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Beneath the ice and snow coating the region lies a hot commodity -- houses.

Real estate agents say they are already seeing the start of home-buyer fervor, with demand for houses high and interest rates low.

Buyers in some neighborhoods are bidding for starter houses that a year ago would have sat for months behind faded for-sale signs. Open houses are drawing such crowds that cars are parked around the block.

A Buffalo News analysis of home sales during the past three years shows rising values in some unexpected places. But others sorely need the anticipated real estate revival.

Of the 49 ZIP codes in the Erie Niagara region with at least 30 sales each year, two-thirds saw average home sale prices either hold steady or rise, according to the analysis. The biggest gains occurred wherever new homes were built -- from development in rural communities such as Wheatfield, Elma and Evans to redevelopment in some of Buffalo's most troubled neighborhoods.

The News analysis is a first of its kind for the region. The survey is based on home sales recorded with the state from 1998 to 2000. The analysis excluded U.S. Department of Housing and Urban Development foreclosures, government sales and sales under $5,000, to give a clearer picture of what homes sold on the open market are fetching.

"Unquestionably, the HUD foreclosures have a lower price than the rest of sales. It doesn't reflect what we consider the real market," said Dan Symoniak, general manager of Stovroff Realty, the area's largest home seller. "On a whole, they would drag the market down."

The big winners were Buffalo's East Side, with a 43 percent increase, and the Lake View area of Hamburg, which experienced a 30 percent increase in home sale prices since 1998. The Evans and Angola area posted a 13 percent gain, while prices in Clarence Center and Eden increased by 11 percent. In the North Tonawanda/Wheatfield area of Niagara County, prices jumped 10 percent.

"More expensive homes were purchased in the outer-ring suburbs," said Michael P. McDonough, president of the Buffalo Niagara Association of Realtors. "Out there (buyers) can get a chunk of land at a reasonable amount of money. They can spread themselves out from their neighbor and get some privacy and build their home."

Existing homes should benefit from the fact that the number of homes for sale has fallen steadily, from about 8,000 in 1997 to about 5,000 today, according to the Buffalo Niagara Association of Realtors.

Since 1998, the Williamsville area and Elma saw 8 percent increases, West Amherst saw its average home sale price rise 4 percent, and Orchard Park saw a 6 percent increase. North Buffalo saw 5 percent increases, while Grand Island prices rose 2 percent.

However, in one-third of the ZIP codes analyzed, houses sold for less than they did a few years before. In one section of South Buffalo, prices plummeted 15 percent, and the Elmwood-Richmond area of Buffalo dropped 21 percent. The East Amherst area saw prices fall 2 percent.

In Niagara County, the Porter/Youngstown area, the City of Niagara Falls and Lewiston suffered the biggest losses, with the average sale price falling 11, 9 and 11 percent respectively.

Prices also tumbled in older areas. Lackawanna fell 2 percent, and parts of the Town of Tonawanda fell 6 percent.

But that could change if home sales are as brisk and busy this spring and summer as real estate agents expect.

"It was dead before. We were lucky if we got someone here once a month," said Norbert Wojciechowski, who has had his duplex on Losson Road in Cheektowaga on the market for about nine months. "Now there's more traffic going through. We had about 10 or 12 people come through in the last couple of weeks."

Searching for value

Buffalo's East Side, long a sinkhole for real estate prices, showed the largest increase, once foreclosures and government sales were removed from the equation. Those neighborhoods are regaining vitality as new homes replace decaying eyesores.

"There is no question that the new-build market (in Buffalo) has a tremendous impact," said Calvin R. Johnson, an associate broker in Stovroff Realty's Buffalo office. "There are homes that are going over the $100,000 mark."

And there's a demand for the homes now that both the City of Buffalo and the Buffalo School District require all newly hired employees, except police and firefighters, to live in the city.

Karoll and Nelson Melendez and their three boys are moving from an apartment behind City Hall into a new home on Pratt Street later this year.

