Lake Norman Real Estate Market Reports

Lake Norman Real Estate’s September Market Report

Lake Norman’s real estate numbers for September took a rather dramatic downturn. We logged in a total of 132 home sales (100 less than last month!), a whopping 35% drop when compared to last September and a 43% drop from last month’s. And, this was the worst September since 2013. Yikes!  Was Hurricane Florence a factor? After four very strong months our Lake Norman housing market’s September numbers are honestly a bit frightening.  Our low pending sales numbers from last month did indicate a slowdown but not to this degree. The million dollar question is where we are headed for the rest of 2018?  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:

  • September’s single family home sales were 35% below last September’s and 43% below last month’s which brought our annual year-to-date sales to -1.5% compared to 2017.
  • Our inventory of active listings remains alarmingly low numbers (a whopping 88 fewer than last year!) after never reaching our normal summer highs and yet we are still recording high sales.  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 jumped back up however our newest contracts (UCS) are down which indicates a continuation of this slowdown for the rest of 2018.
  • Waterfront homes moved back into a balanced 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 Report September 2018

All data is from the Carolina Multiple Listing Service.

Some significant additional statistics for you:

  • Waterfront homes moved back into a balanced market in September as the months of supply increased to 6.17 from 4.9 last month, 6.4 in July and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)
    • Waterfront sales in August represented 25% of Lake Norman’s total sales while comprising 36.6% of our active listings and 31% of our under contract listings.
    • The average price per square foot of our waterfront homes increased slightly to $256.64 from $248.18 last month but down from July’s $262.05.
    • It took on average only 70 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.  So while we have experienced improved activity, our prices are still under their pre-recession highs.
    • There are definitely HOT waterfront properties.  I sold one in May for over asking that had 5 offers in the first week.
    • Vacation rental properties are in great demand which has led to more buyers purchasing waterfront homes for this purpose.
  • Only 25 new construction homes closed in September 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 102 new construction homes under contract in the MLS up slightly from last month. The average sales price in September was $419.855.  The months of supply of active listings based on September’s sales jumped to 6.7 which puts them for the first time in months into a balanced market slightly favoring buyers.
  •  There were 2 closed distressed sales (Foreclosures (REO’S), defaults, Short Sales) in all of Lake Norman in September.  We have 6 under contract and only 7 distressed active listings as of today. Clearly, distressed sales continue to play an insignificant role in our Lake Norman real estate market. 
  • 40.9% of Lake Norman’s September’s single family home sales were under $400,000.
  • 62.9% of Lake Norman home sales in September were under $500,000.
  • Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total today is 281.  This is slightly below last month’s and last year’s at this time which further supports the suggestion that we will experience weaker sales through the end of 2018.  Keep in mind that last Fall Lake Norman’s sales were record breaking every month so we are up against some huge numbers through the rest of the year!

A closer look at the chart:

  • The number of Active Listings as of today in Lake Norman is down 10% 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 777 single family homes for sale in all of Lake Norman. Our absorption rate/months of supply of active listings is up to 5.9 from last month’s record low of 3.34. This means that Lake Norman as a whole is in a balanced market favoring neither sellers or buyers. 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 was up 10% and the days on market was down 20%.  (So what did sell actually sold very quickly).
  • Under Contract Show (conditional) sales are down 17% from this time last year’s.  The average price of our new contracts is up 2% and the days on market is down 12%.  Could hurricane Florence have had an impact on recent activity? As I correctly wrote last month: These numbers hint at a rather significant slowdown after 4 exceptional months. I am sure our extremely low inventory is impacting our sales.  UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. These newer sales should represent solid future closed sales in November/December.
  • Pending/Under Contract No Show sales are up an impressive 30% compared to last year’s.  The average price of our pending sales is down 1% and these listings/sellers successfully negotiated a purchase contract 1% faster than last year’s. These numbers are the only bright spot in our market report but combined with our UCS’s I don’t think we will match or beat 2017’s sales numbers for the rest of this year. 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 October.
  • Lake Norman’s closed September home sales in our MLS as of today and as stated above, were 35% lower than last September’s and the lowest number of closed sales in the month of September since 2013. (See chart below). The average price of our homes sold was up 10% and it took on average 18 fewer days to sell a home in September 2018 vs 2017.  So, our volume of sales are down but the average price is up and homes are selling 20% 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:

