I have been searching for just the right word to describe our May sales numbers. Confounding? Bewildering? Perplexing? I am truly dumbfounded. What the heck is going on? How can Lake Norman have record breaking numbers of new contracts for months yet log in such disappointing closed sales numbers? I have some theories but nothing concrete to back them up. 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 1% of Lake Norman’s total May home sales. With just 9 distressed closed sales for the entire month it is safe to say they really didn’t play a role in May at all. Distressed active listings currently comprise 1.2% 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.
- Waterfront homes continue to under perform but they are selling more quickly and prices are increasing. Waterfront properties represented only 29.3% of our May closed sales. At the same time they currently comprise 45% of our active listings. The average sales price of a waterfront home in May was $769,242 which was almost identical to April’s. The average price per square foot came in at $225.46. It took on average 93 days for a waterfront home to sell and they sold for 97% of the listing price. We currently have 100 waterfront homes under contract comprising 29% of our total homes under contract. Our waterfront homes’ months of inventory stands at 10.7 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.
- 19 new construction homes closed in May 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 99%. There is very little wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 88 new construction homes under contract in the MLS. The average sales price in May logged in at $454,535. The months of supply jumped up to 9.9 from 5.7 in April so overall new construction homes are actually in a buyers’ market.
- 50.3% of Lake Norman’s May single family home sales were under $400,000, up from 44.5% last month.
- 64.3% of Lake Norman home sales in May were under $500,000, also up from 61.1% last month.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 344 is even higher than last month’s record breaking 340. So will we FINALLY see some huge closed numbers in June or will they continue to disappear before closing? After this past month’s poor showing my enthusiasm has definitely waned!
A closer look at the chart:
- The number of Active Listings today in Lake Norman for the first time in months is actually slightly higher than last year’s at the same time. Our absorption rate/months of supply of active listings is 6.9 which puts Lake Norman overall on the cusp of a balanced market favoring neither buyers nor sellers. Within specific price ranges, however, there are swings from a buyer’s market to balanced to a seller’s market.
- Under Contract Show (conditional sales), were UP 13% versus this time last year. The average price of our new contracts is an impressive 1o% higher than last year’s and the average time an UCS listing was on the market dropped to 80. 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 July. These kind of numbers would normally indicate that we should exceed 2015’s sales in the next few months but given our current trends I am not so sure.
- Pending/Under Contract No Show sales were up 14%. These listings went under contract on average in only 56 days (wow!) but the average price is actually 3% lower 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 normally indicate that we should see some strong closed sales in June/July but it remains to be seen!
- Lake Norman’s closed May home sales in our MLS as of today and as stated above, were down a miserable 13% compared to last year’s. This number just boggles my mind! Despite record breaking numbers of homes getting excepted offers and going under contract every month this year we are NOT seeing these translate into higher closed sales. The only explanation is that more contracts are being cancelled than ever before. But why? I know that I had 2 contracts canceled (VERY unusual for me) in the last 2 weeks and at the same time opened 2 new ones. One canceled due to the loan and one due to the idiocy of the buyer. (I represented the seller.) The only other serious change in our real estate process is the new TRID closing requirements that were adopted throughout the country last October. Could this be contributing to canceled or delayed closings? Our total sales for the first 5 months of 2016 are now 4.4% below 2015’s. The average home took only 80 days to sell which is 6% faster than last May’s. So, good properties are selling in less than 3 months 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. But this doesn’t explain the low number of closed sales.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- June 6, 2016 344 (Yep, another new record!)
- 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
- July 7, 2014: 268
- June 5, 2014: 262
Here is a breakdown by price-range of our May 2016 closed sales in Lake Norman
- $33,000 – $99,999: 4
- $100,000 – $199,999: 5–
- $200,000 – $299,999: 20
- $300,000 – $399,999 43+++
(These price ranges represented 50% of our May home sales)
- $400,000 – $499,999: 20
- $500,000 – $599,999: 16
(These price ranges represented 25.2% of May’s sales)
- $600,000 – $699,999: 10
- $700,000 – $799,999: 6-
- $800,000 – $899,999: 6++
- 900,000 – $999,999: 4
(These price ranges represented 18.2 down from 22.7% last month)
- $1,000,000 – $1,499,999: 4-
- $1,500,000 – $1,999,999: 4+
- $2 million+ : 1
(#Solds $1 million+ = 6.% of our total May sales )
The stand out price ranges in May were the $300,000’s (30% of our entire Lake Norman sales for May), the $800,000’s and the $1.5 million – $2.0 million. This was a very interesting month in that there was not one segment of price ranges that were particularly strong or weak but rather narrow price ranges in the lower, middle and high end.
Higher-end home sales in Lake Norman
Our luxury housing market remains flat compared to April and soft overall.
Lake Norman’s Waterfront Housing Market
Lake Norman’s waterfront homes suffered greatly during the recession. With the disappearance of the foreclosures and short sales, 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. New listings with good water are selling more quickly than in the past. The improvement is slow but steady. 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 100 waterfront properties under contract compared to 108 last month. Our months of supply based on May sales is 10.7. 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 5 months in the books, our 2016 home sales are 4.4% below last year. As you can see above, we are up against a huge June 2015. We certainly have enough properties under contract to match that number however given the pattern so far this year I am not optimistic that we will reach it. Our Lake Norman housing market isn’t bad, it just isn’t reaching the highs I expected given how much activity there is. Ask any Realtor, we are all crazy busy!
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Interest rates remain below 4% but are ticking up slightly
- 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.
- 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.
- The popularity of new construction in all price ranges may be hurting our re-sale market.
- Our 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, U.S home prices rose 5.2% in the 12 months ending in March according to the most recent S%P/Case-Shiller Home Price Index.
- 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 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.
I am vary rarely perplexed by real estate trends but I have to say this year’s numbers have got me stumped. For a number of reasons contracts are not closing at their normal rates. In my opinion it is because of a combination of factors including the challenges faced in the loan process, the new TRID closing process that took effect Oct. 2nd 2015, buyers perhaps making decisions faster than they expected and then having second thoughts, properties not appraising as prices go up (although I haven’t seen this), less experienced Realtors who have entered our work force and may not be as successful dealing with the many and unique challenges we face in each transaction and even newer members of the big “teams” that have been delegated too much from their leader with not enough oversight.
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 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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