BUFFALO’S BUSINESS
Goldilocks home market looks hot
Our Goldilocks housing market is looking pretty good.
In fact, our housing market is looking downright hot lately, compared with the rest of the country. And there are a handful of reports that have come out in the last few weeks that make the long-maligned Buffalo Niagara housing market look like one of the nicest places around.
There’s a big reason for that, of course. Our housing market is pretty much chugging along the same way it has been for years and years. Home prices here are still low and keep rising by just a little bit each year, which helps keep it fairly affordable to own a house here.
It’s the rest of the country that has changed. After shooting past us during the go-go days of skyrocketing home prices, those areas are plunging back to earth, leaving a trail of foreclosures and wrecked family finances in their wake.
In that changed landscape, the Buffalo Niagara housing market has pushed its way to the top of the national rankings for home price appreciation.
In one first-quarter report by the Federal Housing Finance Agency, the Buffalo Niagara region ranked fourth out of 294 metropolitan areas for home price appreciation over the last year.
In another, by the National Association of Realtors, the increase in median sale prices here was the 10th highest during the first quarter.
But it also is striking how little has changed here, despite the region’s steady climb up the national rankings. While being a top 10 housing market might sound hot, our home values really are still only lukewarm.
The Federal Housing Finance Agency report, based on data from mortgages used in home purchases and refinancings, pegged the annualized increase in first-quarter home prices here at a tepid 3.3 percent. The National Association of Realtors report, which is based on homes sold, put the increase at 2.7 percent.
That won’t take your breath away, but it’s a whole lot better than the 7.1 percent decline nationally, according to the federal report and the even steeper 13.8 percent drop in the Realtors report. But our first-quarter median sale price of $99,200 still ranks just 136th out of 158 markets in the Realtors’ survey.
Of course, there’s also no question that the local housing market has cooled, with the Great Recession squeezing home buyers finances and banks getting tougher about making loans to marginally qualified buyers. Home sales here are down 16 percent through April, while pending sales, which are deals that haven’t closed yet, are off by 10 percent, according to the Buffalo Niagara Association of Realtors.
The supply of homes for sale is down, too, and that’s helping to keep the market in balance. New listings are down by 12 percent through April, which has kept a very manageable six-month supply of homes for sale, far healthier than the 10- month supply nationally.
As a result, researchers at forecasting firm IHS Global Insight say home values in the Buffalo Niagara region are undervalued by almost 7 percent. That calculation is based on home prices and interest rates, as well as household incomes, population density and the historic premiums and discounts in a given market.
Our stable market also keeps pricing expectations by sellers in check. A little less than a quarter of the homes currently for sale here have reduced their asking price at least once, which is right in line with the national average, according to California real estate firm Trulia Inc. And those price reductions don’t tend to be severe, averaging 6 percent in Erie County, far below the nearly 11 percent average price reduction nationally.
“Your market has come to grips with what the real market value is,” says Ken Shuman, a Trulia spokesman. “There’s only a few markets like that.”
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