Change continues to be in the air in our Lake Norman real estate market. Lake Norman’s closed home sales have maintained historically strong numbers (post the recession) each month in 2013 but they are continuing their softening trend since our record setting high in May. While we still logged in some solid closed home sales numbers in October, we actually appear to be struggling right now to be able to keep our sales up above last year’s for the rest of this fall/winter. At 97 single-family home sales in October we logged in the best October since 2006 but our gains of +5% compared to last October were the smallest monthly gains posted in 2013.
Let’s take a closer look at the numbers to glean some insight into the short term future and exactly where the Lake Norman housing market stands right now.
Here are the October 2013 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area 13 real estate market:
* Note that the Charlotte Regional Multiple Listing Service created two new categories, Under Contract Showings (UCS) to continue and Under Contract no showings (UCNS). These replaced the Contingent, Conditional and Pending categories.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) comprised 11.3% of Lake Norman’s total home sales which is down from 15% last month. Prior months were: 9.4% in August, 11.3% in July, 6.9% in June, 10.6% in May , the 14% in April, 20.4% in March, 16.9% in February and January’s 29%. We only had 11 distressed home sales in October. The average price for distressed single family home sales was $337,972 compared to an earlier low of $252,526. Distressed active listings comprise only 3.1% of our total inventory of Lake Norman homes sale! According to a recent article on Realtor.org in the US foreclosures and short sales represented 12% of August sales.
- 26.8 % of our closed sales were waterfront homes which is well below last month’s 34.6%. The average sales price of Lake Norman waterfront homes in October was $662,850 also well below not only September’s $738,972 but also August’s $709,753, July’s $874,988 June’s $990,693 and May’s $778,045. What is really interesting to note is that the average price per square foot actually increased slightly from $211.11 last month to $215.43 after peaking at $229. Our waterfront home sales have dropped significantly over the past months above $700,000 but the homes that are selling in the lower price ranges are getting relatively strong offers based upon their size.
- 16 new construction homes sold in October which was twice the number last month. The average listing price vs sales price of new construction single family homes remains 101%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 46 new construction homes under contract. The average sales price in October was down, logging in at $359,018 compared to last month’s $406,596. It is important to note that many of the new construction homes you will see driving around the lake are custom homes so will not be included in our Multiple Listing Service numbers.
- 62.8% of Lake Norman’s October home sales were under $400,000 up from 55% last month.
- A whopping 75.25 % of the entire Lake Norman home sales in October were under $500,000 which is up from 66.3% last month and more in line with February’s 81.7%, 81% in January, 74 % in December, 75% in November. After seeing an upswing in both the trade-up price ranges and our Lake Norman luxury homes earlier in the summer, we have now had several pretty weak months of sales in our trade-up and luxury housing markets.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 207 was the sixth month in a row of decline after April’s record high of 319 . At 207, we match last month’s so it appears we may have stopped the bleeding but there are still fewer homes under contract than any other month in 2013 except January. It is not only clear that our Lake Norman housing market has definitely slowed down but now we appear to be struggling to keep pace with 2012.
A closer look at the chart:
- The number of Active Listings in Lake Norman is still 12% higher than last October but they did decline significantly this month which is good news. Our absorption rate/months of supply of active listings today is equal to last month’s 9.6 but well above May’s post recession low of 5.9. For the second month in a row our Lake Norman market is above the nationally defined goal of a balanced 6-8 months of supply. Whereas in the entire Charlotte MLS there is only a 5.4 month supply. Low inventory has played a significant role in Lake Norman’s housing recovery as it has nationally so we need to get our months of supply back down. However, on a positive note, the average number of days an active listing has been on the market dropped again, this time by 17%.
- Under Contract Show (conditional sales), increased for the 20th month in a row when compared to the same month of the prior year, but this time by only 1 property! These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late November/December. Based upon these numbers I expect us to maintain slightly higher sales or at least match 2012’s but I don’t think we will see the double-digit increases we have experienced in late spring and early summer again in remainder of 2013.
- Pending/Under Contract No Show sales were LOWER than last October’s making this the second month in a row of decline. These are the contracts that are past their inspection/ due diligent period and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon these and the Under Contract Show’s relatively weak numbers, for the first time this year I am not confident that we will exceed 2012 sales numbers in the final 2 months of 2013.
- The number of closed home sales in Lake Norman in October as of today beat last year’s but only by 5% compared to double-digit increases in most of 2013. And the average sales price fell by 13% but the average days the homes were on the market dropped 16% which is good news. So, yes, October’s numbers have some positive’s but they are honestly a mixed bag which definitely reflect some weaknesses and areas of concern!
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- November 6, 2013: 207
- October 6, 2013: 207
- September 6, 2013: 218
- August 6, 2013: 264
- July 6, 2013: 271
- June 6, 2013: 293
- May 6, 2013: 316
- April 2, 2013: 290
- March 5, 2013: 255
- February 7, 2013: 219
- January 6, 2013: 184
- December 6, 2012: 197
- November 7, 2012: 214
- October 8, 2012: 218
- September 6, 2012: 206
- August 6, 2012: 228
- July 6, 2012: 234
- June 6, 2012: 235
- May 7, 2012: 246
- April 1, 2012: 227
- March 1, 2012: 178
- February 1, 2012: 155
- January 1: 134 (the lowest ALL year)
Here is a breakdown by price-range of our August 2013 closed sales in Lake Norman’s area 13-1 to 13-5:
- $48,700 – $199,999: 17+
- $200,000 – $299,999: 18-
- $300,000 – $399,999: 26++ (vs 16 last month)
(These price ranges represented 62.9% of our October home sales.)
