Ahh – – December! As the year wound down, the cold, frigid winds of winter blew through Lancaster County. This is the best time of year to reflect back on the year that was and to think and plan for the new one. Now grab a pen and paper and sit down by the warm fireplace and get busy.
(Click each infographic for a larger version)
Not much change from last December’s average sales price. As we will see at the end of this blog post, the final numbers for the year were solid and steady which indicates the real estate market was healthy.
If there is an area of concern looking at this month’s numbers it’s the amount of available inventory. A 40% drop in inventory from last year is unprecedented. This is not just a local phenomenon. Markets across the country are experiencing the same trend.
If you’re a seller, this is great news. Because buyers don’t have a lot to choose from, they are making major concessions to get into the house they want. It is not unusual for buyers to forgo repair requests, eliminate a mortgage contingency (if well-qualified) or waive the appraisal contingency.
We can also see the median days on market figure drop which closely mirrors the inventory shortage. When well-priced homes hit the market, they are usually snapped up within a very short period of time.
Even with a shortage of homes, it still has not hurt sales activity. The number of units sold dipped slightly but not enough to elicit concern.
The interest rate picture is a bit deceiving. It appears that interest rates are moving downward; however, this is not the case. Last year at this time, they spiked up for a short period before dropping throughout the year. Rates are actually on the rise which should be another reason for buyers on the fence to act now.
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 $400,000 are selling rather quickly and we’re in a seller’s market with prices on the rise. If you have a home worth $400,000-$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.
So how did we end up for the year?
Prices in Lancaster County increased a healthy 4.2% and are continuing this upward trend. This number is the result of a robust economy which is experiencing low unemployment and increasing wage levels. A lack of new housing units on the market will continue to cause upward pressure on prices.
What is truly amazing is that the number of housing units sold increased slightly over last year. This indicates that the demand is there despite many sellers sitting on the sidelines. Expect to see this trend continue into at least the first part of 2018.
All the best!
