Amid record prices and crowded open houses, Western New York’s booming housing market has hit an unexpected stumbling block for many buyers: they simply can't find homes to buy.
A dearth of available properties for sale has left many eager buyers out in the cold, unable to find or afford their desired house even after weeks or months of fruitless searching.
The number of houses sold in August was higher than the number sold in August 2015. But the rate of year-over-year increase has dipped from the record levels being struck at the start of the summer.
Sales in July fell 9.1 percent from the prior year, according to the Buffalo Niagara Association of Realtors, and even pending deals dropped. Activity came back up in August, with a 5.7 percent gain in transactions. However, that was still much less than the 10 prior months, when sales grew at double-digit rates of as much as 60 percent from year to year.
“Things have come to a crawl, something I usually see in November,” said Louis Vinci, a real estate agent at RealtyUSA, a unit of Pittsburgh-based Howard Hanna Real Estate Services. “Buyers are getting frustrated with lack of good inventory.”
The inventory of homes for sale in August fell to its lowest level for that peak summer month in more than 16 years, and was also at the fifth-lowest level of any month since early 2005. Three of the other four lower points occurred in the winter months of this year.
But real estate brokers say there's still no drop in demand for new homes, so it doesn't represent a true slowdown in the market.
"We are just experiencing a prolonged period of low inventory," said Jed Carroll, owner of J. Lawrence Realty. "Interest is there by buyers."
Some of the decline in sales is seasonal and routine. Sales typically slow down in September once school starts. And sales were so unusually strong earlier in the year that fewer sales now doesn't really indicate a radical departure.
Indeed, many homes are still getting flooded with visitors as soon as they hit the market, and homeowners are receiving multiple offers within days, often well over the asking price, according to realtors.
But after more than a year of go-go homebuying across the region, the region may just have become a victim of the very factors that drove months of frenetic activity in the first place.
"Prices are increasing to the point that it is denying buyers an opportunity to buy," said David Weitzel, an agent at RE/Max North in Amherst. "I have the same demand as before with buyers but no inventory to sell them."
As a result, disappointment is mounting. And some buyers have relaxed their search, or even give up altogether for the time being, preferring to wait until the pickings aren’t so slim.
“Out of frustration, buyers have a tendency to head for the sidelines when they’ve lost out,” said Peter Scarcello, general manager for Hunt Real Estate Corp. in the Buffalo region.
The situation marks a shift for the market after more than two years of bustling activity. Classic conditions of supply and demand drove home sales activity in the Buffalo Niagara region to unusually high levels in recent years.
Renewed consumer confidence and ongoing record-low interest rates combined to unleash pent-up demand for dealmaking, as buyers who had held back for years because of personal economic woes suddenly came out in droves to seek out new housing opportunities, eager to take advantage of favorable financing to get into the homes of their dreams.
But a dearth of available homes for sale left eager buyers aggressively vie with one another for many of the same properties. In many of the most popular city neighborhoods and suburban communities, multiple offers became the norm and buyers were often forced to pay well over the asking price to win the day.
That was great for sellers for a while, although not for all buyers, who often had to pay more than they wanted in the end.
But now the prolonged period of record-low inventory levels is hampering deal-making at any level, and it could be a circular problem. Buyers have already gone through what's available, and can't find new houses as quickly.
"There's lots of frustrated buyers," said Charles "Sam" Gurney III, president of Gurney Becker & Bourne. "They’re seeing multiple bids, and if they aren’t successful, there’s very little inventory for them to look at."
So they hold off on listing their own homes, because they're worried about not having a place to live. As a result, the shortage builds on itself, said Peter Hunt, CEO of Hunt Real Estate.
"Sooner or later this will affect overall unit sales," Hunt said. "This may then appear to the public at large as a weak market, further discouraging buyers and sellers."
Of course, that could loosen up the pressure on some properties that are for sale, with fewer people vying for them. "Properties I am currently putting on market that would’ve been swiped up in the summer months are sitting with slower activity," said Sarah Campbell of Hunt. "My buyers are having more options and fewer multiple offers."
But it doesn't solve the core problem for the buyers or their agents. "Lots of buyers get really frustrated," said Terri Gentry, operations manager for the Tammy Capozzi team at Keller Williams. "They tend to think maybe it’s their agent that isn’t doing a good job, when in fact it’s the competition."