- $400,000 – $499,999: 12
- $500,000 – $599,999: 9- (14 last month)
(These price ranges represented 21.6%)
- $600,000 – $699,999: 5- (10 last month)
- $700,000 – $799,999: 3 ( Compared to 3 last month, 5 in August and 12 in July)
- $800,000 – $899,999: 4+ (Compared to 2 last month, 4 in August and 7 in July)
- 900,000 – $999,999: 0- (Compared to 0 last month and 3 in August)
(These price ranges represented 12.3% of our October home sales compared to 14.4% last month and 18.75% in August)
- $1,000,000 – $1,499,999: 1 (Compared to 2 last month, 4 in August and 8 in July)
- $1,500,000 – $1,999,999: 1
- $2 million+ : 1 (High sale was $2,000,000)
(#Solds $1 million+ = 3.1% compared to 5.7% last month, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April)
The most improved price ranges in October were homes priced up to $199,000 and in the $300,000’s. While not stellar, the $800,000’s were up as well.
Higher-end home sales in Lake Norman
Wow, what happened to our trade-up and luxury housing market? After two really strong months in June and July we have lost ground not just in the $1 million+ homes but also the $700,000 – $999,999. Yikes! Only 3 sales in the $700,000?s, 4 in the $800,000’s and NONE in the $900,000’s. On top of that we only closed 3 homes priced over $1 million in all of Lake Norman.
We currently have 357 waterfront homes actively listed for sale. With 26 closed sales in October that means Lake Norman has a 13.7 month inventory of homes for sale which is quite a bit higher than the overall 9.6 and well above a balanced housing market. I am honestly baffled by the slowdown in waterfront and higher priced homes in Lake Norman but there is no doubt that it has been weak for several months. We currently have 63 waterfront homes under contract 14 of which are listed above $1 million so we may see improvement in the next few months.
9-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 Charlotte Region 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.
As you can see in our Lake Norman sales by month and year chart above, Lake Norman’s home sales for the first 10 months of 2013 exceeded 2012’s by 22.4% and were the best since 2007. In fact, year-to-date we are only 11% below the number of Lake Norman home sales in the first 10 months of 2007. There is no doubt 2013 has been a great year so far.
Summary and My Insight
- Our Lake Norman real estate market logged some relatively strong numbers in October. Sales were up and the number of days a property took to sell were down significantly.
- Our inventory of active listings is finally dropping
- I have recently been working with a number of home buyers looking off water in the $250,000 – $500,000 price ranges. We are finding that most of the existing inventory of homes have some negatives that are making them less desirable so when a new listing comes on in a popular subdivision with a good lot, good floorplan and tasteful upgrades they are selling in just a few days. These buyers are literally having to watch the new listings every day and get out to see them ASAP. I have found that there is a better selection of homes in these price ranges in Huntersville than in Cornelius and Mooresville where homes are a bit more expensive because they are closer to or in waterfront communities.
- Lake Norman homes are selling significantly quicker (see the Days on Market above) and at higher list-to-sale percentages.
- The number of distressed homes for sale are so low they are almost irrelevant in 2013 and the numbers are still dropping. According to a recent Charlotte Observer article Charlotte foreclosure activity dropped 46% in September which is better than the national rate. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.
- New construction is definitely back. While we only sold 16 new homes last month through the MLS, we have 46 under contract and this doesn’t include custom homes and homes to be built in subdivisions. New housing communities are popping up now as well as custom and smaller groups of spec homes. As I noted above, new construction homes are selling on average for 101% of the listing price! (Interesting note: Builders are more likely to build homes in existing subdivisions at slightly LOWER prices than the existing homes to ensure quick sales).
- Interest rates are dropping again thanks to the Federal Reserve’s announcement related to buying bonds.
- Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.
- Homeowners who went through short sales several years ago are now re-entering the market.
- Economists at UNC Charlotte say that they expect North Carolina to have a strong 2014 in terms of both housing and jobs.
- Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.
- I just took another bullet point out of our Good News section above after removing 4 last month. This is not a good sign!
- The average price of a closed home sale in Lake Norman in October was actually 13% LOWER than last October’s. In my opinion, this is not only a reflection of what price points are selling but also the abrupt slowdown of our higher priced homes. Overall, prices have stabilized but there are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market.
- At certain price points, especially the lower ones, our existing inventory contains the leftovers that have issues/weaknesses.
- Our inventory of active listings in Lake Norman is too high despite the recent drop. This coupled with decreasing sales has led to an absorption rate of 9.6 months which puts us back in a buyers market. At the same time our entire Charlotte MLS has 5.4 months of supply and the national average is 4.9 months of supply.
- Our trade-up and luxury housing niches seem to have all but disappeared after having a few good months.
- Our rock bottom prices are gone due to the disappearance of distressed sales and high levels of inventory. Gone are the great waterfront homes I sold in the $600,000’s and even $700,000’s in 2010/11 and the great waterfront teardowns in the $300,000’s I sold in the last year or two. Good, newer move-in condition homes with good, deep water are really hard to find under $1,000,000 on the east side of Lake Norman. Denver, Sherrills Ford as well as Troutman and Statesville have not caught up to the strong sales of Mooresville, Cornelius and Huntersville (off water).
- Finding the perfect home has become more difficult, particularly under $600,000, because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.
- On the flip side, higher-end properties are simply taking much longer to sell.
- I also have concerns for Lake Norman home buyers. 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 picked over inventory or you might not.
My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floorplan is good, perhaps having to do some painting, new flooring etc. is your best option. 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 low but rising it is a great time to buy. With less than 3% of Lake Norman’s current listings being “distressed sales” don’t expect a “bargain” to come along at an unrealistic price. Low-balling, except on distressed properties, really isn’t a great strategy nor will it result in a lower price.
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 resale, really isn’t a bargain at all. Be smart!
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