Home sales in the region took a turn for the better last year, and industry professionals expect to build on that trend this year, both in existing and newly built homes.
“As long as these [mortgage] rates stay low, we’re looking at a real good 2013,” said Phil Aquila, general manager of M.J. Peterson Co.
Aquila and others say mortgage rates below 4 percent continue to create an attractive sales climate. All they need, they say, is more buyers and sellers to start taking advantage of the rates.
Western New York has long had a reputation as a housing market that avoids the extreme highs and lows of some parts of the country, like Florida, Arizona and Nevada. Real estate business leaders say that steady pattern has continued.
The Buffalo Niagara Association of Realtors reported that closed sales from January through November – the latest available numbers – were up 8.6 percent from the same period in 2011. Closed sales in November alone were up about 6 percent from the year before.
Another trend worth watching is the number of homes on the market. In late 2012, the average was around 5,100, and the number declined on a year-over-year basis each month throughout the year to reach that point. In mid-2011, the average was as high as 7,000 units.
“Things are selling faster,” Aquila said of the lower supply. “It’s getting back to the way it should be.”
The lower inventory presumably benefits sellers, with the reduced supply driving up prices and generating competing offers. But real estate agents also want to see enough homes on the market so that buyers who are ready to make a purchase can follow through.
Peter Hunt, chief executive officer of Hunt Real Estate Corp., said he is encouraged by current residential real estate conditions. “I think we’re into kind of a fairly pleasant and protracted period of market strength.”
Areas such as North Buffalo, the Elmwood Village, Hertel Avenue and the villages of Hamburg and East Aurora are doing well, supporting the premise that “walkable” neighborhoods also make for attractive real estate markets, Hunt said. And he says two-family homes, which create an investment opportunity for the buyer, are especially hot properties all over. “They make all the sense in the world, if you think about it,” he said.
Hunt said if homeowners have been hesitant about putting a home on the market, the conditions are unlikely to get better than they are now. So why aren’t more people taking that step?
“I think there are some people who are discouraged just because of the news of the past few years,” he said.
Aquila has a similar view: If the economy starts to strengthen, he said, interest rates could start climbing, leaving people to regret they had waited to act.
Just as all real estate is local, the amount of available inventory can be price-dependent. Shortages might apply to homes in some price ranges but not in others, and availability can differ from one community to another.
Aquila says home sales are particularly strong in the $125,000 to $275,000 range. Sales at the upper end “aren’t dead” but are moving more slowly, he said.
The region’s median sale price was showing improvement as of late last year. In November, the 12-month average for the median sale price was $120,200, up 3.7 percent from the same period the year before. (The figure means half the homes sold for more and half sold for less than that price.)
On a national level, Lawrence Yun, chief economist for the National Association of Realtors, said he viewed 2012 as a turnaround year. In comments he made with the release of his 2013 forecast, he said the industry was starting to come around last year “after four very, very tough years.” He estimated sales rose about 10 percent last year, and he predicted an additional 5 percent growth this year – a slower rate, but growth nonetheless.
Yun mentioned the threat posed by acute shortages of inventory in some metro areas. In the worst-case scenario, he said, a shortage drives up prices at a rate that far exceeds income growth, a disparity he called “not healthy for the country.”
The economist said the real estate market last year benefited from four positive trends – job creation, rising rents, household formation and low interest rates – and he expects those trends to continue, laying the groundwork for another good year of sales.
New-home construction is another significant element of the residential market. John Manns, vice president of sales and marketing for Marrano Homes, said Marrano had an exceptionally strong October-through-December quarter. Customers signed 16 deals last month alone. “I’ve never seen a December like this in my career,” he said.
The people signing those deals, he said, are planning for spring delivery of their homes. Manns sees this activity as a sign of consumer confidence. “People aren’t afraid to sell their homes. They aren’t afraid to put their homes on the market.”
Marrano’s new activity spans the housing spectrum, from townhomes to single-family homes to high-end properties, Manns said. For instance, five customers signed deals in December for the upscale Greythorne patio home development in Amherst. “These are people who don’t do things unless their investments in stocks and things are good.”
Christopher Tucker, the new president of the Buffalo Niagara Builders Association, also saw more activity than usual from customers in December and January, a sign of increased confidence.
Joseph McIvor, executive director of the BNBA, said his group’s members have learned to look for ways to generate more business to manage their growth.
“We’re still dealing with coming out of the recession that didn’t hit Western New York and Buffalo as hard as other parts of the country, but the national publicity put a pall on everybody,” McIvor said.
“I think in our industry, you’ve got to be concerned with diversifying your company, because it’s not like we’re a boom city and there’s going to be a tremendous amount of growth moving forward,” he said. “Every other house you look at in Western New York is over 50 years old, so you’re probably doing remodeling, you may be doing some light commercial, you may be doing multifamily [housing]. … All of those issues are, how do you survive in an industry that has so many challenges against it?”
The Horizons Home Show, the industry showcase that was revived in 2012 following a one-year hiatus, will be back for a 2013 edition. McIvor said builders were pleased with the turnout for the show at Spaulding Greens in Clarence, a town which is home to several emerging residential projects.
While BNBA leaders were still finalizing their plans this month, they were talking about hosting a two-site show, potentially at Spaulding Greens and Emma Woods in East Amherst. The expanded Horizons format has not been used in a number of years.