Tuesday, November 27, 2012

2012 Finishing Strong In Most Areas, Prices Begin Recovery

Low Rates, Pricing Bottoms, Spur Increase in Lake Area Luxury Unit Home Sales For 2012
 
As has been the case for most of 2012, luxury home sales surged on through early November, with a total of 383 luxury homes sold year to date, versus 299 at this time last year in the Lake Norman/Davidson area. As we forecast in August, high summer Internet and home showing activity materialized into actual transactions throughout the fall with most areas and pricing segments running well ahead of last year in terms of units sold. As of this writing, the area luxury pending index stands at 74 luxury homes under contract, a solid number heading into the holiday season and year end. 

Several areas and price ranges reported excellent results so far, with the surprise of the year being the robust activity on the west shore of Lake Norman in the under 1 million dollar waterfront segment, where 35 properties have sold so far this year. Cornelius has paced the east side of Lake Norman, particularly in the 500k-999k range, where 73 homes have sold compared with 54 last year, an increase of 35%. Activity in those segments also spurred an improvement in pricing in some areas like The Peninsula, where the under 1 million range saw an uptick in average sold per foot pricing from 163.00 per square foot in 2011, to 172/sf thus far in 2012. Segments in Mooresville, The Point, Davidson, and some areas on the north shores of Lake Norman also showed upticks in unit sales, as well as modest improvement in pricing.     

Ultra Luxury Segment-What may come as a slight surprise, given the recent headline stealing 4.5 and 7.5 million dollar transactions on the lake, is the fact that the range above 2 million in list price, has underperformed relative to both the lower ranges, and last year, when 16 deals closed versus the 9 lake wide so far in 2012. The high end deals of recent months will likely help appraisal values given they were done at solid per foot prices, but there remains a pretty competitive level of inventory relative to the number of actual sales. The range is such a small subset of the market that a handful of deals can change the dynamic, from lagging to robust, yet it still seems there's more work to do in terms of inventory reduction in this range (there are 34 homes lake wide on the market over 2 million).  

Inventory-Inventory levels have continued to show improvement in most areas, and 2 of the 3 price ranges we track in the luxury space. At the height of the recession, there were close to 900 luxury homes on the market, today, there are 433, including 34 over 2 million, and 11 over 3 million. Distressed inventory has also remained manageable, with 29 homes on the market, or less than 6% of total listed luxury inventory (and just 1 in River Run, 2 in The Point, and 3 in The Peninsula over 500,000). Slim distressed pickings in the high demand communities. 

Banks have continued to unwind distressed properties at a pace that the markets have been able to manage the past year and a half, and while Notices of Default did trend up slightly for a period this year, it so far has not translated into another spike in actual distressed homes hitting the market.   

Of the new metrics we've introduced, our smart phone inquiry tracking has shown a decrease in total drive by traffic of 35% since mid-September, something we view as typical for the season, given showings begin to decline this time of year as well. One encouraging factor coming from our smart phone tracking, is the 36% makeup of out of state inquiries at a time of the year that we anticipated this proportion would drop. At the height of the summer, out of state drive by inquiries were running at 50% of total, so while we've had a drop, its indicative of a remaining high level of interest overall.      
    

  

  
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