Housing cooldown? Not in central Pa.


HARRISBURG, Pa. (WHTM) — Nationally, it’s no longer a question: The dramatic pandemic-era housing market boom is over.

But locally?

“This is a story from just last night,” said Wendell Hoover, a real estate agent with Iron Valley Real Estate of Central Pa. Hoover said was representing a buyer who had been looking for a home for nine months.

“My buyer was the fortunate winner” of a three-way bidding war, Hoover said. “But it was $20,000 over list.”

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The historically slow-and-steady Central Pennsylvania real estate market — demand and home values up a little in a great year, down a little in a terrible one — experienced an unprecedented boom since 2020. The question: Would a bust follow, like the one perhaps underway in some cities in the U.S. west and elsewhere?

The answer: Not so far. Hoover’s story from this week is just that — an anecdote, one data point — but aggregate data corroborate the trend.

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More precisely, fewer homes are indeed selling here, just as elsewhere, but for a very different reason: Fewer homes are for sale. That’s especially true in Harrisburg:

Area For-sale inventory July 2022 vs. July 2021 Newly pending sales July 2022 vs. July 2021
Harrisburg -25.3% -19.8%
Lancaster -17.0% -20.0%
York -22.7% -21.3%
U.S. average -9.5% -24.7%
Source: Zillow

The upshot, especially in Harrisburg – and to varying degrees, everywhere in the region compared to elsewhere in America?

“There are just so few homes to choose from that the somewhat fewer buyers who are still out there, they’re actually still in finding themselves in a pretty competitive market,” said Jeff Tucker, a senior economist with Zillow.

Again, that’s here. Nationally, according to Tucker, characterizing a trend observed by most real estate experts?

“The last several months have seen a major cooldown in the U.S. housing market from really its most overheated and kind of unbalanced seller’s market that we’ve ever seen,” Tucker said. “The combination of higher prices and then much higher mortgage rates this spring meant that a lot of buyers kind of hit a wall with affordability.”

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So supply — which Tucker said is most easily thought of as “How many homes do you see on the map? How many do you have to choose from?” — finally began catching up with demand nationally.

Why are so few homes coming onto the market here — especially in Harrisburg — despite what clearly remains a seller’s market?

“It’s hard to say,” Hoover said. “Partly it could be because [would-be sellers are] having trouble finding another house. Where are they going to relocate? You know, they have to buy something.”

In fact, he said the buyers who won the bidding war this week sold their former homes months ago.

The result for buyers here?

“They don’t have that wealth of options, of listed homes to choose from, that people are starting to experience in other markets in the country, places like Phoenix and Las Vegas,” Tucker said. “We’re not seeing that in Harrisburg. Buyers still have a very limited pool of inventory to look at.”

As a result, homes here — for now, at least — continue falling under contract about as quickly as a year ago. Here are median number of days between when a home is listed and when its status switches to “pending sale”:

Area July 2022 (current) July 2021 (one year ago)
Harrisburg 6 6
York 6 5
Lancaster 6 6
U.S. Average 10 8
Source: Zillow

Less than a week here. More than a week elsewhere.

And nationally, “there are more of them and more of them you’re likely to find if you dig into a home’s details, where the seller has been sitting there waiting to get an offer now for two or three weeks, in many cases, which is a pretty radical change,” Tucker said.

Hoover said subtle signs do exist of a market coming back into balance. Prices aren’t declining, he said — and Zillow figures corroborate this trend — but they’re not increasing at the same clip as before.

Another sign of buyers regaining at least a modicum of leverage: Hoover said that whereas nearly all (95 percent, by his estimate) of buyers were waiving their right to home inspections early this year, that figure is now more like 50 percent. That’s still far more than in a truly balanced market, in which nearly all buyers would expect to be able to inspect a home before buying it — but still, a change.

“We can’t keep going at the same pace that we were,” Hoover said. “The craziness that we had is not there any longer. But we still have a very strong market.”

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