The Buffalo Niagara housing market still is sizzling, although there are some signs it's not quite as hot as it was during the summer.
Median home prices – which means half of the homes sold for more and half sold for less – are up 8 percent over the past year and about 17 percent over the last three years.
Homes still are selling fast, with the average house staying on the market for about five weeks before it finds a buyer. That's more than three weeks faster than just two years ago.
And available homes remain in very short supply. There were fewer homes for sale in November than there had been at this time of year in at least 20 years, which is as far back as the data from the Buffalo Niagara Association of Realtors goes. As recently as three years ago, homebuyers would have had 50 percent more homes to choose from.
"We still have an inventory problem," said Susan Lenahan, a real estate agent at MJ Peterson Corp. "There's just not as many things to buy, particularly in the city."
Yet home sales remain brisk, averaging about 1,000 sales a month over the last 2 1/2 years, as the slowly growing Buffalo Niagara economy and mortgage rates that remain below 5 percent help keep local homes relatively affordable.
Nevertheless, Lenahan and other agents say activity has slowed a little bit from the record-setting pace of this summer, when home prices hit an all-time high.
Some of that is seasonal and doesn’t necessarily mean the market is getting weaker.
“I think the market is leveling off somewhat,” Lenahan said. “We were running at a pretty frantic pace for a couple of years, and you can’t sustain that.”
Betty L. Harris, broker at Metro Town Center Realty on Grand Island, called it a "roller-coaster year," but affirmed that it's slowed slightly since October, as buyers became more discouraged and deterred by the pressure of multiple offers above asking price for high-demand homes.
"They can only offer so much, and sometimes they are reluctant to even want to do an offer," she said.
Where many new listings used to receive more than a dozen offers and disappear from the market within days, homes now are staying active for weeks, giving buyers more opportunity to view a handful of homes without rushing into bids and decisions.
“Many markets are becoming more balanced, with more inventory available,” said Howard Hanna Real Estate Services agent Dana David. "It’s nice that they have a moment to breathe before making a decision."
Gary Kenline agreed. The senior vice president at Hunt Real Estate Corp. said the company saw its business rise "significantly" in November from the prior year. At the Williamsville/Clarence office, which he oversees, sales were up 40 percent.
But "generally speaking, there's a little bit of a breath here," Kenline added, noting that well-priced, quality homes in good neighborhoods are now getting two to three offers, not 15.
Annabelle Aquilina, another Hunt agent, said she's seen fewer people calling on listings and going through open houses since October, which is usually busy.
Buyers also are not having to offer as much money to win the day. While homes were selling for their most recent asking price in June and July – a highly unusual occurrence in Western New York – sales now are commanding a more normal 98 percent of their latest asking price, according to data from the Buffalo Niagara Association of Realtors.
And contingent offers – the bane of buyers' existence during the heat of the market – are being accepted again, "which is a plus for buyers needing to sell a home," said Greg Straus, broker-owner of 716 Realty Group.
"I'm having a lot of success offering low," he said. "The key today is to price it right, for today."
Shifting factors are at play within the housing market.
On the one hand, the local economy is solid. With unemployment now below 4 percent and at its lowest point in at least 28 years, wages have started to creep higher after remaining stubbornly stagnant during most of the recovery from the Great Recession. With the expansion now in its ninth year and on the verge of becoming the longest period of economic growth in 150 years, the average weekly wages earned by local workers grew by almost 4 percent during the first half of this year, according to data from the U.S. Bureau of Labor Statistics.
But with the recent uptick in mortgage rates – which had dipped below 4 percent and now have increased by about a percentage point – affordability is becoming more of an issue, particularly in other parts of the country that have seen bigger jumps in housing values and have much higher prices to begin with.
"I’ve been telling clients all along that rates are going to go up. That’s just what’s going to happen. That’s how it goes," Lenahan added.
Affordability is not as much of an issue here, however. Despite the strong housing market in Buffalo Niagara, the rise in home prices has been slower here, with prices increasing by 33 percent since 2012, according to data from the Federal Housing Finance Agency, which includes both home sales and appraisals. The increase is 22 percent – or about half of the national average after adjusting for inflation, which means that the housing boom here has been far weaker than in other parts of the country.
"Housing prices over the last 20 years have risen much slower here than the rest of the country," said George Palumbo, a Canisius College economist. "They've risen faster more recently, but it's from a much lower base."
Indeed, the median price of homes that sold over the last 12 months in the Buffalo Niagara region is around $150,000. That's hovering near record levels for this area, but it's more than $100,000 less than the nationwide median price of about $255,000, according to the National Association of Realtors.
So while the rising prices and higher mortgage rates have made homes here less affordable in absolute dollars, buyers here still don't have to stretch as much to buy a house as they do in markets with much higher home values.
"Interest rates are still historically low, and most buyers realize that," David, of Howard Hanna Real Estate Services, said. "So while it may be frustrating to some that they’ve increased, the reality is that they couldn’t stay where they were forever."
Agents say they're optimistic about next year, too.
"I think there are some people who have been sitting back, but they need to sell their house, for whatever the reasons," Lenahan said. "I think we’re going to see some product come on the market, and we’ll have people snap them up."