York, Pennsylvania
Investors Prepare for Pivot in the “White Rose City”
By Carole VanSickle Ellis
York, Pennsylvania, is one of the oldest cities in the country. Also known as “The White Rose City” in a nod to the white heraldic rose of England’s House of York, the city was initially named Yorktown in 1741 for its namesake across the ocean. York, which also styles itself “the first Capital of the United States” (this is debatable since Philadelphia, Baltimore, and Lancaster all preceded it), is home to many historic sites and has emerged as a top retirement location in the past few years thanks to high quality healthcare, relatively affordable cost of living, and a vast array of attractive, seasonal events, including the York Fair, which opened in 1765 and is generally considered “America’s first fair.”
Opportunities for real estate investments abound in the area, whether an investor prefers long-term investments or shorter-term fix-and-flip options. According to ATTOM Data, fix-and-flip deals are particularly attractive in York right now and showed profit margins of more than 107% as of Q3 2023.
“Pennsylvania is home to…four of the 10 best markets for house flipping by ROI,” observed Motley Fool research lead Jack Caporal in March 2024. In addition to York, Caporal listed Scranton, Pittsburgh, and Harrisburgh/Carlisle. Caporal also used Q3 2023 numbers in his report, indicating York’s 2023 gross flipping profit was nearly $105,000.
While York, like most areas of the country, is struggling with low housing inventory, local real estate investor Eric Brewer observed that the “frenzied activity” of 2021 and 2022 has eased off.
“We are not seeing people putting in offers sight-unseen or waiving inspections very often anymore,” he said. Brewer, who is the owner and founder of Integrity First Home Buyers (IFHB) and helps train and coach other investors to be prepared for any market condition, called the current buyer approach to making a home purchase “more disciplined,” but noted that his company is still consistently listing homes and seeing them spend only about 10 days on the market after being listed.
IFHB invests in rental properties and fix-and-flip deals, and Brewer reported most successful offers are coming in at or slightly above list price. He credited realistic listing prices and solid renovations for this, noting, “You must price according to location and condition or your property will sit.”
Inventory is Falling, but Prices Remain Steady
Traditionally, real estate analysts have been able to predict future market shifts based on the amount of inventory available and the current sales prices of homes in an area. When prices rise out of reach due to tight inventory and, in many cases, rising interest rates, analysts expect the market to hit a “tipping point” at which prices will begin to fall and, at around the same time, inventory will begin to increase because fewer home purchases are made at the peak price point. However, in York, while home purchase volumes have been declining steadily and prices have held more or less steady (rather than risen) in recent months, the market does not appear to be closing in on its tipping point just yet.
Brewer noted that an investor with a strong off-market lead generation program will likely not experience the same strain the broader York market is experiencing when it comes to finding properties to purchase.
“When it comes to off-market inventory, we have not seen a substantial change, but that is likely because we have a history of spending a significant amount of capital on marketing and keeping ourselves top-of-mind for people who are in a position that forces them to sell,” he said.
For example, he said, IFHB does not deal with “discretionary buyers” who may be weighing their options, deciding whether to remain in their current home or sell and purchase a new one. Instead, they deal with homeowners who must sell, possibly due to an employment-related relocation, divorce, or job loss, and are in the process of deciding how to accomplish the sale.
According to Realtor.com, there are currently just over 600 homes for sale in York, with 241 rentals also listed. Although sold and listed prices began to diverge in March 2024, York properties still are typically selling for “approximately the asking price,” Realtor.com analysts stated at that time. Rocket Homes analysts agreed and, the following April, reported the median sales price of York properties was up about 15% over the same month a year prior, and inventory was down nearly 1% compared to April 2023.
Relatively flat inventory levels could have something to do with local population trends as well. Since the 2020 U.S. Census, the York population has increased by only a few thousand people. However, a growing interest in retiring in the York area could turn that particular trend around in the coming years.
According to U.S. News & World Report’s “Best Places to Retire in the U.S. in 2024” report, York is the fifth-most-attractive location in the country in which to spend retirement years. The area’s relatively low cost of living also makes it attractive to professionals working in the Baltimore area.
“This small metro is known for its rich history, museums, and numerous hiking trails,” raved USA Today reporter Amritpal Sandhu-Longoria. Multiple colleges and universities in the area attract a consistent population of students as well, and the York Historic District, a national historic district that encompasses more than 300 buildings, attracts thousands of tourists annually as well as retirees.
New Legislation Could Eliminate Unprepared Investors
At present, York is still a highly attractive market for investors, and competition for off-market deals remains fierce. Cash buyer activity remains high as well. However, at least some of that cash-buyer activity could fade away as more Pennsylvania cities adopt legislation requiring residential property wholesalers to apply for and receive a license before entering the business.
A number of Pennsylvania cities have already passed legislation requiring residential wholesalers, who typically get properties under contract and then assign the contract to another investor for a fee, to obtain an official license indicating, among other things, that they are properly insured, have not been convicted of a crime involving “fraud, dishonesty, breach of trust, or deceit in the past six years,” and have kept the license current. In 2022, proponents of this type of legislation in Pittsburgh cited statistics indicating nearly one in every five home sales nationwide involved wholesalers, and the Pittsburgh Community Reinvestment Group indicated its data put that number closer to one in four locally in 2021.
Local politicians say this sort of regulation is good for communities because it makes the process of acquiring large volumes of residential properties more difficult for institutional investors and prevents people from selling their homes for low prices and being displaced.
“There is a subset of this corporate takeover of housing that is very predatory,” observed Pittsburgh councilwoman Deb Gross to the Tribune Live at that time. “They are unregulated…unlicensed, [and] they harass people and seem to prey on seniors or on low-income homeowners or minority homeowners,” she concluded.
While Pennsylvania does not currently have state laws fully prohibiting “unlicensed” wholesaling on a state level, the trend is certainly spreading and enjoys popular support with Pennsylvania residents.
Brewer observed real estate investors who are unlicensed and operating in York still have time to prepare, and that preparation could put them far out in front of their competition in the near future.
“You want to be one of the investors who benefits from this pivot because you have already executed the changes you needed to make to tighten up your systems and processes,” Brewer said. He noted IFHB has been wholesale-licensed for the past two years although it is not yet required in York, explaining, “We believe when this change does come, this will help us pick up customers.”
SIDEBAR
Top 10 Employers (by Volume)
Ross Stores, Inc. (3,300 employees)
LPL Financial (3,242 employees)
Piedmont Medical Center (2,000 employees)
Wells Fargo Home Mortgage (1,283 employees)
Comporium, Inc. (986 employees)
Schaeffler Group USA, Inc. (793 employees)
Duke Energy Catawba Nuclear Station (793 employees)
U.S. Foods, Inc. (738 employees)
Shutterfly, Inc. (500 employees)
Cummins-Meritor (500 employees)
