The familiar sight of the sun rising over the horizon on a frigid morning and its beams reflecting off of the frosty blades of grass tells us that winter is just around the corner, and with it, another year will be in the books for Lancaster County real estate. As we start preparing for the holidays, let’s take a look at the numbers.
(Click on each Infographic for larger size)
The average sales price shot up over ten percent from last year’s number. This is a function of supply and demand as inventory levels are at some of the lowest levels in a long time which is causing the price of homes to increase. Homeowners’ equity, which plummeted during the Great Recession, has risen and surpassed the 2006 peak which is a welcome development.
The first thing that jumps off the page in this graphic is that the number of available residential homes to buy has dropped a third from last year’s level. This drop is unprecedented. There is a lot of speculation as to what is causing this decline. A post-recession equity decline causing homeowners to stay put longer; builders’ reluctance to commit to new projects because they got burned holding inventory the last time the real estate market turned; or the fear by existing homeowners that if they sell they won’t be able to find something to their liking – – – perhaps it’s a combination of all three.
Settled units dipped a little which is not surprising considering the aforementioned inventory levels are so low. Agents are observing buyer frustration on two levels. First, the selection of homes is sparse as we just discussed. Secondly, if a buyer does find a home they like and submits an offer, chances are they find themselves in a competing situation with multiple offers. It is not unusual for some buyers to go through this multiple offer situation a half a dozen times. Ugh!
Interest rates are approaching four percent as we close out the year. While still near historic lows, the trend here is upward. Economists and other experts believe that as we approach the end of 2018, rates will be at or about five percent which is a full percentage point over where we find ourselves today. What does that mean? An increase of approximately $118/month if a borrower obtains a $200,000 mortgage or $42,000+ over the term of the loan. Buyers who are sitting on the fence should be aware of this potential additional outlay of cash.
The median days to sell a home in the Lancaster County marketplace continues to drop. In this market, if homes are competitively priced and staged appropriately, they will sell – in record time. If you’re a seller and your home has lingered on the market for more than thirty days without an offer, something’s wrong. Talk to your real estate agent about making some adjustments to the way the home is being marketed or presented. Oh by the way, in most cases, it’s the price.
Absorption rates are the rates at which available homes are sold in a specific real estate market and price range during a given time period. It is calculated by dividing the total number of available homes by the average number of sales per month. The rate represents the number of months it would take to clear out available inventory if no other homes come on the market.
At the present time, homes that are valued below $300,000 are selling rather quickly and we’re in a seller’s market with prices on the rise. If you have a home worth $300,000-$500,000, you are in a fairly balanced market where home prices are stable. If you happen to have a home valued over $500,000, you are facing an overabundance of inventory where buyers have a wide selection of homes to choose from. Sellers in this price range need to stand out from their competition by making sure their home is staged properly and priced aggressively or it will linger on the market.
Until next month – – – all the best!