I’ve been crunching the numbers on the home market here in Lancaster County PA so you don’t have to…

I’ll have more on October next week as the final changes are made to the MLS. In the meantime, I took a look at inventory metrics.

Price ranges are very important to Lancaster County, with some distinct markets. I looked at average monthly sales for 2008 (including October) and hold that up against current inventory in each price range.

The inventory is shown two different ways – as a percentage or in Months Supply (MSI). MSI is more popular so we’ll stay on that. You should know that there are some generally accepted views of MSI:

• Under 5 months of inventory = Sellers Market
• 5-7 months of inventory = Balanced Market
• Over 5 months of inventory = Buyers Market

Now look at the price brackets for Lancaster County. Under 100K is still biaised towards sellers but in the balanced market range. In fact, homes priced up to $200,000 are still in that range although over $130K starts getting iffy.

Where the trouble starts is over $200,000. Homes priced there have 9.31 months backed up – things are not looking good, but still not insurmountable. However, homes over $300,000 really have some trouble right now – well into double-digits with high-end homes ($750K+) being basically beyond help at 53 months backup (4 years!).

Here’s the bottom line: If you have a home priced under $130K, you’re doing OK right now altough it may take you 4-6 months to sell. Same if you’re in between $130-200K (where the county average falls anyway). If your home is priced between 200-300K then you should be a bit concerned if you need to sell soon – talk to your agent about an appropriate price drop.

If you’re priced over $300,000 right now you have a serious problem. Current sales are weighted strongly against you and if you need to sell you should be talking about a drastic price re-adjustment to spur interest from the 40 or so buyers who might be interested in your home over the other 700+ listings!

If you’re a home buyer then you see the opposite side of the coin. Homes under $200K probably won’t see much extra negotiation so don’t bother lowballing them. Statistically they have little reason to work with you. On the other hand, if you’re shopping in the $300K+ range you have strong negotiation power IF THE SELLER GETS THE PROBLEM THEY HAVE. If they are still sailing happily along with their Realtor telling them to “tough it out” then you’ll have a hard time talking sense with them. Don’t get upset – just move on. But MAKE OFFERS – now is the time to work the deal – if you’re buyer agent isn’t pulling his weight give us a call – we’re seasoned negotiators.