So a month ago I wrote: “October is really going to be ugly“. Unfortunately, it was. Sales were down 36% compared to October 2014 and 28.7% from last month. Because we had exceptionally strong home sales in October 2014, October 2015 looks REALLY bad however we actually logged in some respectable numbers when you look at Lake Norman’s October sales historically. (See annual sales chart below) . Our inventory of active listings is insanely low (10% below last year’s) which will also serve as another challenge to the rest of 2015 sales. If there is a silver lining it is that after October, our sales in 2014 dropped significantly so there is a chance we can pull out ahead of last year again in November and December. And, our year-to-date 2015 closed single family home sales are still 9% higher than 2014’s. After 9 straight months of increases over 2014, October broke our winning streak. However, things just may pick up based upon the numbers below. 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 only 5.6% of Lake Norman’s total October home sales. We had just 6 distressed sales with an average price of $264,292 (The highest closed sale price was $519,750 so clearly these sales were in our lowest price ranges). Distressed active listings currently comprise only 2.3% of our total inventory of Lake Norman homes for sale. Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market and this is very good news!
- Waterfront homes represented 34.6% of our October home sales while they comprise 37.6% of our active listings. The average sales price of a waterfront home in October was $816,282 compared to $882,512 in September and $775,058 in August. And, the average price per square foot was $234.19. It took on average 125 days for a waterfront home to sell and they sold for 95% of the listing price. We currently have 59 waterfront homes under contract. Our waterfront homes’ months of inventory at 8.6 puts them slightly in a buyers market but this varies considerably by price range.
- 17 new construction homes closed in October 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 98%. Clearly there isn’t a lot of wiggle room on prices of new homes! We currently have 71 new construction homes under contract in the MLS. The average sales price in October logged in at $350,987. The months of supply of 10.9 puts this group back in a buyer’s market. Too many spec homes going up? Definitely something to watch but Lake Norman really needs the inventory of new homes!
- 50.5% of Lake Norman’s October single family home sales were under $400,000.
- 62.6% of Lake Norman home sales in October were under $500,000.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 222 is the reason I feel optimistic about the last 2 months of 2015. Last year on this date we had 221 under contract and in 2013 we had 207 so we are actually a tiny bit better off than prior early Novembers. I am relieved to see that perhaps October was just a one month blip on the screen and now we are back on track. We may not exceed the last 2 months of 2014 but I feel we will at least match them.
A closer look at the chart:
- The number of Active Listings today in Lake Norman is a substantial 10% lower than last year’s. Our absorption rate/months of supply of active listings rose to 7.9 which puts Lake Norman back in to an overall buyers market for the first time in months. Within specific price ranges, however, there are swings from a buyer’s market to balanced to a seller’s market. Lake Norman is not alone as throughout the country economists have noted the low inventory of active listings and how this is impacting sales volumes.
- Under Contract Show (conditional sales), are UP 12% versus this time last year.These 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 late November/December. This number would indicate that while our November sales may be iffy by December we should be logging in some seasonally solid numbers again. So far in 2015 our Lake Norman’s housing market has performed at it’s most consistently strong pace since the recession despite the lack of a good number of fresh new listings with the exception of October. It would be great to see us bounce back quickly!
- Pending/Under Contract No Show sales are down but only 16% compared to a whopping 34% last month. These listings went under contract on average in only 66 days. Pending sales are the 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. We may not match last November’s home sales because of this low number but December is looking good. If you look at the Days on Markt (DOM) of 66 days compared to active listings at 144 it is clear that good properties that are priced right are selling significantly faster than the rest of the market. Buyers are jumping when good properties come on the market!
- Lake Norman’s closed October home sales in our MLS as of today and as stated above, were a staggering 36% below than last year’s. (Don’t forget that this number will go down a bit as slower agents log in their sales.) We see some positive signs in that these closed sales’ as the average sales price was up 4% and they closed 2% faster than last year’s.
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- 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
- May 6, 2014: 274
- April 6, 2014: 243
- March 6, 2014: 187
- February 6, 2014: 185
- January 6, 2014: 155
- December 6, 2013: 197
- November 6, 2013: 207
Here is a breakdown by price-range of our October 2015 closed sales in Lake Norman
- $15,000 – $99,999: 4+
- $100,000 – $199,999: 7
- $200,000 – $299,999: 22
- $300,000 – $399,999 21
(These price ranges represented 50.5% of our October home sales which is up from last month’s 45.5%.)
