THE OFFICIAL NEWSLETTER OF TEAM TRIMBLE
Over the past several years, historically low interest rates and historically low inventory levels have combined to increase Lancaster County real estate values by over 25%, clearly unsustainable. In the past 12 months interest rates have doubled while inventory levels remain at historically low levels. Today there are 429 homes for sale in Lancaster County. 10 years ago, at the bottom of the market, there were almost 3,000 homes for sale
Over the past several years, historically low interest rates and historically low inventory levels have combined to increase Lancaster County real estate values by over 25%, clearly unsustainable. In the past 12 months interest rates have doubled while inventory levels remain at historically low levels. Today there are 429 homes for sale in Lancaster County. 10 years ago, at the bottom of the market, there were almost 3,000 homes for sale.
As of today, anyone that took a 30-year mortgage or refinanced since 2008 has a rate locked below the current market rate. Believe it or not, the current 30-year mortgage rate of 6.3825 is below historical averages – even though we haven’t seen rates this high since the early 2000’s.
For the past 18 months days on market (DOM) to sell was steady at a blistering pace at only 7 days. Today we are beginning to creep above a median of 10 days. Despite the slowly increasing days on market, listing inventory in Lancaster County is still stalled out at historically low levels.
As we enter 2023, the market continues to SHIFT. We believe interest rates will stabilize within the current range, after overcoming the shock of doubling in the past 12 months. With interest rates stabilizing some buyers will return to the market. The challenge for buyers will be the stubbornly low levels of inventory. There are many homeowners who would like to sell but are not moving because they are in “interest rate prison”. They have a low-rate mortgage and do not want to give that up for a much higher mortgage in a new home. Additionally, new construction will continue to slow as builders struggle with increased costs to build homes at the correct price point for buyers. Due to lack of inventory, the number of homes sold in 2022 Lancaster County declined 10% from 2021 sales levels. We expect 2023 sales levels will drop another 10% to under 5,000 countywide.
Our expectation is that we will see a flattening or possibly a modest decrease in home sale prices in 2023. Talk of a real estate bubble is way overblown. Supply and demand factors will stabilize real estate values. As prices moderate, we expect we will also see the terms of offers moderate. 2023 will mark the slow return of the home inspection. Blemishes overlooked in a frenzied sellers’ market will start getting a second look and deals will be renegotiated based on inspection findings. We will start to see offers with a few more contingencies. Multiple offers will still be common for homes that are priced correctly. The market will slowly move from a strong sellers’ market to a more balanced market.
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 and minimize the marketing time of your home. As a buyer, you need to be sure that you have your financing in place, understand all the new lending options, and are well versed in the nuances of the marketplace. Please contact Team Trimble if you, or someone you know, have any real estate needs or questions or if you want to discuss market conditions.
We look forward to working with you or your referrals in the future!