There were a lot of scary things going on in our Lake Norman area besides Halloween in October!
This past month was full of fear about the short and long term future of the U.S. real estate market. Fueled by the national foreclosure freeze by many of the major banks, pessimistic views about our national housing market were released by such pundits as Karl Chase of Case-Shiller who revised his more upbeat report from just weeks before to a more subdued one. Mark Zandi, chief economist at Moody’s Analytics, who just a month ago predicted that a housing recovery would be underway by the third quarter of 2011, recently reported that “he now thinks the foreclosure scandal could prolong the housing depression for at least another few years” according to a recent article in Inman News. The US Department of Housing and Urban Development released their October scorecard which concluded that the housing market was “still fragile” and that we have hit bottom in terms of sales but not prices. Finally, the National Association of Realtors revised downward their 2010 prediction in a report released on October 4th projecting a 6.4% drop in existing home sales for 2010
But, there was some good news too, especially related to the future of our Lake Norman and North Carolina economy:
- Forbes Magazine ranked North Carolina as the 3rd best state for business in America which is up from 5th just a year ago.
- Statistics from the Federal Bureau of Labor and Statistics show that North Carolina is the 3rd best state for declining unemployment and 4th in the nation for job creation according to a press release from Governor Perdue
- Site Selection Magazine named North Carolina the state with the TOP BUSINESS CLIMATE for 2010 touting our extensive higher-education resources, work-force training initiatives, moderate climate, transportation infrastructure and business-recruitment efforts according to an article in the Charlotte Business Journal on November 1.
So, exactly how did our Lake Norman housing market fare in October?
The total number of Lake Norman single family homes under contract (but not yet closed) on October 31st, 2010 increased a whopping 24% when compared to August and July’s numbers of 157 , and experienced a 15% increase from June’s 169 and were only 3% lower when compared to the 200 at at the end of May. While our closed sales dropped significantly in October, there are some clear signs that the next several months will be much stronger.
Let’s take a look at the details:
- Active Listings dropped 16% from a year ago. Based upon our October closed sales, we now have 20 months of inventory. Our goal of a truly balanced housing market of 6-8 months of supply is still out of reach. To achieve these numbers given our current inventory levels we will need to sell about 145 homes per month. Clearly we need to have a combination of increased sales and decreased levels of active listings in order to return to a balanced market. However, it is very good news that our inventory is continuing to shrink to record lows each month. Note that the average price of our active listings dropped 5% compared to October 2009. We continue to see a number of price reductions.
- Contingent Sales, which don’t account for a signifcant segment of our housing market, dropped 13%. Clearly, fewer sellers are willing to accept an offer contingent upon the sale of a buyer’s home due to the overall weak housing market.
- Conditional Sales increased 52 % this month when compared to September 2009 and were 11% above last month’s conditional sales. These are homes that just went under contract and still have financial and inspection conditions. They will represent closed sales in either late November or December and would seem to indicate that the sales in Lake Norman in the next month or two will be substantially higher than last year’s numbers and even our current month’s sales as well. This is the strongest trend we have seen for a long time!
- Our pending sales represented a 6% increase from a year ago and 27% higher than last month! These are the contracts that are past inspections and are just waiting to close. Pending sales are usually the best indication of closed sales in the next few weeks. These numbers would indicate that our closed sales this month will be significantly higher than both last month and November of 2009. Again, this is really good news for our Lake Norman real estate market’s short-term future!
- The number of closed sales dropped 30% compared to 2009 and down 25% from last month. Every month I do my sales analysis on or about the 5th of the month thus allowing time for agents to input their end of month sales into our MLS database. However, we can count on a few late additions so my guess is our closed sales for October 2010 will be about 60 but this is still a dramatic drop.
Here is a breakdown by price-range of our October 2010 closed sales in Lake Norman’s area 13- to 13-5:
- $42,000 – $199,999: 8 (Conditional, & Pending = 28)
- $200,000 – $299,999: 10 (Conditional & Pending = 37)
- $300,000 – $399,999: 17 ( Conditional & Pending = 30) (49%)
- $400,000 – $499,999: 4 ( Conditional & Pending = 19)
- $500,000 – $599,999: 5 ( Conditional & Pending = 20) (20%)
- $600,000 – $699,999: 4 ( Conditional & Pending = 15)
- $700,000 – $799,999: 2 ( Conditional & Pending = 8
- $800,000 – $899,999: 0 ( Conditional & Pending = 7)
- $900,000 – $999,999: 3 ( Conditional & Pending = 3) ($600,000 – $1mill = 17%)
- $1,000,000 – $1,999,999: 3 ( Conditional & Pending = 24 WOW!)
- $2 million+ : 1 ( Conditional & Pending = 4)($1million+ = 14%!)
- (Total conditional, contingent and pending = 194)
In October, 61% of our Lake Norman home sales were under $400,000 and 77% were under $600,000. But, Look at our properties currently under contract! Almost one third of our recent contracts are over $600,000 including 28 homes at $1 million+. This is a niche of our market that is showing life for the first time in several years. Waterfront homes make up the bulk of the higher-end home sales right now. As prices come down buyers are scooping up these properties realizing that they may not see these prices with such good quality of water again. It will be very interesting to see if this trend continues into the winter months.
6-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 2010 and the totals in the prior calendar year. The columns may not add up but I do my best with what I have to work! I also adjust past months when I do the monthly update as a few more sales are usually input late by agents.
I love this chart because it puts our Lake Norman home sales numbers in the context of the past 6 years. Four out of the past six years Lake Norman home sales in October dropped from September. This October was one of the lowest months’ sales in the past 6 years. However, after looking at our conditional, contingent and pending sales I do expect to see some relatively strong numbers in November and December. In my opinion, significant price reductions are inspiring buyers to jump off the fence. It will be a very interesting winter!
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