  • 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
  • October 6, 2016: 274

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

  • $1,000 – $99,999: 0-
  • $100,000 – $199,999: 9-
  • $200,000 – $299,999: 25-
  • $300,000 – $399,999: 20–

        (These price ranges represented 40.1% of our September home sales)

  • $400,000 – $499,999:  17–
  • $500,000 – $599,999: 12-

       (These price ranges represented 21.9% of our September sales)

  • $600,000 – $699,999: 10-
  • $700,000 – $799,999: 12
  • $800,000 – $899,999: 7++
  • 900,000 – $999,999: 4-

       (These price ranges represented of 25% of our September sales,  21.1% of our August sales,  23.6% of our July sales, 19.1% of our June sales compared to 19.9% of our May sales, 21.1% of our April sales, 12.7% of our March sales, 14.3% of February sales, 20.4% of our January sales, 14,5% of December’s sales, November’s 22.1%, October’s 13.2%, and last September’s 23.7%.)

  • $1,000,000 – $1,499,999: 10
  • $1,500,000 – $1,999,999: 4=
  • $2 million+ : 2=

       (#Solds $1 million+ = 12.3% of our September 10.8% of our August sales,  6.2% of our July sales, 8.1% of our June sales, 9% of our May sales, 11.2% of our April sales 7.4% of our March sales, 8.9% of February sales, 7.1% of January’s sales, 6% of December’s sales, 7.86% in November, 7.8 % in October, 9.3% in September, 6.3% of August’s sales,10.6% of July 2017’s sales)

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 September our standout price ranges were actually groups of price ranges both of which represent our trade-up and luxury home prices. Within these the $800,000’s were the only price range to actually exceed last month’s sales but the $1.5 million and higher price ranges matched last month’s which was quite good. The most significant drop in sales were the under $100,000’s, the $300,000’s and the $400,000’s. 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

Our trade-up and luxury homes sales were relatively strong compared to prior months.  This means that the huge drop in sales this month was primarily in our lower to middle price ranges. Properties in the $800,000’s actually went up and the number of sales at or above $1.5 million were equal to last month despite the overall drop in sales.  As you can see above, the trade-up price range group ( $600,000 – $999,999 represented 25% of our September sales which was the highest in the past year.  And, the $1 million+ segment of sales represented 12.3% of our total which is also a record for the past year.

Lake Norman’s Waterfront Homes

As I wrote above, waterfront homes moved back into a balanced market in September with the months of supply increased to 6.17 from 4.9 last month, 6.4 in July and June’s 4.97 months. (A balanced market of 6 months favors neither buyers nor sellers.)

  • Waterfront sales in August represented 25% of Lake Norman’s total sales while comprising 36.6% of our active listings and 31% of our under contract listings.
  • The average price per square foot of our waterfront homes increased slightly to $256.64 from $248.18 last month but down from July’s $262.05.
  • It took on average only 70 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.  So while we have experienced improved activity, our prices are still under their pre-recession highs.
  • There are definitely HOT waterfront properties.  I sold one in May for over asking that had 5 offers in the first week.
  • 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 real estate 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 9 months in to 2018.  Thanks to our big drop in sales in September, our combined total of 1537 is now 1.47% LOWER than the first 9 months of 2017 but because of our strong prior months it is still the second highest 9-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 three quarters of the way through this year is certainly respectable. 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 three months of 2018 may 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 and quality of life.
  • Our trade-up and luxury housing niches did reasonably well during a very weak month
  • 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.
  • Sellers are in the driver’s seat in many negotiations 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 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.
  • New construction is definitely back in a consistent way. 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 has increased their Conventional Loan Limit to $453,100 from the current $424,100!

Challenges/Weaknesses for 2018:

  • With 9 months in the books we are now 1.47% below 2017’s exceptional numbers and the next few months look to be a struggle.
  • Record-breaking low inventory of active listings!
  • Interest rates keep going up. As of today they are about 4.875% for a 30-year conforming loan. This week the stock market dropped dramatically which is attributed in part to the expectation of more increases by the Federal Reserve.
  • 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 selling very quickly. Watching the “hot sheet” is now a necessary part of the buying process for some price ranges and locations.  Don’t procrastinate when considering a really good new listing because they are 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 2nd 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.
  • The big picture: “Even as the housing market is chugging forward, hamstrung by low inventory…NAR thinks 2018 will be challenging. The group revised its 2018 forecast to show that sales will be flat compared to 2017.”

Final thoughts: 

As I wrote the past four 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 and entertainment.  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 and increased sales 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!

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