Wow, a 33% increase in Lake Norman’s home sales in November, now that is impressive! In 5 of the past 6 months we have beaten the same months in 2015 and 4 of the 5 by double digits. Not only were November’s sales 33% higher than last November but they also were the highest November sales since 2005. The cherry on top is the number of new contracts where are also significantly higher than last year indicating that this momentum is going to continue throughout the next several months at least. Mercurial has been emphatically replaced by momentum as my favorite adjective to describe our current Lake Norman real estate market. Let’s take a closer look:
* All data is from the Carolina Multiple Listing Service.
Some significant additional statistics for you:
- “Waterfront homes continue to under perform and are trending downward despite Lake Norman’s overall high sales numbers. Waterfront properties represented only record low 23.8% of our November closed sales,. At the same time they currently comprise 42% of our active listings. The average sales price of a waterfront home in November was $804,082 which is slightly higher than last month’s $780,493 but well below August’s $1,040,070, July’s $912,446 and June’s $870,498. This drop indicates a continued softening of our overall luxury housing market and is linked closely to our waterfront market. At the same time, the average price per square foot came in at a whopping $252.94. This is up from last months $237.98 and the highest number I have noted since the recession. While the volume of waterfront home sales are down, their prices are actually trending up. It took on average 108 days for a waterfront home to sell and they sold for 96% of the listing price. We currently have only 55 waterfront homes under contract comprising 23.2% of our total homes under contract. Our waterfront homes’ months of inventory bumped back up to 11 from 9.5 last month. Waterfront home sales are very much in a buyer’s market. That said, this varies quite a bit by price range, location and quality of water. Don’t be complacent because when really nice waterfront properties hit the MLS as they are actually selling quickly.
- 22 new construction homes closed in November 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.) The average listing price vs sales price of new construction single family homes was 100%. There is still very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 91 new construction homes under contract in the MLS. The average sales price in Novemer logged in at $447,441. The months of supply of active listings based on November sales stands at 9.4 so overall new construction homes are technically in a buyer’s market but again this varies greatly by location and pricerange.
- Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented .07% of Lake Norman’s total home sales. With just 1 distressed closed sale for the entire month it is clear they didn’t play a role in November at all. Distressed active listings currently comprise 2.3% of Lake Norman’s current total inventory of single family homes for sales. Distressed sales continue to play an insignificant role in our Lake Norman real estate market.
- 50.8% of Lake Norman’s November single family home sales were under $400,000 which is slightly higher than last month’s.
- 62.7% of Lake Norman home sales in November were under $500,000, which is about equal to last month’s.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 237 is truly impressive for this time of year. We have 16.7% more properties under contract than at the same time in both 2015 and 2014. We are on pace to have an exceptional December and strong beginning of 2017.
A closer look at the chart:
- The number of Active Listings today in Lake Norman, is virtually identical to last year’s at this time. Our inventory plummeted to 778 from last month’s 841, September’s 909 and well below June’s 1033. After enjoying decent levels of inventory we are now seeing sharp declines which is the case in much of the US. Our absorption rate/months of supply of active listings remains at 6.3 which puts Lake Norman overall in a balanced market favoring neither buyers nor sellers. Keep in mind, however, within specific price ranges there are swings from a buyer’s market to a balanced to a seller’s market.
- Under Contract Show (conditional sales), are up 19% versus this time last year! The average price of our new contracts is about equal to last year’s and the days on market dropped 11%. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. While not always true this year, normally, these newer sales should represent future closed sales most likely in January/February.
- Pending/Under Contract No Show sales are were also up by an impressive 15% versus November 2015. These listings went under contract on average in only 53 days which is 46% faster than last year. This is a great example of our overall market. Good properties are selling very quickly! The average price is up 2% from 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. Given this relatively strong number I think we will see higher closed sales in December and beyond.
- Lake Norman’s closed November home sales in our MLS as of today and as stated above, were up an amazing 33 % compared to 2015! 126 closed sales in November is second only to November 2005. Our total sales for the first 11 months of 2016 are now 6.2% higher than 2015’s. Thanks to 5 of the past 6 months we are now well ahead of 2015 despite the first half of the year’s ups and downs. There is more good news in that the average sales price in November was up 10% versus last year and the average home took 83 days to sell which is 4% faster than last November’s. So, good properties are selling in less than 3 months. At the same time, despite low inventory, our active listings have been on the market 153 days. You will see this broken down below.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- December 6, 2016: 237
- November 6, 2016: 275
- October 6, 2016: 274
- September 6, 2016: 288
- August 6, 2016: 325
- July 6. 2016: 313
- June 6, 2016 344
- 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
Here is a breakdown by price-range of our November 2016 closed sales in Lake Norman
- $50,500 – $99,999: 0-
- $100,000 – $199,999: 17++
- $200,000 – $299,999: 10–
- $300,000 – $399,999: 37+
(These price ranges represented 50.8% of our November home sales compared to 47.7% last month)
- $400,000 – $499,999: 15-
- $500,000 – $599,999: 17+
(These price ranges represented 25.3% of our November sales compared to 25.8 last month)
- $600,000 – $699,999: 9
- $700,000 – $799,999: 10
- $800,000 – $899,999: 2
- 900,000 – $999,999: 4
(These price ranges represented 19.8% of November’s sales compared to last month’s 19.7%)
- $1,000,000 – $1,499,999: 3–
- $1,500,000 – $1,999,999: 0
- $2 million+ : 2++
(#Solds $1 million+ = 4% of November’s compared to 6.8% in October)
The stand out price ranges in November, were in our lowest price ranges especially the $100,000’s, $300,000’s and $500,000’s. It it important to note that we had 2 sales above 2 million as well. As in October, the strongest price ranges were all under $600,000.
