There really is no free lunch. The aphorism comes to mind in considering the matter of housing costs in Buffalo. They’re going up, so much and so fast that builders can’t afford to construct houses priced for first-time buyers. That’s one of the costs of Buffalo’s welcome and ongoing revival.
As problems go, it’s not a bad one to have, especially since it goes hand in hand with an area’s desirability. Prices go up and some people can’t afford them. That’s supply and demand.
Buffalo has an opportunity to play those rising prices to its advantage by encouraging lower-cost housing projects in areas that have long resisted the developer’s eye. While that could include a number of neighborhoods, the city’s East Side is an obvious place.
Between its vacant lots, substandard homes and lower land costs, it’s a section of Buffalo whose time has come. It offers the flip side of the coin that is driving prices out of reach in other neighborhoods.
That phenomenon is what one expert called “a new normal” in Buffalo.
“Builders are building, absolutely,” said Jessica Lautz, vice president of demographics and behavioral insights research for the National Association of Realtors. “But they’re building at higher price points, and there’s no impetus for that to change.”
It’s a big turnaround for Buffalo, a city that not so long ago was better known for its declining Rust Belt inheritance – that and snow – than for its many assets. That has changed. Between the continuing, long-awaited development of the city’s waterfront and the economic expansion driven in large part by the Buffalo Billion economic development program, the city is now a magnet for Millennials, empty-nesters and others who are drawn by the lure of urban life, especially in a city with as much going for it as this one does.
But the cost: After years of stagnant prices, Buffalo is hot. The improving local economy and low interest rates have turned an oversupply of houses for sale into a shortage. The result is that Buffalo-Niagara’s long-depressed housing prices are rising faster than in any other upstate market – up 35% since December 2011, according to data from CoreLogic and the Federal Reserve Bank of New York.
"Buffalo is the shining star among the upstate metros,” Jaison Abel, regional economist at the Federal Reserve Bank of New York, told The News. “We’ve had the fastest home price appreciation in decades and are outpacing the rest of upstate New York.”
For sellers, that’s been a bonanza. For buyers, it’s a frustration as bidding wars erupt in some neighborhoods and builders meet a demand for higher-priced homes.
But, as is usually the case, the city’s East Side lags. That’s long been its plight as advantages that come to other neighborhoods pass it by.
This time, though, things can be different.
The East Side is in the development sights of the Buffalo Billion. The Northland Workforce Training Center is helping to produce able employees from the East Side. The state is investing money in East Side infrastructure, prompting developers to predict substantial private-sector investment.
Why not housing?
It’s possible to build lower-priced homes, including prefabricated structures whose elements are constructed off site and assembled on the property they will occupy. That would not only provide lower-priced housing in a city where that is increasingly hard to come by, but will count as another building block in the East Side’s pending revival. And it will expand the city’s tax base.
Some public incentives might be needed to start that ball rolling, but this is the time to do it. Buffalo, itself, is on a roll and the city now has a golden opportunity to help would-be homeowners, a struggling neighborhood and its own rising fortunes. Why wait?