Norman homes for sales. Interesting note that of the 14 distressed properties currently for sale, 2 of them are over $2 million! Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- Waterfront homes continue to struggle. They represented only 23.7% of our March closed sales. At the same time they currently comprise 45% of our active listings. The average sales price of a waterfront home in March was $828,043. The average price per square foot came in at whopping $283.44. It took on average 101 days for a waterfront home to sell and they sold for 95% of the listing price. We currently have 79 waterfront homes under contract. Our waterfront homes’ months of inventory stands at 16.7 which puts them very much in a buyers market overall but this varies quite a bit by price range. When really nice waterfront properties hit the MLS they are actually selling fairly quickly compared to the older inventory.
- 24 new construction homes closed in March 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, for example, 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 97%. This is down from 99% so there appears to be a little wiggle room in new home prices. We currently have 86 new construction homes under contract in the MLS. The average sales price in March logged in at $435,399. The months of supply of 6.67 puts this group in a balanced market overall.
- 55.7% of Lake Norman’s March single family home sales were under $400,000, up from 51% last month.
- 73.2% of Lake Norman home sales in March were under $500,000, also up from 69% last month.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 297 is significantly higher than the same period for the past two years and the 3rd highest in all of the past 2 years! Given that we are up against more strong numbers of the spring of 2015 this is an indication that our momentum has returned after the March dip and that we will at least keep pace with or exceed 2015 for the next several months.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is 3% below last year’s. This is the closest we have been to last year’s level of inventory is quite some time. Our absorption rate/months of supply of active listings is 8.77 which keeps Lake Norman overall in a buyers’ market but given our recent trends by next month we should be back in a balanced market. Within specific price ranges, however, there are swings from a buyer’s market to balanced to a seller’s market. Lake Norman is not alone as throughout the country economists continue to note the low inventory of active listings and how this is impacting home sales volumes.
- Under Contract Show (conditional sales), are UP 2% versus this time last year. The average price of our new contracts is an impressive 21% higher than last year’s. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. They represent future closed sales most likely in late April/May. This number would indicate that we should at least match if not exceed 2015’s sales in the next few months.
- Pending/Under Contract No Show sales are up a whopping 26%! These listings went under contract on average in 88 days and the average price is 7% 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. These would indicate that we should see some strong closed sales in April into May.
- Lake Norman’s closed March home sales in our MLS as of today and as stated above, are down a painful 29% compared to last year’s. Yikes! As I said in the introduction, last March’s closed sales of 136 were significantly higher than normal so it isn’t a total surprise that our March 2016 didn’t reach them. Some positive signs: these closed in 95 days or 7% faster than last year’s and our average price was up 14% which is very impressive. Good properties are selling in about 3 months yet our average active listing has been on the market for over 4 months. This is the crux of the problem in Lake Norman. 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:
- April 6, 2016: 297 (Wow!)
- March 6, 2016: 234
- February 6, 2016: 207
- Januuary 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
- July 7, 2014: 268
- June 5, 2014: 262
- May 6, 2014: 274
- April 6, 2014: 243
Here is a breakdown by price-range of our Januray 2016 closed sales in Lake Norman
- $88,500 – $99,999: 1
- $100,000 – $199,999: 5–
- $200,000 – $299,999: 26++
- $300,000 – $399,999 22+
(These price ranges represented 55.6% of our March home sales)
- $400,000 – $499,999: 17=
- $500,000 – $599,999: 8=
(These price ranges represented back up to 25.7% of March’s sales)
- $600,000 – $699,999: 2=
- $700,000 – $799,999: 5-
- $800,000 – $899,999: 3
- 900,000 – $999,999: 1
(These price ranges represented 11.3% down from 14.8% last month)
- $1,000,000 – $1,499,999: 4
- $1,500,000 – $1,999,999: 3++
- $2 million+ : 0–
(#Solds $1 million+ = 7.2% of our total March sales )
The stand out price ranges in March in all of Lake Norman were $200,000’s, the $300,000’s, and the $1,500,000 – $1,999,999 million.
