Spring is in the air, and that means the start of another home buying season in Western New York, although the climate for housing is vastly different than a year ago, and so is the pace.
“The spring market, which we all anticipate, has been slow to arrive,” said Peter Hunt, CEO of Hunt Real Estate Corp.
Home prices across the Buffalo Niagara region continue to rise – but at a slower pace than the last few years. That’s because home values have already increased substantially, while mortgage rates have now risen and pushed up monthly payments, knocking some buyers out of the market. In turn, that means less competition to drive up bids.
But there are still few homes for sale, with many homeowners reluctant to sell and trade their sub-4% mortgage for one that approaches 7%. And the mismatch of supply and demand is forcing buyers to keep paying more, with the median sale price increasing by an average of 7% over the past year.
“It’s bizarre. I’ve been in real estate for 20 years, and I’ve seen all kinds of markets, but this one is definitely unique,” said Stephanie Morgan, broker-owner of JRS Morgan Realty. “Buffalo has never kept on trend. We’re always a unique little unicorn.”
The good news is that the Buffalo Niagara region has avoided the drop in home values that has hit higher-priced markets, like San Francisco, Seattle and Austin, Texas, according to real estate firm Zillow. Nationally, the median home price fell 0.9% in March from a year ago, while existing home sales fell 22%, the National Association of Realtors reported April 20.
“A lot of areas are beginning to slow,” said Jay Coles, an agent with Howard Hanna Real Estate Services. “But we have always trudged along in Western New York, so we’re much more insulated from some of the big price moves that you see in other places in the country.”
But the continued shortage of homes to buy means there’s fewer deals getting done, just because there are fewer houses for buyers to pick from.
“It’s such a confusing market,” said Kristan Andersen, vice president and agent at Gurney Becker & Bourne. “It is not all gloom and doom. The interest rates have certainly slowed some buyers down, but in general, we are still seeing multiple offers on some properties.”
The thought that the Buffalo housing market is crashing or declining is simply untrue,” said Greg Straus, broker-owner of 716 Realty Group WNY.
Sales are falling fast
According to the latest data from the Buffalo Niagara Association of Realtors, completed sales in Western New York have dropped by around 25% during each of the past four months. And pending sales – those with signed contracts but still in the works – fell 10.3% in March, and are down nearly 9% so far this year.
That slowdown is partly because homeowners aren’t selling. New listings also sank in March, by 14%, to fewer than 1,000 for the first time in seven years. Over the past year, new listings have dropped by more than 7%, the real estate group said.
Yet the number of homes available for purchase in Western New York has actually ticked up by 8% from last year’s record lows. That reflects the drop in sales.
But total listings still are down nearly 70% from 2016 levels, so the modest uptick in inventory isn’t nearly enough to relieve the pressure on buyers or cause an overall price drop.
“It’s still a sellers market, without a doubt,” said Donna Littlefield of Howard Hanna.
In fact, prices in the Buffalo Niagara region are still much lower and far more affordable than many metropolitan areas nationwide – and that provides a bit of a downside cushion for local homeowners.
“Our area is still very affordable and the numbers make sense,” said Renee Moran, broker-owner of Red Door Real Estate WNY.
But prices keep rising
As a result, prices locally have kept rising. The median price – which means half sold for less and half for more – rose 1.2% in March to $200,000, according to BNAR. That followed a 2.6% uptick in February.
“People are not losing money,” Andersen said.
And sellers are generally still getting at least their asking price, and sometimes significantly more – especially for homes under $350,000 that are priced appropriately, agents said.
“It’s leveled out a little bit,” Morgan said. “The appreciation isn’t as high as it might have been before, but it’s not going down. That’s Buffalo.”
In fact, listing prices in March were almost 6% higher than a year ago, according to brokerage firm Redfin. And homes are still selling fast. According to Redfin, three-quarters of the homes listed in the Buffalo Niagara region sell within two weeks of hitting the market.
“Houses are not necessarily moving as quickly, but the market is still strong and good homes priced properly sell,” said Hunt agent Carolyn Hoyt Stevens.
“It’s really interesting. The story that’s being told on a national level is so different from what we’re experiencing in the Buffalo area,” agreed Charlene Zoratti of Howard Hanna. “We try to get people off of the national reports, because it’s really not indicative of what’s happening in Buffalo and the entire Western New York area.”
An incentive to stay put
Despite the rise in mortgage rates, the demand for homes continues to outstrip the still near-record low supply of houses for sale.
But rising rates will likely deter many current homeowners from selling and buying if they already have mortgages at 3% and don’t need to move.
“Almost everyone who could refinance between 2019 and 2021 did so,” Hunt said. “Who wants to give up a 3% mortgage to enter the market to buy financed by a 6.5% or 7% mortgage?”
So buyers and their agents are still struggling to find homes to buy, especially in popular neighborhoods where many people want to live, but no one wants to sell.
“A lot of buyers had to sit back a little bit, maybe save some additional money and adjust their budget,” said Enas Latif, an agent with Hunt.
Minor bidding wars – while not as frenetic as before – are still common. And some desperate buyers are still offering well over the asking price and outbidding rivals.
John Majewski, an agent with HusVar Real Estate, said he had 67 private showings and over 200 visitors during three open houses for a home in Lockport that ultimately got 36 offers. It was listed for $165,000, and sold for $210,000.
Another home in Tonawanda, listed for $199,900, had 52 showings, 200 open-house visitors and 20 offers. And he had 58 showings, 125 people at open houses and 42 offers for a Depew house that also was listed for $199,900. Both sold for $250,000.
“We simply don’t have enough inventory to go around for the amount of buyers in the market,” Majewski said. “I believe people have accepted the fact that interest rates are what they are and owning a home versus renting is still the pathway to building long-term wealth.”
Not all or nothing
On the other hand, it’s not all or nothing anymore for buyers, either. They’re now more willing to insist on a traditional home inspection – something that was commonly waived in recent years – and to walk away without renegotiating if something doesn’t pan out.
“I’ve had lots of conversations with my buyer clients about being strategic,” said Jonathan Carvallo, of Keller Williams Buffalo. “The increase in rates over the last year have helped buyers to focus more heavily on finding a home that they’re ecstatic to buy, and not necessarily out of necessity.”
And sellers are finding out that they can’t just raise prices and expect to get what they want. “In this market, you cannot aim high and expect to receive higher,” said Ariel Willard, assistant manager at WNY Metro Roberts.
“We are definitely cautioning sellers that it’s not the market it was one to two years ago,” Andersen said.
Source: The Buffalo News