Western New York is on track for the second-best year on record for home sales, as prices and transaction volume continue to hit at or near their peaks.
But the new federal tax reform legislation could put a damper on that in the future.
With just a few weeks to go in the year, the level of home sales activity is already poised to surpass that of 2015, and in some cases even within striking distance of the all-time highs of last year, according to data from the Buffalo Niagara Association of Realtors.
According to the real estate group:
- The median price for November stood at $143,000, easily besting $129,500 last year. Looking back more than 18 years, only the prices in the previous five months of this year exceeded that, and no month prior to this year ever hit $140,000.
- The average price for November, at $164,712, was the highest ever for the month, also going back 18 years. Only seven months at any point in the year have ever reported higher average prices — five of them in the last five months.
- Pending sales of 825 marked the second-best on record, down by only three transactions from last year. Already, the market has recorded 11,872 pending sales all year, just six less than in 2015 and 600 less than last year's height of 12,473.
Closed sales in November dipped 19 percent from a year ago, to 855 — the sixth-highest level since 2001. But that's likely to be adjusted upwards significantly when the next report comes out in January, after more realtors belatedly report the rest of their sales in the coming weeks. That's happened consistently to the most recent figures in the last few months, since BNAR started reporting market results 10 days after the end of the month instead of waiting 40 days.
Even now, BNAR figures show 10,976 sales for all of 2017, which is less than 500 transactions from the 2015 level.
New listings dipped 4 percent in November to 975, after consistently exceeding 1,000 every month this year. And total inventory of homes for sale dropped another 12 percent to 3,128 — the lowest level for the month since at least 2000, and the lowest level for this year since April.
But all that could change radically with the tax reforms, which could diminish the incentive for homeownership for 94 percent of Americans, according to Mike Kelly, director of government affairs for the New York State Association of Realtors. Specifically, doubling the standard deduction could reduce the need or desire to take out a mortgage and itemize the mortgage interest. That, in turn, could reduce demand for buying a home, Kelly warned.
Global accounting firm PricewaterhouseCoopers has even predicted a 10 percent to 15 percent drop in home values, he noted.
"It's not difficult to imagine that home values are going to diminish as a result of this tax package," Kelly said in remarks recently to the Western New York chapter of the New York State Commercial Association of Realtors. "We think this is going to do tremendous harm to homeownership if that suppression in the housing market does come to fruition."