Higher-end home sales in Lake Norman
We saw a slight decline in our trade-up and luxury housing markets in March. With only 16 sales in all of March over $700,000 compared to 19 last month and no sales above $2 million this market is still struggling to gain momentum.
Lake Norman’s Waterfront Housing Market
One highlight of this month’s waterfront home sales is the fact that the price per square foot jumped to $283.44 which is a post recession high.
So, this continues to be the reality of Lake Norman’s waterfront housing market: We have relatively few good, lower priced, waterfront homes, even tear-downs, and very few are coming one the market. Gone are the great tear-downs or good but distressed homes in the $300,000-$600,000 price ranges. The good news is that for the first time in a long time I am seeing some good waterfront listings coming on the market in the $700-950,000 price ranges. It is important for potential waterfront buyers to understand that there are fewer and fewer good options in the lower and trade-up price ranges. While our waterfront market hasn’t fully recovered from its peak, it has improved enough that the bargains of the recession are gone. The lowest priced listings are mostly at the end of coves, can’t have docks or are in less desirable locations. I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that doesn’t suit them or needs too much work. My gut is telling me that now that we are entering our strongest months of the year and as new listings come on the market they are going to be at higher price ranges because the demand is there. Prices are going up out of circumstances rather than overall market trends. For more details: Lake Norman Waterfront Home Sales 2005 – 2005, Some Interesting Insights.
As of today we have 79 waterfront properties under contract compared to 57 last month. Our months of supply based on March sales is 16.6. This puts Lake Norman waterfront homes very much in a buyer’s market. However, it is important to note that these active listings have been on the market on average 135 days while the properties under-contract-show were on for only 102 days and pendings 110 days and their median days on market was only 51 days which means half of the waterfront homes sold in less than 51 days. Can you say stale inventory? Waterfront sellers need to be very realistic about the current market. Overpriced listings are sitting until reduced to within 5% of market value. Know your price niche! Waterfront home buyers 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. Seriously, buy as soon as possible…this spring, if you find a waterfront property with good water in an acceptable price range.
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 volume our Lake Norman housing market truly has recovered. With 3 months in the books, our 2016 first quarter sales, thanks to March, were down 6.5%. I am optimistic about the next several months but beyond that it is extremely hard to predict.
Summary and My Insight
Good signs/news remains about the same as last month:
- Interest rates remain below 4% but are ticking up slightly
- Lake Norman’s continued low inventory of active listings puts pressure on demand and plays a role in firming up prices.
- 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. 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.
- 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.
- Lake Norman’s low inventory is comprised of a lot of stale inventory. Good fresh new listings are selling quickly so our low inventory is even worse when you consider the number of listings that have been sitting due to price, location, condition or age.
- Waterfront tear-downs and lots are selling but are also disappearing in prime locations. More buyers are willing to build or do major renovations if they can get “good” waterfront lots in good locations but with such low inventory it can be frustrating and some find it tough to accept that prices are going up.
- Our trade-up and luxury price ranges are still very much in a buyer’s market.
- Lake Norman home prices are increasing in a rather inconsistent pattern and in different locations and price ranges. At the same time, according to economists, home prices in the entire US in 2016 will see only modest gains.
- 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 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 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 much 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.
If you are looking in a “HOT” neighborhood and price range be prepared to make an offer quickly. No matter what, have your pre-approval letter in hand before even looking at homes. This is particularly important due to the new TRID closing process that took effect Oct. 2nd 2015. The new mandatory waiting periods during the loan process mean your lender has to be ready to go the minute you sign a contract on a property. I can’t emphasize this enough! Ask your lender and Realtor if they have experienced and are prepared to close using all of the new forms and deadlines. Then get your lender everything they need as soon as possible!
Always keep in ming 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 2% 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 feel that we have two different markets right now in Lake Norman. There are new listings that are priced right that are selling in just a matter of days and then there are the older listings and high-end luxury estates that are still struggling.
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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