Home sales in 2020 were about the same as 2019 even with the COVID-19 shut down for 2 months in the Spring, our peak selling season. 2020 marks the 8th straight year of year over year price increases, after posting 5 consecutive years of year over year declines, since the price peak in 2007. With the price increases in 2020, housing prices remain well above 2007 levels. Of course, this will vary depending on the location, price point and condition of the home. Inventory levels have declined steadily for 114 months. The strength in sales, continued decline in inventory and increase in prices indicates that the Lancaster County real estate market continues to be strong and stable. With the exception of high-end homes, which continue to struggle, it remains a strong sellers’ market in the lower price ranges.
Everyone is talking about the shortage of housing inventory which is very real and presents a hardship for most buyers especially in the lower price ranges. While new home construction is steadily increasing it is still not enough to keep up with the demand especially in Lancaster County where the population continues to increase roughly 1% per year.
While sales are robust with increasing prices, there are still many wannabe sellers who will remain on the sidelines until they feel it is safe to have potential buyers touring their homes. Only when we are almost past the worst of the pandemic will home inventory levels start to rise, hopefully by summer of 2021.
My expectation is that we will see the sales flattening continue in 2021 with sales levels possibly sliding lower than 2020 because of lack of inventory. Further, I expect that we will see prices continue to increase in 2021 with increases in the 4% to 6% range. Mortgage interest rates actually dropped this year and more than likely will rise in 2021 but I expect the market will be able to “absorb” the increased costs to buyers.
In a robust seller’s market such as this, sellers still need to meet two criteria:
1. A home needs to be priced correctly to maximize value. This seems obvious, but pricing homes remains an art, not a science and it is difficult to determine just where the right price is in this market.
2. The home must be in good condition. This means it must be clean, uncluttered, neutral, functional and updated. Again, this sounds obvious, but is not easily obtained in many homes.
If a home does not meet these two simple criteria, the seller will be “punished” both on selling price and the time on the market. If it does meet the criteria, the home will sell and sell very quickly at a “premium” price.
With all the above said, you need not be fearful to step into the market if you are careful and realistic. As a seller, you need to make sure you have done all you can to maximize the value of your home. As a buyer, you need to be sure that you have your financing in place, understand all the new lending regulations and are well versed in the nuances of the marketplace. Whether you are a buyer or a seller, you need an excellent Realtor!
Hopefully, this information has been helpful to you to put the market in perspective. Please contact me if you, or someone you know, have any real estate needs or questions or if you want to discuss market conditions. I look forward to working with you, or your referrals, in the future.