- $400,000 – $499,999: 13 –(half of last month’s)
- $500,000 – $599,999: 11
(These price ranges represented 22.4% which is slightly lower than last month’s 27.2% )
- $600,000 – $699,999: 6
- $700,000 – $799,999: 4 — (half of last month’s)
- $800,000 – $899,999: 5++
- 900,000 – $999,999: 6++ (twice as many as last month’s)
(These price ranges represented 19.8% which is equal to last month’s)
- $1,000,000 – $1,499,999: 6+
- $1,500,000 – $1,999,999: 2
- $2 million+ : 0–
(#Solds $1 million+ = 7.4% compared to last month’s 7.6%)
The stand out price ranges in October in all of Lake Norman were the $800,000, $900,000’s, and $1,000,000 – $1,499,999. The very lowest price ranges also did well but there wasn’t one price range that stood out.
Higher-end home sales in Lake Norman
Given the drop in overall sales, I am really quite impressed with our higher-end sales. Sales over $800,000 but under $2 million did quite well relatively speaking. As I wrote last month, in reality the bulk of Lake Norman’s slowdown has been in the lower price ranges while our higher price ranges are holding steady. Another piece of the silver lining to hang on to this month!
Lake Norman’s Waterfront Housing Market
As goes our trade-up and luxury market so goes our waterfront housing market for the most part. These past 2 months were definitely an improvement over August. As of today we have 59 waterfront properties under contract and our months of supply based on the October sales is 8.6. This isn’t that far off of a balanced market and keep in mind that the inventory over $2 million weighs on this number. I have been showing waterfronts in all price ranges and I am noticing quite a bit of activity especially on new listings. While the inventory looks a bit high by the numbers, the selection of good waterfront homes in more affordable price ranges is quite limited. I have several recent sales where my buyers ended up deciding to build because they couldn’t find a home they liked. What will happen once the good lots/teardowns are gone? My guess is we will see more renovations of dated homes on good waterfront lots. 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.
11-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 chart of our sales by month since 2005 as it really gives us a good sense of where we are today and where we have been over the past 11 years. With 10 months now under our belts in 2015 our sales have exceeded all post recession years and are 9% higher than 2014 AND 5.4% higher than the 2007 numbers. We are still out performing 2014 and I predict we will end 2015 with higher closed sales than 2014 and all years prior including 2006. October’s low sales served as a reminder that we can’t take our growing housing market for granted and we can’t rest on our laurels!
Summary and My Insight
Good signs/news remains the same as last month:
- Lake Norman’s inventory of active listings remains low which puts pressure on demand.
- Not only is our drought is over but today’s water levels of 98.8 puts us 2 feet above the target levels set by Duke Energy and almost up to full pond!
- 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.
- Waterfront tear-downs and lots are selling. More buyers are willing to build or do major renovations if they can get “good” waterfront lots.
- New listings that are in good condition and in desirable locations are selling within days of hitting the MLS.
- Interest rates remain under 4% which was unexpected for this late into 2015
- I have personally experienced a marked increase in the number of calls from buyers from out-of-state planning to move to Lake Norman since the early January.Because sales and prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move now than in the past 5 years.
- Economists are looking at the Feds to potentially raise rates in December which would lead to higher mortgage interest rates.
- Lake Norman’s low inventory is comprised of a lot of stale inventory. Good fresh new listings are selling quickly so our low inventory is even worse when you consider the number of listings that have been sitting due to price or condition or age.
- While improving, our waterfront and luxury price ranges are still very much in a buyer’s market.
- Our “trade-up” market is better but erratic.
- Lake Norman home prices are increasing in a rather inconsistent pattern and in different locations and price ranges. At the same time, according to economists, home prices in the entire US are expected to rise about 5%.
- 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.
- While easing a bit, strict loan standards are still making it more difficult of buyers to qualify despite some easing and modifications.
- Finding the perfect home has become more difficult because much of the older inventory has been picked over. 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. 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.
NEW: If you are looking in a “HOT” neighborhood and price range be prepared to make an offer quickly. No matter what, have your pre-approval letter in hand before even looking at homes. This is particularly important due to the new TRID closing process that took effect Oct. 2nd. I had my first TRID closing this past week and the lender and the closing attorney were very stressed by all of the new forms and procedures. The new mandatory waiting periods during the loan process mean your lender has to be ready to go the minute you sign a contract on a property. I can’t emphasize this enough! Ask your lender and Realtor if they have experienced and are prepared to close using all of the new forms and deadlines. Then get your lender everything they need as soon as possible!
Officially we are now in Lake Norman’s slowest season for home sales. However, if you look at the green and yellow chart above you will see that historically we can also see some solid sales numbers in the 4th quarter. With improvement in our new “under contract” numbers it looks like we will end the year on a positive note. Despite what you might think, the holidays are actually a great time to buy. While casual sellers might take their homes off the market for the holidays, serious sellers will not. And, serous buyers will be looking all through the holidays. I already have buyers coming to town the day after Christmas! With bargains gone and sales up now is the time to act VERY quickly when you find a home that suits you. I have out-of-state buyers who have their “favorites” list planned for their visits only to see a good number of them going under contract before they have a chance to see them.
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 low but rising it is still a great time to buy. With less than 3% 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.
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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