Fewer homes changed hands in the Buffalo Niagara region in July, prices fell, and the number of homes available for sale dropped as the hot local housing market appeared to stall in early summer.
According to new figures from the Buffalo Niagara Association of Realtors, the number of closed sales in July fell 7.3 percent to 1,096, continuing a streak of mostly negative year-over-year comparisons since last November. Indeed, through July, sales for the year are down 5.2 percent, to 5,309.
Prices also tumbled, as the median price – half sold for more, half sold for less – fell 4.5 percent in July to $127,000, while the average dropped 7.4 percent to $151,008.
And the total inventory of homes for sale in the eight-county area fell 7.1 percent to 5,432, despite a 5.6 percent increase in new listings to 1,852. At that level and sales rate, the supply would last 6.2 months, down 8.8 percent and just barely above the level that is considered balanced by national experts.
Yet those negative figures don’t tell the full story of the market. In stark contrast to the lower closings, pending sales rose for the third straight month, up 9.9 percent to 1,126. As a result, for the full year to date, the number of contracts that were signed since January is now up 1.5 percent from 2013, to 6,714.
“The summer trend of having a hot housing market continues,” said Philip L. Aquila Jr., general manager of residential real estate for M.J. Peterson Corp. and longtime head of the multiple-listing service. “It’s positive, looking better heading into the fall, that we will have a better year.”
However, while pending deals mean a signed contract to buy a house is in place, the sale is not final. Home sales in New York typically take about 60 days to close, and many are now taking as long as 90 days. So the gap between pending and closed sales indicates many deals are either significantly delayed or that they’re falling through between the signing of the contract and the closing table.
According to BNAR data, 5,588 sales contracts were signed during the first six months of the year, through June. But those pending sales translated to just 4,716 closed deals from February to July. It’s not clear what’s happening with the rest of the lingering deals.
“We’ve had a lot of deals fall apart based on the inability of people to give,” said Miriam Treger, a real estate agent and branch manager for RealtyUSA, the biggest real estate firm in the area.
Stan Palczewski and his fiancée, Jennifer Lowell, are selling their two houses in Ashford and Cheektowaga, respectively, and buying a third one in Eden to move in together. They listed their separate homes in late May through RealtyUSA, with Lowell’s home finally going under contract last month. Palczewski’s has been on the market for $125,000 with no luck since the first few days.
“It is quite frustrating,” the 39-year-old cell site technician and disabled Army Special Forces support veteran said. “I don’t understand. You hear that it’s a sellers market, and I’m not seeing it here.”
Treger said many deals that were signed amid harried bidding wars within hours or days of the initial listing later fell through, leaving the seller to turn to the second or even third offer.
Home inspections and financing problems appear to be the two biggest culprits in canceled sales, Treger said. Describing the home inspection as the equivalent of “discovery” in a lawsuit, she said it’s the opportunity for buyers to ensure they are getting their value.
Banks have also become “a little more stringent with their lending practices,” which sometimes results in “dry closings where people don’t show up with the money” because the buyer can’t get a loan, she said.
In addition, the heavy flurry of activity earlier in the year also drove many potential buyers “to the sidelines” after they couldn’t compete with no-contingency or cash offers, said Peter Scarcello, general manager for Buffalo Niagara for Hunt Real Estate Corp. “If they need seller concessions and they’re in a competitive situation, their financing disadvantages them,” he said.
Instead, buyers are waiting until the market settles down in the fall and winter, when properties tend to sit for longer and buyers aren’t rushed and pressured into making hasty decisions. “That is the best time for people to buy, especially if they have to use seller concessions,” he said. “If they have to get into a hot market, they can’t compete.”
BNAR’s figures include all arms-length transactions handled by Realtors in the eight-county area, plus a handful of deals in Monroe and Livingston counties. Sales cover single-family homes, townhomes and condos.