Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s October Market Report

As predicted, Lake Norman’s real estate numbers for October continued their downturn for a second month in a row. We logged in a total of 150 home sales, a 14% drop when compared to last October but a 13.6% increase over last month’s. So, while disappointing, not nearly as severe a decline as we experienced in September. And, this was the 4th best October in since 2005. Was Hurricane Florence a factor? No matter what factors have contributed to our weakening housing market, there is clearly a downward trend that will continue through the end of this year.  Our low pending sales and new contracts’ numbers compared to last year are both down which substantiates this trend. My numbers below should provide some insight.

Here are what I feel to be the biggest takeaways from last month’s Lake Norman real estate sales data:

  • Our Lake Norman home sales were down for the second consecutive month and our year-to-date sales are down -2.6% compared to 2017.
  • Our inventory of active listings remains historically low, (44 fewer than last year), as they have been all year, never reaching our normal summer highs.  It is hard to quantify but there is no doubt that the low inventory does have a negative impact on our Lake Norman’s home sales.
  • Our pending sales and our newest contracts (UCS) are down which indicates a continuation of this slowdown for the rest of 2018.
  • Waterfront homes moved back into a buyers’ market.
  • I want to share with you again this great interactive calculator for determining rent vs. own costs from the New York Times!

Let’s take a closer look:

Lake Norman Real Estate Sales Analysis

All data is from the Carolina Multiple Listing Service.

Some significant additional statistics for you:

  • Waterfront homes moved into a buyer’s market in October as the months of supply increased to 7.13 from 6.1 last month, 4.9 in August, 6.4 in July and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)
    • Waterfront sales in October represented 25.3% of Lake Norman’s total sales while comprising 34.6% of our active listings and 28% of our under contract listings.
    • The average price per square foot of our waterfront homes dropped back down to $248.70 from last month’s $256.64, August’s$248.18 and July’s $262.05.
    • It took on average only 84 days for a waterfront home to sell and they sold for 95% of their listing price.
    • The average price per square foot for our waterfront homes has still not returned to 2007’s peak of $283.16 and after getting close, we are now seeing another decline.
    • Vacation rental properties are in great demand which has led to more buyers purchasing waterfront homes for this purpose.
  • Only 27 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. The average listing price vs sales price of new construction single family homes was 99%. This suggests there may be some wiggle room with builders so give negotiating a try! (And, don’t forget to ask builders for all those great upgrades!) We currently have 97 new construction homes under contract in the MLS, down slightly from last month. The average sales price in October was $484,283.  The months of supply of active listings based on October’s sales dropped slightly to 6.48 so they remain in a balanced market slightly favoring buyers.
  •  There were 5 closed distressed sales (Foreclosures (REO’S), defaults, Short Sales) in all of Lake Norman in October which may not seem like a lot but this is the highest number of monthly distressed sales in several years..  We have only 2 under contract but 11 distressed active listings as of today. While these numbers still seem insignificant it is concerning that they have started to increase.  We will watch this trend closely going forward! 
  • 38.7% of Lake Norman’s October’s single family home sales were under $400,000.
  • 57.3% of Lake Norman home sales in October were under $500,000.
  • Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total today is 255.  This is not only below last year’s but for the first time all year they are below 2016’s as well. This would further support my conclusion that our overall Lake Norman real estate market is on a longer-term downturn.

A closer look at the chart:

  • The number of Active Listings as of today in Lake Norman is down 5% compared to last year’s at this time.  Although late to the party, this year we joined most areas of the nation who have been experiencing extremely low numbers of housing inventory for several years. Today we have only 784 single family homes for sale in all of Lake Norman. Our absorption rate/months of supply of active listings is 5.2, down from last month’s 5.9 but well above our record low this year of 3.34. This means that Lake Norman as a whole is leaning more in favor of sellers. Keep in mind, however, within specific price ranges there are dramatic swings from a buyer’s market to a balanced to a seller’s market.  The average sales price of active listings is down 5% and the days on market is down 15%.  (So homes for sale have been on the market fewer days than last year).
  • Under Contract Show (conditional) sales are down 11% from this time last year’s.  The average price of our new contracts is down 3% and the days on market is down 9%. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent weaker future closed sales in December/January.
  • Pending/Under Contract No Show sales are down 6% compared to last year’s.  The average price of our pending sales is up 14% and these listings/sellers successfully negotiated a purchase contract 1% faster than 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 this month or early December.
  • Lake Norman’s closed October home sales in our MLS as of today and as stated above, were 14% below last October’s but the 4th highest October since 2005. (See chart below). The average price of our homes sold was down 4% and it took on average 15 fewer days to sell a home in October 2018 vs 2017.  Interesting! Our volume of sales are down, the average price is down however homes that are selling are doing so 18% faster than last year.

