Change seems 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 September, we actually appear to be struggling right now to keep our sales up for the rest of this fall/winter above last year’s. At 104 single-family home sales in September we logged in the best September since 2007 and we may even equal 2007 once the late comers input their sales into the MLS but will we sustain this trend?
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 September 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. Contingent Sales are now joined with Conditional sales in my reports.
Some significant additional statistics for you:
- “Distressed sales” (Foreclosures (REOS), defaults, Short Sales) comprised 15.4% of Lake Norman’s total home sales which is up from 9.4 last month, 11.3% in July, 6.9% in June, 10.6% in May , the 14% in April but down from 20.4% in March, 16.9% in February and January’s 29%. We only had 16 distressed home sales in September. The average price for distressed single family home sales jumped back up to $348,168 from last month’s low of $252,526. Distressed active listings comprise only 3.2% 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.
- 34.6 % of our closed sales were waterfront homes which is equal to the last few months. The average sales price of Lake Norman waterfront homes in September was $738,972 which is up slightly from last month;s $709,753 but well below July’s $874,988 June’s $990,693 and May’s $778,045. The average price per square foot was $211.11 dropping for the second month in a row after peaking at $229. This can be directly attributed to having only 6 waterfront home sales over $1 million for the second month in a row compared to 13 sales of waterfront homes over $1 million in both June and July.
- 8 new construction homes sold in September which was 3 less than last month’s. The average listing price vs sales price of new construction single family homes was 101%! Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 50 new construction homes under contract. The average sales price was up to $406,596 compared to last month’s $373,183. 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.
- 55% of Lake Norman’s September home sales were under $400,000 up from 50% last month.
- 66.3% of our August home sales were under $500,000 which is about equal to last month but significantly lower than last winter’s in 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 seen several months of weaker sales in our trade-up and luxury housing markets.
- Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 118 was the fifth month in a row of decline after April’s record high of 319 . At 207, we have fewer homes under contract than any other month in 2013 but 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 increased 14% compared to last September’s. Our absorption rate/months of supply of active listings today has edged up again in September to 9.6 after May’s post recession low of 5.9. For the first time in quite a while our Lake Norman market is now above our goal of a balanced 6-8 months of supply in the Lake Norman area (MLS area 13). Whereas in the entire Charlotte MLS there is only a 5.4 months of supply. Low inventory has played a significant role in our housing recovery so to see even slight increases like this is disconcerting. On the other hand, the average number of days an active listing has been on the market dropped 15%.
- Under Contract Show (conditional sales), increased for the 19th month in a row when compared to the same month of the prior year, but this time by only 2%. These are homes that just went under contract and still have financial and inspection conditions. They represent future closed sales most likely in late October/November. 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.
- Pending/Under Contract No Show sales were actually 6% LOWER than last September’s for the first time in months. These are the contracts that are past their inspections/ 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 relatively weak numbers, for the first time this year I am not confident that we will exceed 2012 sales numbers in the final 3 months of 2013.
- The number of closed home sales in Lake Norman in August as of today were actually pretty solid at 13% higher than 2012. And the average sales price increased 6% and the days on the market dropped 24%. So, yes, September numbers look good. But I am concerned about the future!
The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:
- October 6, 2013: 207 (lower than all of 2013 back to January!)
- 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:
- $50,020 – $199,999: 15
- $200,000 – $299,999: 26
- $300,000 – $399,999: 16
(These price ranges represented 54.8% of our September home sales.)
- $400,000 – $499,999: 12 –
- $500,000 – $599,999: 14+
(These price ranges represented 25%)
- $600,000 – $699,999: 10
- $700,000 – $799,999: 3- ( Compared to 5 last month and to 12 in July)
- $800,000 – $899,999: 2 – (Compared to 4 last month and 7 in July)
- 900,000 – $999,999: 0- (Compared to 3 last month)
(#Solds for $600,000 – $999,999 = 14.4% compared to 18.75% last month)
- $1,000,000 – $1,499,999: 2 (Compared to 4 last month and 8 in July)
- $1,500,000 – $1,999,999: 2
- $2 million+ : 2 (High sale was $3,290,000)
(Solds $1 million+ = 5.7% compared to 4.7% last month, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April)
The most improved price ranges in August were homes in the $500,000’s and the one sale over $3 Million
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, 2 in the $800,000’s and NONE in the $900,000’s.
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 9 months of 2013 exceeded 2012’s by 23.7% and were the best since 2007. In fact, year-to-date we are only 14% below the number of Lake Norman home sales in the first 9 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 strong numbers in September. Sales were up, prices were up and the number of days a property took to sell were down significantly.
- The average price rose 6% further supporting that prices have not only stabilized but are actually increasing in some areas. However, I can not yet say that our prices have increased across the board. Rather, 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.
- 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 significant;y 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 area homeowners who are “underwater” are now down to 17% compare to 23% a year ago. 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 8 new homes last month through the MLS, we have 50 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 shorts ales several years ago are now re-entering the market and are ready to buy.
- 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 4 bullet points out of our Good News section above. This is not a good sign!
- 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 rising. 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 perfect 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, 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 rising 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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