If you’re in the market for a new house in Western New York, be prepared for slim pickings, intense competition and high prices this summer.
Home prices hit a record high for the month of June, while the number of homes available for sale tumbled to a record low, amid one of the hottest seasons for the regional housing markets in recent memory.
“It’s crazy out there,” said Bonnie Clement, a leading agent with Hunt Real Estate Corp.’s city office, citing “lots of people moving in” to the area, ranging from doctors and sports figures to young parents returning to their hometown to be near their own parents.
Consider the latest data from the Buffalo Niagara Association of Realtors, for June 2016:
• The median sales price in June rose 2 percent from a year ago to $135,000 – its highest level ever for the month of June. Back in 2000, it hadn’t even hit $85,000.
• The average price set an all-time record for any month, jumping 7 percent to $168,641. Just sixteen years ago, the average didn’t even hit $100,000.
• The inventory of homes listed on the market fell 19.9 percent to 4,309. That’s the lowest level for the month of June since at least 2000, although it’s a little higher than during the previous four months of this year. And that’s despite adding 1,931 homes to that market – the most since the peak of last summer.
To be sure, real estate agents have been talking up the market for the past couple of years, citing highly competitive bidding on many homes and frenetic deal-making in neighborhoods throughout the region. And many observers predicted this year would demonstrate another boom. But the data is also now backing up such claims with evidence of another record-setting month.
Western New York’s housing market is hotter overall than the rest of New York, while the price gains since 2000 are more consistent, without the sharp ups and downs of downstate New York and the so-called “sand states” like Florida, Arizona and Nevada. Indeed, if the current activity rates continue, the Buffalo Niagara market may set new annual records in 2016 for pending sales, new listings and possibly prices.
That’s fabulous for sellers, who are not only getting what they want, but at a much faster pace than in the past. It’s so competitive in many cases that sellers are virtually auctioning their homes, setting deadlines for “best and final” offers from all comers.
Of course, the inventory shortage can then become a problem for those sellers if they need to become homebuyers for themselves, but can’t find a place to go. Besides frustration, that could hold up the first deal.
“It does put sellers who in turn need to buy in a difficult position,” said Jed Carroll, broker and owner of J. Lawrence Realty. He said one of his agents, Dannielle Koerner, “had to scramble” to help a client get a new patio home after their old house in Aurora went under contract for $500,000 amid multiple offers. And another home went under contract on Tuesday in East Amherst for just over $400,000, also after several bids, but the sellers “are now having trouble finding a ranch-style condominium-type home that suits their needs,” Carroll said.
“Sometimes we can’t even get into the houses they want to see,” Koerner said. “That’s been a challenge for me right now, trying to get people in before they sell. They’re not staying on the market for too long.”
Cash offers also are becoming more common, not just for investors but even for people who plan to live in the house. Agent Tim Riordan of Keller Williams had buyers purchase a home in Eggertsville for $5,000 more than the asking price, in cash and without competing bids, because “they had already lost out on many homes.”
“The market is very tough for buyers, especially ones that are looking in the city,” said Hunt agent Alex McGuire. “Cash offers make it nearly impossible for the average first-time buyer to compete.”
That was nearly the experience for Patrick Johnson and his fiancee, Yelenis Rodriguez, a corporate tax auditor for the state Tax Department. The couple, both 29, spent five months searching for homes in Buffalo and Kenmore, trying to stay in that area after renting apartments or houses in the city’s Elmwood Village and Allentown neighborhoods for years.
But “we found the market was just too crazy,” with homes that needed repairs selling “way above their value” because of their location or potential for being rental properties, Johnson said. In one case, he recalled, an open house on St. Patrick’s Day still drew more than 60 shoppers, while more than 40 came through another one over just two hours on a Sunday.
Finally, they found a home on Hendricks Boulevard in Amherst, which they snagged for “slightly under asking” at $137,000, while every other house they looked at sold for more. “It was almost too good to be true,” said Johnson, an Amherst native, who works for Buffalo-based advanced materials company Materion.
Meanwhile, the sales pace continued to heat up, too, as the number of completed sales soared another 18.4 percent in June. That’s the sixth-straight double-digit percentage increase this year – every month so far. And the tally of 1,152 transactions is tied for the second-highest of the past 16 years, behind only 2010, when 1,379 homes changed hands in June.
“The market is red-hot,” said Greg Straus, a broker with HusVar Properties in Tonawanda.
The level of pending sales – those where a deal has been signed but it’s not yet final – is even more telling, with 1,350 homes under contract in June. That’s up 7 percent from a year earlier, and it’s the highest total since at least 2001, besting even last year’s level of 1,263. Indeed, what may be the all-time record of 1,366 pending sales in a single month was set just two months ago, in April, with May coming in at 1,351.
“Most desirable houses sell within the first few days of hitting the market or after they hold the open house,” McGuire said. “So buyers need to be prepared to write up a contract immediately if they see something they like.”
The Buffalo Niagara housing market, much like the rest of the country, has been experiencing virtually unprecedented homebuying and selling activity, as pent-up demand from the recession combined with continued record-low interest rates to push shoppers out on the streets. Following a four-month streak of gains, national home sales in June were at their highest seasonally-adjusted annual sales pace since February 2007. The median price rose nearly 5 percent to $247,700 – the 52nd-straight month of year-over-year increases – and inventory fell again.
Add to that a renewed sense of optimism and confidence in Buffalo specifically – because of the influx of Buffalo Billion and other state dollars into economic initiatives, the surge in construction and renovation projects, and newfound national attention to the city – and there’s a recipe for banner home sales.
Indeed, Buffalo’s housing market appears to be stronger than the state as a whole. According to the New York State Association of Realtors’ data for June, closed sales were up 15.4 percent statewide in the first six months of the year. But in Western New York, they’re up 34 percent so far. Similarly, pending sales for the entire state were up 15.5 percent, compared to 18.6 percent in Buffalo-Niagara.
BNAR’s data covers arms-length sales by its Realtor members in the eight-county region of Western New York, as well as a few sales in Monroe and Livingston counties.
“The market continues to remain strong as we move through the summer months and inventory is still a challenge,” said Peter Scarcello, general manager for Hunt for the Buffalo Niagara region. “Demand areas are still seeing multiple offers and we don’t anticipate a slowdown in activity.”
Still, brokers caution not to assume that every house and every community will see such activity. Not all neighborhoods are as attractive as others, and well-kept and well-priced homes will fare better, they say.
“The market’s hot, and inventory’s down, but there’s still an important component of preparing the property and making sure it’s best in class to attract multiple offers,” said Hunt agent Michael Burke.