The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:

  • November 8, 2018: 255
  • October 8 2018: 281
  • September 8, 2018: 310
  • August 8, 2018: 347
  • July 8, 2018: 345
  • June 8, 2018: 406
  • May 8, 2018: 389
  • April 8, 2018: 334
  • March 8, 2018: 280
  • February 8, 2018: 244
  • January 8, 2018: 206
  • December 8, 2017: 264
  • November 6, 2017: 282
  • October 6, 2017: 301
  • September 6, 2017: 346
  • August 6, 2017: 364
  • July 6 2017: 350
  • June 6, 2017: 370
  • May 6, 2017: 391
  • April 6, 2017: 351
  • March 6, 2017: 295
  • February 6, 2017: 227
  • January 6, 2017: 183
  • December 6, 2016: 237
  • November 6, 2016: 275

Here is a breakdown by price-range of our October 2018 closed sales in all of Lake Norman

  • $1,000 – $99,999: 1
  • $100,000 – $199,999: 12+
  • $200,000 – $299,999: 18–
  • $300,000 – $399,999: 27+

        (These price ranges represented 38.7% of our October home sales)

  • $400,000 – $499,999:  28++
  • $500,000 – $599,999: 23++

       (These price ranges represented 34% of our October sales vs 21.9% last month!)

  • $600,000 – $699,999: 13+
  • $700,000 – $799,999: 8-
  • $800,000 – $899,999: 7
  • 900,000 – $999,999: 3

       (These price ranges represented of 20.7% of our October sales, 25% in September, 21.1% in August sales,  23.6% in July, 19.1% in June, 19.9% in May, 21.1% in April,12.7% in March, 14.3% in February, 20.4% in January, 14,5% in December’s, November’s 22.1% and last October’s 13.2%.)

  • $1,000,000 – $1,499,999: 6-
  • $1,500,000 – $1,999,999: 2-
  • $2 million+ : 2=

       (#Solds $1 million+ = 6.7% of our October sales,  12.3% in September, 10.8% in August, 6.2% in July, 8.1% in June, 9% in May, 11.2% in April, 7.4% in March, 8.9% in February, 7.1% in January, 6% in December 2017, 7.86% in November, and 7.8 % last October.)

In my opinion, this price range breakdown is one of the most important resources in my market reports because it goes deeper to define our specific strengths and weaknesses each month. In October our standout price ranges were the $100,000’s, $300,000’s,  $400,000’s, $500,000’s, and $600,000’s. It is interesting and unusual to see the strengths in a grouping like this. Almost two thirds of all of Lake Norman’s home sales were in this $300,000 – $699,999 price range. The most significant drop in sales were the $200,000’s, the $700,000’s and the $1 million – $2 million. As I have said so many times, with our Lake Norman real estate market you really need to know specifics about your price niche because there is such disparity within price range sales trends.

Higher-end home sales in Lake Norman

After last month’s strong showing in our trade-up and luxury homes sales, October almost reversed these numbers in favor of our lower/middle price ranges under $700,000. Both our trade-up and luxury home sales fell far short of September’s numbers. If you look at my comparison of % sales by month you can see that our $1 million+ luxury homes percentage of this past month’s total sales, at 6.7%, was the third weakest month in the past year. Of the 10 luxury sales, 4 were in Cornelius, 4 in Mooresville, and 1 each in Sherrills Ford and Troutman.

Lake Norman’s Waterfront Homes

As I wrote above, Waterfront homes moved into a buyer’s market in October as the months of supply increased to 7.13 from 6.1 last month, 4.9 in August, 6.4 in July and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)

  • Waterfront sales in October represented 25.3% of Lake Norman’s total sales while comprising 34.6% of our active listings and 28% of our under contract listings.
  • The average price per square foot of our waterfront homes dropped back down to 248.70 from last month’s $256.64, August’s$248.18 and July’s $262.05.
  • It took on average only 84 days for a waterfront home to sell and they sold for 95% of their listing price.
  • The average price per square foot for our waterfront homes has still not returned to 2007’s peak of $283.16 and we are now actually seeing a decline.
  • Vacation rental properties are in great demand which has led to more buyers purchasing waterfront homes for this purpose.

Annual Sales by Month

Lake Norman Annual Home Sales by month and year

* Please note that all of my numbers are for single family homes in what used to be referred to as “Area 13 – Lake Norman. 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. ***Our MLS just merged with two other’s so all of the total sales numbers have changed slightly.  I did update the entire 2017 year so that this year’s numbers will be comparing apples to apples. However, I am not going to go back to prior years and adjust.

What a fascinating look above at our highs and lows, especially now that we are 10 months in to 2018.  Thanks to our drop in sales in September and October, our year-to-date total sales of 1690 is now 2.6% LOWER than the first 10 months of 2017 but because of our strong prior months it is still the third highest 10-month period since 2005. It is important to remember that 2017 was a record breaking year for Lake Norman’s housing market so being close to it’s numbers this late in the year is certainly respectable. That said, our new downward trend does not bode well for our late fall and winter housing market. As you can see, we are up against some strong 2017 numbers for the rest of the year and our lower numbers of new contracts today indicate the last two months of 2018 will be a struggle.

