Bah Humbug: A Real Estate Market only Scrooge would enjoy
Updated: Dec 14, 2022
Market Snapshot, December 2022
by John Spidaliere
Things are feeling a bit grim for the housing market this holiday season.
According to the National Association of Realtors, Lancaster is not alone in experiencing a slump.
Nationwide, pending home sales dropped for the fifth consecutive month, down 4.6% from September. Month-over-month, contract signings fell in most of the country, including Pennsylvania, meaning fewer people are buying homes. And, added NAR, pending sales declined everywhere compared to one year ago.
Locally, you’re seeing fewer “for sale” signs in yards. Sellers are facing the grim reality of lower asking prices and diminished equity.
In the third quarter of 2022 (July, August, and September) the real estate market saw a 29.3% decrease in the number of houses sold as compared to the same time last year. The number in the second quarter (April, May, and June), which is usually the boom months in real estate sales around here, the number was down 26.4% over the same period last year.
Put simply, for sellers the number are going in the wrong direction and fast.
We saw a 6% drop in the number of homes for sale in just three months. The amount of time a house is sitting on the market is also increasing, from 15 days on the market in the second quarter, down 32% over the same time frame in 2021, to 18 days in the third quarter.
The days of multiple offers and houses selling way above asking are over.
Buyers are not fairing much better. As the supply of homes dips, fewer and fewer buyers are able to afford a mortgage. Just for perspective, rates hovered around 3.5% this time last year. In mid-December this year the average rate is sitting above 7% for a 30-year fixed mortgage. And you’ll need stellar credit to get that rate.
Breaking it all down: values are dropping; sellers are not selling; buyers are not buying; and those that do are facing some dour numbers.
It’s not all bad news. The central bankers at the Federal Reserve, who got us in this mess in the first place by increasing rates to curb inflation, are suggesting that they will continue to raise rates, but at a slower pace.
Yet, the Fed has shown little concern that they have driven real estate market into the ground. Eventually, this will drag down new housing starts and the construction industry with it.
For Lancaster countians, this could mean that local municipal governments and school boards that rely on transfer taxes from property sales to make ends mean, will be forced to hike taxes to make up the difference.
Industry changes are likely as well, with some experts suggesting as high as a 30% drop off of practicing Realtors who would rather hang up their licenses than pay local real estate association dues. Why pay upwards of a $1000 in dues when there is no work to be had?
Lancaster County should prepare for a rough ride in 2023.
John Spidaliere is the broker and owner of LancLiving Realty. Contact John at 717-824-3090 (ofc) or 717-425-9892 (mobile) or via email at john@lancliving.com.