Lancaster County home sales in 2021 were up almost 8% over 2020 and home prices increased 14% in 2021. Home prices are increasing at over 1% per month, clearly an unsustainable growth rate. 2021 marks the 8th straight year of year-over-year price increases – after posting 6 consecutive years of year-over-year declines since the peak in 2007. Inventory levels have declined steadily for 10 years. 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. It remains a strong sellers’ market across all 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 not enough to keep up with the demand in Lancaster County where the population continues to increase roughly 1% per year.
While sales are robust with increasing prices, there are still many potential sellers who will remain on the sidelines until they feel it is safe to have potential buyers touring their homes. Only when we are through the worst of the pandemic will home inventory levels start to rise, hopefully by the end of 2022.
Our expectation is that we will see some sales flattening in 2022 – possibly sliding lower than 2021 due to of lack of inventory. Further, we expect to see continued price increases in the neighborhood of 5% to 7%. Home prices are not going to drop. We are not in a housing bubble. Mortgage interest rates more than likely will rise in 2022 but I expect the market will be able to absorb most of the increased costs to buyers.
In this robust seller’s market, sellers still need to meet two criteria to maximize value:
- A home needs to be priced correctly. 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.
- 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 very quickly at a premium price.
With all the above said, you don’t need to 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.
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!