The hot local housing market isn’t showing any signs of cooling off.
In fact, even with mortgage rates rising, it’s hotter than ever, mainly because buyers are fighting over a pool of available homes that’s at close to a record low.
Homes locally are still largely affordable, but less so than before as the median sale price shot up by 17% over the past year, topping $200,000 for the first time ever, according to the Buffalo Niagara Association of Realtors.
Just how hot is the local housing market? The Buffalo News used data from national real estate brokerage Redfin, cited in a recent report by Porch, to measure the ways the local housing market is changing.
- Prices jumped 17% last year in the Buffalo Niagara area, ranking it 18th among 54 large metropolitan areas nationwide.
- Nearly two-thirds of homes that were sold locally went over the asking price last year – the fifth-highest among all large cities across the U.S.
- Homes in the Buffalo Niagara area sold for the fourth-highest premium – in percentage terms – over the asking price among all large metros.
- Better than 8 of every 10 homes for sale were off the market within two weeks of listing.
- Fewer than one in 20 sellers are cutting their prices after listing.
- The price per square foot has doubled in 10 years, and soared by $35 last year in just five months.
Here’s more on what to know about the state of the local housing market.
What asking price?
It used to be that the asking or list price on a home was the benchmark target, with buyers viewing it as the ceiling, and trying their best not to hit it. It was a rarity when a buyer paid more than what a seller was asking for.
Not anymore. Today, that old theory has been turned on its head, with the asking price as the floor in many cases, and bidders vying for how high they have to go to win the day.
Last year, almost two-thirds of the homes that changed hands locally were sold for more than what the seller sought – well above the national rate of 47.5%, according to Redfin.
Only four major cities had more houses sell above the asking price: neighboring Rochester and the Northern California cities of San Jose, San Francisco and Sacramento. But nearly half of all big metros saw more than half of their home sale prices exceed what sellers expected.
When there’s competition among buyers, it pushes prices through the roof – and that’s exactly what’s happening here.
The median hit $200,000 for the first time last year, and peaked at $225,000 during the heat of the summer, according to Redfin. For the full year, the median sale price – meaning that half of the homes sold for more and half sold for less – stood at $203,984.
A new benchmark
One way real estate agents measure home values is by looking at sale and asking prices by the square foot. That allows agents – and buyers – to compare relative costs of different-sized homes using the same standard.
And those costs are going up. It’s now common to see suburban homes sell for more than $200 a square foot – a once unthinkable benchmark for a region where $100 per square foot was the suburban standard in the mid-2010s.
Across the region, the price per square foot locally hit a high of $150 last summer, before settling back to $135 as of February. It was just $69 in 2012.
But prices tend to follow seasonal patterns – peaking during the busy summer home-buying season and then falling back during the slow times over the winter.
Prices per square foot are on their seasonal upswing and are back over $140 now. They are about 17% higher than they were a year ago.
“Home prices have consistently moved upward as supply remains tight,” said NAR Chief Economist Lawrence Yun.
To be sure, the stories of homes selling for tens of thousands of dollars over asking are legendary at this point, and have occurred often enough to influence expectations.
But that doesn’t mean every home sells for that high a premium. Nor does it even guarantee that a home will exceed that level at all, especially if it’s in a less desirable area, isn’t kept up or is overpriced to begin with.
Still, with so many homes doing so, the odds are high. Indeed, homes in Buffalo Niagara sold for an average premium of 5.8% over asking – nearly five times the national premium of 1.2%.
That’s the fourth-highest among big cities nationwide – again behind only San Francisco, San Jose and Rochester. San Francisco had the highest premium, at just under 8%, but 42 of the 54 major cities posted even minimal gains over list prices.
Very few sellers are cutting their list prices, either, indicating that they are generally getting what they are asking for – at least this time of year. That’s especially true in major and more costly cities around the country, but also here in Buffalo Niagara.
According to the Redfin data, just 3.4% of the homes currently on the market in the Buffalo Niagara region have reduced their asking prices. That’s slightly higher than at this time last year, but less than the 4.5% of homes with price cuts at this time in 2019, before the pandemic.
There is a very early sign that trend could be changing. Over the past two weeks, the number of properties with price cuts has slightly increased – in tandem with the rise in mortgage rates. Two weeks ago, only 2.5% of the homes on the market here had reduced their prices.
No time to dawdle
Finally, because of all the demand and the dearth of options for buyers, the homes on the market are selling at a record pace, draining the inventory faster than sellers can list new houses.
Nearly 85% of the homes on the market over the past month have sold within two weeks, according to Redfin. That’s up from 78% at this time last year and 60% in the pre-pandemic market of 2019.
In comparison, fewer than 3 of every 5 homes nationally currently are selling within two weeks, although the pace is quickening across the country, too. It was 52% in 2021, up from 37% two years earlier.
That means buyers had to scramble to see new listings almost as soon as they went up, and were forced to make decisions quickly about whether and how much to bid. Otherwise, they would miss out before they even had a chance to consider it.
Locally, homes that sold during the first three months of this year had been on the market for an average of 25 days – a week faster than at this time last year. The local housing market cools during the winter months and heats up during the spring and summer. Last August, homes sold in an average of just 15 days, according to the Buffalo Niagara Association of Realtors, which looks at the eight-county area instead of just the Buffalo metropolis.
Couple that with an 8.7% drop in new listings, and the available inventory locally is just 1,100 homes for sale – slightly above the record low set in February, according to BNAR. At the current pace of sales, that means buyers would run out of houses to purchase in just a month’s time. The national stock would last 1.6 months.