This winter is likely to be a very important moment for many home sellers. That’s because three big trends are coming together to affect Lancaster County home prices right now:
1. Housing inventory remains extremely tight. The total number of homes on the market fell 10% year over year in the last quarter. This is the biggest drop since 2013, and it’s part of a consistent pattern of very limited and decreasing housing supply. Of course, the fewer homes there are on the market, the easier it is to sell, and the higher the price you can expect to get. Home prices have increased almost 6.5% nationally since last year.
2. Buyers are increasingly optimistic. Despite the tight inventory, homebuyers are increasingly optimistic and continue to look for homes. Some of this has to do with the recent growth in income and job stability. Loosening lending standards are also making many homebuyers eager to take advantage of current mortgage rates, which slipped under 4% recently.
3. The new tax reform bill will impact the market. The federal government recently passed the Tax Cuts and Jobs Act, which majorly overhauled our tax code. While it’s unclear how this will affect the real estate market as a whole, there are some changes that do not favor home sellers. As a result of the changes made to the tax code, the National Association of Realtors now projects slower growth for home prices in 2018, with an appreciation rate of 1% to 3%. By doubling the standard deduction, Congress has significantly reduced the value of mortgage interest and property deductions as tax incentives for homeownership. On the bright side, no changes were made in the rules surrounding capital gains for home sales, which is good news for home sellers.
When you put all three of these trends together, two big conclusions emerge. First, now is a very favorable moment for home sellers, thanks to the shortage in the market, the many eager buyers, and the high and rising prices. On the other hand, higher cost, higher tax areas will likely see prices decline as the result of new restrictions on mortgage interest and state and local taxes.
If you are looking to take advantage of the present moment to sell your home, please reach out by giving us a call or sending us an email. We look forward to hearing from you soon.