You have likely heard about the shortage of homes for sale in Lancaster County. Last week there were 372 homes for sale in all of Lancaster County. For perspective – 12 years ago at the bottom of the market there were over 3,300 homes for sale in the county. To get there, prices dropped approximately 15% to 18% over a 6-year period before bottoming out in 2013. Since 2013 prices have been moving up and inventory has been declining.
We were experiencing sellers’ market prior to COVID-19. The pandemic has exacerbated inventory shortages and accelerated price increases. The median home price in Lancaster County now stands at $219,000 which is a 47% increase from the bottom just 8 years ago. Our expectation is prices will increase another 6% to 9% in 2021.
SO WHAT IS DRIVNG THE MARKET?
- A robust economy
- Lancaster County population increased approximately 1% per year while housing starts declined 75%.
- Household formation numbers increased after declining during the recession.
- Low interest rates
- New construction continued to lag demand due to the development costs.
Since the Pandemic Started in March 2020
- Even lower interest rates
- 2nd home buyers from more densely populated areas.
- Relocation buyers from more densely populated areas.
- Approximately 20% to 25% of home sellers who want to sell but will not sell during a pandemic.
- Seniors who had planned to move to retirement communities but have delayed or cancelled those plans.
- Frustrated buyers who now have decided to stay in their home and remodel.
The last 3 points remove significant housing inventory from our market. Our expectation is that the inventory shortage will not begin to ease until we are well through the Pandemic. It may take 2 to 3 years to return to a balanced market. We have included a simple graphic to illustrate this point.
This is a broad strokes overview and hopefully has been helpful to you. If you want to discuss buying, selling, or market conditions, please give us a call!