Wednesday, August 29, 2012

Strong Activity Across Lake Norman Spurs Sales Increase

Continued Mid-Summer Activity Points to Solid 2nd Half 
Surging activity from the first half of 2012 has extended into the third quarter, with historically low rates, attractively discounted home prices, and slowly improving economic news all combining to spur homebuyers into the market. The MLS index of pending luxury transactions has spent much of the year ahead of last year's pace, and there are currently 89 homes under contract around the Lake Norman and Davidson areas listed over 500,000. In most areas and price segments, home sales are running slightly to well ahead of 2011, with just a few exceptions. The chart to the left indicates that total homes sold for the year in the Lake Norman and Davidson MLS areas in the luxury price points are running 33% ahead of 2011 through mid-August (280 units vs 211).

Great values on the west and north shores of Lake Norman are grabbing solid shares of the luxury market for the first time in several years, and both The Point and The Peninsula are running ahead of last year's pace in unit sales albeit showing some slowing this summer. Overall showing activity on homes has also in most cases remained ahead of last year's pace, a leading indicator that points to continued solid transaction activity through the fall, something we did not see in 2011.    

While distressed inventory continues to hit the market, its being absorbed at an improved pace, leaving the index of distressed luxury homes at 29 units, out of the some 485 luxury homes for sale in the Lake Norman and Davidson areas. This dramatic reduction in foreclosures, short sales, and relo homes, is one of the key factors in the area experiencing some pricing stability. In many areas and price segments, we're starting to see some improvement in sold prices per square foot over last year. For all the talk of foreclosure waves, we just haven't seen one, nor have we seen a large spike in defaults in our area which might signal a problem.
Inventory levels in many of the area's more popular communities also remain at low levels, with both The Point and The Peninsula reporting total on market inventory in the 45-50 unit range. Total luxury inventory in our region peaked at near 1000 units on the market in '09, and currently stands at a fairly healthy 485 total units, with 30-40 being absorbed per month. As we've said before, lower inventory plus low distressed availability equals pricing stability and upward movement.      

The ultra-lux price range above 2 million has continued to lag the balance of our covered areas and price points. At this stage last year, the area had seen 10 transactions over 2 million, this year we went into August with 5, although 4 homes recently went pending including 2 in Cornelius (one over 4 million), 1 in The Point, and another home on the water at Avalon in Sherrills Ford listed at 2.75m.

New to this report is our analysis of what's bubbling in the upper price ranges in Huntersville, as well as a breakdown of the waterfront lot/raw land segment, which is finally showing some signs of life after 3 years of inactivity.

Finally, we've added a new metric to our stable of leading indicators, we're now able to track curbside, sign call, and print ad inquiries by area code and frequency. Why might this number be important? Its telling us whether or not more people are out looking, usually well in advance of them actually turning up as a showing at a home, its also telling us how out of state traffic is trending, and right now, that's been one of the solid indicators that the second half of the year looks to be active. Our total inquiries surged over 20% from May to July, an indicator that there remain a lot of people browsing for homes. We're also encouraged that well over 50% of this inquiry traffic is coming from out of state visitors looking to move to our region.

Our firm is very focused on having the pulse of the market's momentum. Its critical to understand momentum and its impact on negotiating tactics, setting prices, properly anticipating whether activity is improving or declining, etc. Our momentum indicators which include showing activity statistics, online activity, and now drive by/marketing response activity, really help us anticipate coming market conditions in each community and price point, which sometimes can vary significantly. We're typically able to project that if those areas are trending up, so will contracts and thus sold units.     

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