When Christopher and Amy Capalbo saw the four-bedroom house on Clarendon Place in Buffalo, they just knew they had to have it. They just didn’t expect what it would take.
The parents of two young children had looked at homes in the city for eight months, but “we never really saw anything we liked,” said Chris Capalbo, 36. “Something always was missing from our wish list.”
They already lived in one half of a duplex they owned in Depew, near where Amy worked as an art teacher, so they weren’t in a rush, but they were “slowly outgrowing” what they had after eight years. They considered building a new house in Orchard Park, but many of their friends lived in the city, and a new build “would have been a lot more expensive and our lifestyle would have been different than we had hoped,” said Capalbo, an information technology manager at Sodexho in Williamsville.
So when their agent, Kristan Andersen of Gurney Becker & Bourne, showed them the 2,400-square-foot, three-story house, on a street they liked, “we jumped on it.”
But it wasn’t so easy. Even after offering $10,000 more than the $349,000 asking price, they still found themselves in a bidding war with two other buyers just days after the house was listed. So they raised their price to $362,000, waived the inspection and any contingencies, and agreed to give the seller extra time to move in order to win.
“We had never heard of that in this area, a bidding war,” Capalbo said. “So we were a little surprised by that, but we knew we wanted it.”
The nation’s economy continues to languish in a tepid recovery and developers are still adding new rental apartments to the local scene, but the housing market is heating up in Western New York, particularly in some key neighborhoods and communities.
“This is the best time to buy a home that I have ever seen,” said Dan Symoniak, vice president and general manager for RealtyUSA. “The combination of adequate supply, relatively stable prices over the last several years and amazing borrowing costs have created a once-in-a-lifetime opportunity.”
Demand is high and some homes are selling almost as quickly as they go on, with multiple competing offers happening frequently. Throughout the area, homes are going for an average of 95 percent of the asking price, according to the Buffalo Niagara Association of Realtors. In many cases, bidding wars are driving prices well above the listed amount.
“Prices are wonderful,” said Ann Edwards, broker and owner of Realty Edge in Amherst. “Homes priced right to sell are going quickly and in many cases to multiple bids over asking. But the rates are so terrific that buyers are doing so well, too.”
Western New York’s affordable housing values have always tilted the buy-versus-rent equation in favor of “buy,” as consumers can own a decent home for as much or even less than they would pay to rent an apartment. The region didn’t suffer the massive decline in housing values that California, Florida, Arizona and Nevada experienced, but it also never experienced the boom that made homes unaffordable in those areas. So buying a home here has remained attractive. “For what you can get in Western New York compared to other cities, it always makes sense to buy, but particularly because the interest rates are so low,” Andersen said. “Your buying power is so much better. You can afford a lot more.”
Also, the supply of rental units is down, because more people are unable to qualify under the more stringent mortgage standards right now, so they’re renting apartments or homes until they can save enough money and improve their credit.
As a result of the demand, rental rates are going up.
So, with interest rates still hovering at record lows, real estate agents say now is a great time to buy.
“This is the best time in a long time to buy,” said Susan Lenahan. a broker at M.J. Peterson Real Estate’s City Office on Delaware Avenue. “I’ve been doing this for more than 30 years. They’ve never been lower. I’ve never seen the rents so high.”
After several tumultuous years of falling prices, weak demand and sluggish sales — tempered only by special tax incentives that propped up the market temporarily — the housing industry is coming back.
The Federal Reserve’s newest economic survey released last week, known formally as “The Beige Book,” found that stronger housing activity helped drive economic growth in 10 of the Fed’s 12 regional banking districts from August through September, and rising home sales drove prices up. That helped overcome generally flat consumer spending and mixed manufacturing activity.
The housing surge is driven heavily by the Fed’s efforts to keep interest rates low to spur more borrowing and spending, particularly by consumers.
The average interest rate for 30-year fixed-rate mortgages of less than $417,500 — conforming loans — fell to 3.53 percent at the end of September, according to the Mortgage Bankers Association’s weekly index. It ticked up a week later after six weeks of declines, but was still “historically low,” the group noted.
Loans backed by the Federal Housing Administration were even lower, at 3.34 percent, while 15-year fixed-rate mortgages were 2.90 percent. Both rates are the lowest in the 20-year history of the MBA’s survey.
As a result, mortgage applications nationwide increased 17 percent in one week at the end of September, according to the MBA. More than 80 percent of the volume stems from refinance applications, but home purchase loans also rose, and that continued into the first week of October. Purchase activity was up 11 percent to 12 percent from the same weeks a year ago, and hit the highest level since June, with both conventional and government loan volume increasing, according to MBA.
“The market is definitely better than it was a couple of years ago,” Andersen said.
Locally, the impact of the low rates is significant because prices are already inexpensive. For example, Symoniak noted that a borrower would pay $422 a month in principal and interest on a $100,000 loan at 3 percent interest over 30 years. For the same loan at 7 percent, which was common several few years ago, the payment would be $665, or $243 more.
And a $500 monthly payment for 30 years at 3 percent would buy a home for $118,594 (not including taxes). The same loan at 7 percent would only pay off a $75,153 loan. “Today, you get over $43,000 more house for the same money,” he said. “In our market, at this price range, that is a major difference in lifestyle.”
Most of Western New York remains a buyer’s market, because there are plenty of homes on the market in most price ranges, so sellers can’t command premium prices. That’s particularly the case with the suburbs. “Buyers are looking for good deals now, and you can definitely find some,” Andersen said. “The suburbs are a little more sluggish. There are a lot more houses, and the houses are not going as quickly as in the city.”
Carlo Zavatti Jr. and his wife, Anna, just bought a 3,701-square-foot, four-bedroom home on Stonebriar Drive in Clarence, to be closer to family members. The sellers had listed it for $439,000, but the Zavattis offered $400,000 to start — and found themselves in a bidding battle with another buyer well below the asking price. They won it for $412,500.
“We kept countering back and forth,” said Zavatti, 40. “We were surprised to see that there was a lot of activity on that street.”
They also sold their former house, also in Clarence, to his mother-in-law, who was downsizing from a five-bedroom home in Amherst, which also sold — all in a couple of months. “It was a quick turnaround,” he said. “There are definitely people out there who are looking.”
The key for sellers, agents say, is to do the research to price a home properly the first time. “It’s all about price right now. If you price your house correctly, it will sell very quickly,” Andersen said. “If you overprice your house, hoping you’ll get more, those are the houses that you’ll see sitting. People are not just going to pay anything.”
By contrast, she said, “homes go pretty quickly” in certain desirable neighborhoods of Buffalo, such as Allentown, the Elmwood Village or the Delaware District. “There is a shortage of housing right now in the city,” Lenahan said. “There are more buyers than there are properties that they want to buy.”
A few suburban villages have particular appeal as well, such as East Aurora or Orchard Park. “You can’t ever find a house,” Andersen said. “They come on the market and they sell quickly.”