Davidson area is enjoying not only an uptick in sales activity, but also prices per foot in some areas.

Prices in The Peninsula are on the rise in all ranges, in The Point most ranges are on the rise with the

exception of the ultra lux range, which showed a decline over the past 12 months but should settle now

that inventory has remained low.

We’d start by putting forth its first and foremost all about what is happening on your street, in your neighborhood. There are parts of the country in recovery, and there are parts of Charlotte in recovery, to know how to make the right decisions relative to your home, you need expert advise on your specific area.

Next, I’d mix in trend and inventory analysis not just in your community, but your specific range of home. Its entirely possible for there to be a lot of activity in the 500 to 750k range, while its a little more quiet in others. You also need to understand how available inventory relates to that high or lower level of activity. If you are in a low inventory/high activity price range right now, you’re likely to be able to get more for your house than you might have as recently as January. For example, the range in the 500-750 segment in the more popular areas of Lake Norman is really cooking. There were almost 50 contracts placed in that range the past 6 weeks, and in areas where there is lower inventory, you’re starting to see the conditions for higher prices. Our office has seen several multiple bid situations in that range recently in high demand areas. Its important to note that it can be different within specific neighborhoods, so its important to have a realtor who monitors that trend at the street level.

We still hear of realtors telling people how poor the conditions are and that they should price low. Yes, we’re still well off from 2008, but there are areas where prices are ticking back up off of last year and the year before’s market lows. If you’re priced at market low in one of the hotter ranges, be careful not to leave money on the table. If you’re listing right now, you should look for a realtor who can tell you not only what’s going on in terms of sold comps, but showing activity and what ranges are starting to see multiple bids. We had two scenarios this winter where we felt homes were price already aggressively enough, we told the owners not to reduce further, and in one case we got 55,000 dollars more than another realtor got for their clients 3 doors down with same size and features. That realtor’s strategy is to tell people they need to be priced very aggressively. We thought the spring market was coming, that economic conditions would improve, and that inventory was at an 8 year low in their community and that despite the other house selling cheap, they should wait and see how the early spring went. Most brokers would have been thrilled with a reduction, but our philosophy on price is to look at where you are at any given point in time compared to comps, inventory, etc.. We don’t just push price decreases for the heck of it.

In certain ranges and areas, we’re starting to see multiple offers again due to the low inventory.  Jan Sipe, one of our agents with a waterfront listing in Mooresville on Normandy had 3 offers and sold at close to full list price. Patty Howe also had a home in The Peninsula get two offers.

The range between 500-999k has seen contracts jump the most, going from 58 to 83 in 3 weeks.

As we predicted in our January newsletter, these conditions have also allowed the market to absorb new distressed inventory at a pace that is keeping it well below the highs of two years ago. Distressed luxury inventory declined from 46 units to 39 over the past 4 weeks, a small number given there are almost 500 homes for sale in the luxury segment at Lake Norman.  Inventory in communities like River Run, The Peninsula, and The Point remains low, rewarding sellers who stayed on the market this winter as many landed contracts.

The election year political climate appears to be one of compromise in order to win re-election, and last year’s political battles have moved off the main stage, helping to restore consumer confidence. We continue to anticipate a solid year in terms of selling activity.

Low inventory, low rates, and pent up buyer demand seemed to get the 2012 year off to an early start. This early 1st quarter contractual activity looks like it will reward some sellers who either stayed on the market over the holidays, or got their homes listed early.

While there is no doubt that all three exist in the Lake Norman and Davidson areas, its helpful when trying to estimate the impact of this potential inventory, to quantify and put it in context of prior inventory levels.

The media tends to talk about it as an enormous elephant in the room, something that is going to crash upon the housing market like a tsunami, further eroding housing prices.  This discussion always seems to center around foreclosures, pre-foreclosures, and people who are underwater on their mortgages in the sense that they owe more than the home might be worth. Much of this potential problem statistically exists in Florida, California, Arizona, Nevada, and Michigan. In fact, those states make up 75% or more of all distressed activity.  There’s also frequently a vital fact left out of this discussion, that of distressed homes in those areas being actively purchased. For inventory coming on the market to be a problem, it has to come on at a pace much more quickly than it can be absorbed, and the absorption rate in many states for distressed property is increasing.

Here in North Carolina, Realtytrac’s regional month to month tracking index of pre-foreclosure activity by banks, while slightly up the past 60 days, is within the monthly range that it has plodded along at for over a year, something that seems to project distressed flow arriving on the market at a pace similar to what we’ve seen the past 12 months, and that pace has seen it absorbed faster than it came on the market (albeit slowing over the winter).  The luxury distressed home index at Lake Norman has declined from 70 units to the mid-40′s over 12 months, so it will be an indicator of absorption moving forward.

Inventory levels in areas like The Point, The Peninsula, and River Run are all at 4-8 year lows for January, yet there will likely be at least an average seasonal increase as homes come on the market for spring. Given there’s starting to be some positive economic news, we anticipate a run up into the mid-range of the last two springs, perhaps slightly higher. For The Point, that would put inventory in the 60-70 range, River Run in the 35-45 range, and The Peninsula in the 50-65 range through the mid-summer.  All of which seem to be levels which would support at minimum, flat pricing in terms of sold price per foot.

Equally interesting but not nearly as much discussed in the media, is the number of buyers who one might consider in the “shadows”. The affordability index in the U.S. is at 45 year lows, rates are cheap, as are prices, and that has spurred many to wade into the viewing arena and to look at homes. The past 60 days in the Lake Norman area, have seen roughly 3000 showing appointments for homes listed at 400k and up, by area realtors. During that period, with 3000 home showing appointments, there were 48 contracts placed. If you figure the average luxury buyer looks at 10-15 homes, this would indicate 200-300 buyers out looking, yet only 48 putting the hammer down.  Clearly an indication that there are buyers out there timing the bottom, waiting for the perfect combo of price and features, etc.

All of that seems to point to “shadow inventory” as being a potential issue, yet perhaps nothing close to an impending tsunami.