Higher-end home sales in Lake Norman
After stepping up in August, our luxury housing market has consistently weakened. With only 5 (yikes!) sales above $1 million compared to last month’s 9, September’s 11, and August’s 19 they represented only 4% of our total sales. While the most notable decline was in the prices just over $1 million, the one bright spot was that we had 2 sales over $2 million. Our luxury market has struggled to recover since the recession and it is clear we are not out of the woods yet.
Lake Norman’s Waterfront Housing Market
As I wrote last month, there is no doubt that Lake Norman’s waterfront homes suffered greatly during the recession. With the disappearance of the foreclosures and short sales during our recovery, 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 have gone up despite rather tepid sales but have not fully recovered. Almost all of my waterfront buyers have had to increase their price range when they realize how much better the options are when they do so. But, I wonder if this is the reason waterfront home sales are still struggling. There may be many buyers who simply can’t increase their price range so have to turn to off-water options instead when they can’t find something desirable in their price range. It is also true that new listings with good water are selling more quickly than in the past while the rest are lanquishing. Good properties with good water are selling rather quickly but the rest are languishing. 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 55 waterfront properties under contract compared to 74 last month. Our months of supply based on November sales jumped back up to 11% putting Lake Norman waterfront homes over all very much in a buyer’s market. That said, the cream of the crop waterfront properties sell relatively quickly. With our current market 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. Remember, good water trumps a good house on bad 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 11 months now in the books, our 2016 home sales are 6.2% ABOVE last year’s. Looking forward, you can see that we are up against some relatively strong December numbers in both 2012 and 2014 but I think, based on our under contract numbers that we will end 2016 on a high note. There is a chance that we will even exceed 2006’s total annual home sales!
Summary and My Insight
Good signs/news remains almost the about the same as last month:
- Thanks to 4 out of 5 great months, Lake Norman has now logged in 92 more sales year-to-date than 2015 with only one more month to go in 2016.
- Our Under Contract/Pending numbers continue to be higher than previous years at the same time period indicating we are in for a strong close of 2016 and early 2017.
- 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 in a consistent way. 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. But, really nice homes in the higher price ranges are selling quickly as well. In July I listed a home in The Point for $775,000 and we had a full price offer within 24 hours of it hitting the MLS and we are already closed!
- Forbes ranks North Carolina second on best states for business list
- Bankers and economists indicated that the Charlotte are economy will ramp up in 2017. Wells Fargo is forecasting at 2.1% growth in GDP next year compared to 1.5 this year. “We will continue to see folks and businesses moving here,” according to Mark Vitner, senior economist at Wells Fargo
- Mortgage interest rates have shot up .5% in the past month and the Federal Reserve is expected to raise their rates this month. Rates are expected to continue to rise in 2017 which will have an impact on affordability particularly in the lower price ranges.
- Inventory levels are low and still dropping
- Lake Norman’s waterfront and luxury home sales continue to struggle.
- 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 and the number of homes for sale drops. 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!
- 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.
For the first time even the experts are unsure of the future of the US housing market due to the many unknowns with the incoming administration. Will the flat tax, long the single greatest issue fought by organized real estate groups, finally be a serious consideration? (Removal of mortgage tax deductions). With a potential increase in spending and inflation, how high will interest rates rise and how quickly? Will affordability become a greater issue for home buyers? What is the future of Freddie Mac and Fannie Mae if they are privatized? This list goes on and only time will tell.
Despite all of these potential challenges, I am still upbeat about our overall Lake Norman real estate market. Our momentum finally gained some consistency in the second half of 2016 which will carry forward into the first quarter of 2017. At the same time, I am very disappointed to see the decline in our trade-up and luxury home sales and our struggling waterfront sales which really go hand-in-hand.
Buyers in 2017 need to: be more flexible, be willing to do some work on their newly purchased home and do their own updating if possible, lock in interest rates as soon as you are ready to buy, and on be more flexible about locations based upon our limited inventory.
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 rising sharply along with prices rising it is not time to sit on the fence. 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 have also noticed a growing pace of price reductions. I think listing agents are getting sellers to lower prices more quickly now that the market is stronger in order to take advantage of this before interest rates go higher. Our market is ever evolving!
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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