"I work at Blue Cross/Blue Shield. I'm looking for a place near where I work," said Mrs. Melendez. "I like living right here in the city. I want to be close to the Bisons' stadium and the Sabres' stadium."

The four-bedroom homes M.J. Peterson built in the East Side neighborhood fit the bill. The couple bought a white house with a porch for $118,000. Their mortgage payment is just a little more each month than they are paying in rent.

In the Buffalo Niagara suburbs, areas that have seen the average sale price drop in recent years should see some improvement this spring, real estate agents say.

In the Town of Tonawanda, for example, sale prices in the 14223 ZIP code have dropped by 6 percent since 1998. Now buyers are bidding on the same homes that used to sit for months without a nibble.

Peter and Suzanne Johnson decided to stop renting in Kenmore and buy a home after the birth of their first child 10 months ago. They were outbid on a fixer-upper on Cleveland Drive in the Town of Tonawanda that had been on the market for six months.

"We went back out, and we found one that had been on the market for less than a week, and it had three offers on it," Peter Johnson said.

And they would have lost that starter home on Twyla Place if not for a last-minute increase suggested by their agent, Anita Gullo-Eardley of Re/Max Allstar Team Realty in Amherst.

"And they got it by 99 cents," she said.

Some hot, some not

In other areas, the real estate market is so hot that agents are desperately searching for people who want to sell their homes.

After selling a home on Chatham Avenue in Buffalo for $180,000 -- the highest price ever on that street -- Carole Holcberg of Holcberg Real Estate Brokerage sent letters to the neighbors.

"I sent letters to everyone on Chatham saying we'd garnered a benchmark price and still had more buyers," she said.

But the dramatic increases come with an important footnote. Just because the average sale price is rising in a neighborhood doesn't mean that property values are necessarily increasing at the same rate. It all depends on how a home compares to those that are selling quickly.

The hottest-selling homes in Buffalo, Niagara Falls or the suburbs are those between $100,000 and $120,000, popular with single people and young families buying their first homes, area real estate agents say.

"Not everything is hot," said Joel P. Calabrese, an associate broker in Hunt Real Estate's office serving Amherst and Clarence. "It's based on the location, condition and price of the property."

The reverse holds true as well. If a ZIP code is dropping in value, it doesn't mean that homes in that area are losing value. Sometimes it's just because none of the larger, more expensive homes are for sale.

"My guess is appreciation in the Buffalo Niagara region is much higher than what the sale prices indicate, because of the shortfall of homes in the upper-price range," said Walter Molony, spokesman for the National Association of Realtors. "There are not enough homes available in the higher price ranges, so as a result, the homes for sale are costing less, and the median price is lower."

Real estate agents say that's what caused the 21 percent drop in the Elmwood-Richmond area of the city. Fewer of the better homes in the area are for sale at the moment, and as a result, anyone who wants to live in that neighborhood must buy a less expensive home.

Market is better nationally

While the real estate market is getting brighter in Erie and Niagara counties, it lags sorely behind the rest of the nation.

Local housing prices have been stagnating for the past decade, rising just 3.3 percent since 1990, according to the National Association of Realtors. That's about one-tenth as much as the 34 percent jump in average home prices nationally. And it means that local home prices have actually dropped by more than 28 percent since 1990 when inflation is taken into account.

So why are things finally looking up for home prices after years of decline and stagnation?

"The last several years, the market has been glutted," said A. Bruce Wilson, executive vice president of the Buffalo Niagara Association of Realtors. "We've got to be getting close to the bottom."

But it took a sharp drop in interest rates -- a 30-year, fixed-rate mortgage is currently at about 7.25 percent -- to break the ice jam in the region's real estate market and create a flood of interest from buyers.

"I think this is going to be a banner year for us in real estate," said Gullo-Eardley. "It's not as much of a buyer's market but more of a seller's market. It's good to see the light at the end of the tunnel."

Monday: Buffalo revaluations are high on the low-end houses, low on the high-end houses.

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