Summary and My Insight

Good signs/news for 2018:

  • People are still moving to Lake Norman from all over the country to escape high taxes and cost of living, extreme weather, and myriad other reasons in order to enjoy our beautiful area, mild 4 seasons, vibrant communities and better quality of life.
  • The number of distressed homes for sale are still extremely low despite a slight uptick this month. Therefore, they still don’t play any perceptible role in our Lake Norman housing market.
  • Sellers are in the driver’s seat in some price ranges and are seeing increased equity and even profits. I can’t emphasize enough the importance of upgrading and staging to sell more quickly and in most cases for more money. Design trends have changed since the early 2000’s.  More buyers want white kitchens with big islands that open to their great rooms, hardwood floors (darker stains), remodeled bathrooms with spa showers and grey paint colors. The days of tan walls and dark wood cabinets are somewhat behind us.
  • Multiple offers are still possible in nearly all price ranges and even in our waterfront properties if a property is particularly special.
  • New listings in the lower price ranges that are in great condition and in desirable locations are selling with multiple offers within days of hitting the MLS.
  • Move-in condition, updated listings in the trade-up price ranges and homes on exceptional waterfront lots are also selling quickly.  (Note our days on market numbers in the top chart.)
  • New construction feels like it is everywhere. 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. Note that lumber prices are sky high which is causing construction costs to go up as well.
  • Fannie Mae & Freddie Mac increased their Conventional Loan Limit to $453,100.

Challenges/Weaknesses for 2018:

  • With 10 months in the books we are now 2.6% below 2017’s exceptional numbers and the next few months look to be a struggle.
  • Record-breaking low inventory of active listings continues to provide a headwind for our Lake Norman housing market.
  • Interest rates keep going up. “Rising interest rates are now clearly taking their toll on potential homebuyers. Total mortgage application volume fell 4 percent last week from a week earlier and plunged 16 percent from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.”according to an article yesterday written by CNBC. Today the average mortgage conforming loan rate is 5.15%.
  • 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 except in lower price ranges where there simply isn’t enough inventory.  Much of our housing inventory is becoming more and more dated so it will be incumbent upon sellers to do more significant updating and staging to compete with new homes.  Of course, the alternative is to drop their sales price but most buyers are not willing to buy a home here that needs a lot of work.
  • Finding the perfect home can be challenging. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are still 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.   See my price range analysis for the 3rd quarter of 2018.   
  • Many economists feel that the US housing market will continue to experience a slowdown primarily due to low inventory, rising prices, increased mortgage rates, and challenges with new construction due to increased costs of lumber and shortage of qualified labor. Lake Norman was a few years behind but is now experiencing extremely low inventories of homes for sale so it is hard to know if we might take longer to slow down.

Final thoughts: 

As I wrote the past five months:

My family moved to Lake Norman from California in 2005 seeking a better quality of life and a lower cost of living.  I have watched our area grow immensely over the past 13 years. There is no doubt that Lake Norman is still a very appealing destination for folks from all over the country. We now can compete with many trendy cities throughout the country with our amazing number of new restaurants, breweries, entertainment and job growth.  But, with this growth has come increased traffic which is now just a fact of life on I-77. With the passing of time, our pre-recession “new” homes are now a bit dated and will be needing new HVAC sysems, water heaters and roofs. With a complete halt to new construction during the recession years we are now lacking the number and type of homes that appeal to many of today’s buyers.  For this reason new construction and remodeled homes are selling more quickly than ever.  It is more of a challenge for our “dated” homes and subdivisions where open floor plans are rare and kitchens and bathrooms are in less appealing woods and materials.  The result has been the need for sellers to do updating before listing and buyers, especially waterfront, need to be more willing to do remodeling after they purchase IF they found a home on a great waterfront lot or in a great location. Today, the bottom line comes down to price, location, condition, updates and proximity to desired amenities.

Buyers today need to know their price range’s.  Are they in a buyer’s or seller’s market? If you are in a seller’s market, be prepared to act fast when a new listing that has been updated comes on the market. Or, if you want a more affordable option in any price range, be prepared to be more flexible.  This means a willingness to do your own updating if you can’t afford an updated home, and, if possible, be more flexible about locations based upon our limited inventory.  At the same time, if you really love the home, be aggressive  with your offer! Come in high and with very clean terms. My Mantra as always: Don’t focus just on the price but also 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!  

Sellers, while our lack of inventory may favor you, you still have work to do!  Watch a lot of HGTV and, if possible, be prepared to do painting, new flooring, painting kitchen cabinets white when feasible and staging to attract buyers. Your efforts will pay off with quicker selling times and higher sales prices.  I listed and sold another home with multiple offers which can be completely attributed to the renovations and staging.  How do I know this?  The seller had it listed last year in it’s dated condition with no staging and it sat on the market.  We sold it after updating and staging for about $20,000 above where they were before! Also, remember that buyers can be reluctant to buy a home knowing they will need to replace a roof, the AC and heating etc. in the first few years they are living there so, if possible, put on that new roof, replace the HVAC units while you are updating.  ALWAYS offer home warranty plans to buyers!

OTHER ARTICLES of INTEREST

Lake Norman Relocation Resources

10 Things Lake Norman Waterfront Home Buyers Should Know

Standard

Your comments...