Once again, we had a month of a plethora of real estate and economic news which could be strategically used to support a positive or negative evaluation of our present and future real estate market. Many economists have declared that our recession is officially over but to expect a rather slow recovery. At the same time the National Association of Realtors reports a record 9 straight months of pending home sales increases and are adjusting their estimated 2009 home sales upward slightly. There have even been some positive signs in the new construction real estate sector.
However, on the negative news side, there still exists the concerns about the “shadow” inventory expected to come on the market next spring and a second round of foreclosures brought on by Option ARMS and Alt-A loans that are resetting over the next 18 months. Some are saying that this second wave of foreclosures, which for the most part are not subprime, will hit the mid-range and luxury home markets because these are loans that the middle class Americans got during the 2004-2007 time-frame. And, getting new home loans, especially jumbo, are still extremely challenging and a tedious process at best.
Our conforming loan rates dipped back down to near record lows this month until the positive job numbers came out last Friday. Mortgage rates immediately jumped back up into the +5% range.
How does this national news compare to our Lake Norman real estate market? Let ‘s look at our November numbers:
Lake Norman’s November 2009 Housing Statistics
Active Listings continue to decline (4.0%). As I have written many times, this is an important part of our Lake Norman housing recovery. Again, note the average price of our active listings when compared to the average price of our solds this past month. Our high-end market is still suffering however I am seeing some increased activity in part due to foreclosures and short sales.
- Contingent Sales are down 33% compared to the 15 in October. These are the homes under contract that are contingent upon the buyer’s home selling
- Conditional Sales dropped slightly compared to 60 in October. This confirms that recent activity remains at about the same level as last month
- Pending sales remained pretty stable compared to 87 in September and 85 in October. While our closed sales have dropped significantly since last month, these strong pending numbers indicate that our sales in December should be higher than 2008.
- The number of closed sales dropped 37% compared to last month. However, they were 24% higher than November of 2008. I am now feeling pretty confident that our fourth quarter 2009 sales will be significantly stronger than last year’s record lows.
5-Year Comparison of Lake Norman Home Sales By Month
* Please note that all of my numbers come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.
**I have made an adjustment of the totals reflecting the ACTUAL sales every month in 2009 and the totals in the prior calendar year.
What immediately stands out is that the past two months our Lake Norman sales of existing homes has been higher than the same months in 2008. It is important to remember that these were the months in 2008 with the financial crisis hit our US economy. While we are not going to equal the total number of sales of 2008 this year, if you look at our trends since January there is an obvious trend of improving home sales, especially in our 4th quarter.
However, if you compare our 2009 monthly sales to 2007 we are still coming up significantly short every month through November. It will be very interesting to see how our December sales play out given the number of pending sales. We might actually meet our December 20o8 AND 2007 numbers.
Based upon our November sales we currently have 23.4 months of active listings which increased from 17 months in October and is 4 times the 6-month levels of a balanced housing market.
There was a wonderful article by Bernice Ross on 12/03/09 in Inman News which listed 5 factors that will impact 2010 home prices:
- “Markets aren’t just local, they’re “hyperlocal….To determine what will happen in your local market, you must consider the “hyperlocal” or “micro” market conditions.”
- “Months of inventory on the market are the best predictor of price changes…During the 30-plus years I have been in the business, I have found the amount of inventory in a given location and price range to be the best predictor of what prices will do several months from now.” Yes! As I have been saying every month, the real issue is how much inventory is on the market in our local Lake Norman market. Considering we are at about 4 times the levels of a balanced market, Lake Norman will still experience price reductions until these numbers improve.
- “Extension of the first-time buyer and addition of the resale buyer’s tax “
- “Demographics bode well for increased sales activity” She points out the timing for Generation Y and Baby Boomers as a plus for home sales.
- “The real issue: cost of ownership, not sales price…This is a huge wild card for a variety of reasons. If interest rates increase from 5 to 7 percent, or even from 5 to 6 percent, the impact on monthly payments would take would-be buyers off the market.”
- Bottom line: Watch for sales levels and the inventory in your local area. If sales are increasing and inventory is decreasing, look for stabilization of prices first and then, eventually, an increase in sales.”
I would add one more to this list: the potential tightening of underwriting standards by FHA and any other added challenges to our already very difficult home loan process.
Stay tuned for our December sales analysis, my year-end sales analysis and my 4th quarter sales analysis by price range which will come out in January!