What a difference a few years can make.

Just four years ago, with housing prices in the Buffalo Niagara region increasing by a

little more than 3 percent a year, the local real estate market looked like a real laggard,

with homes here appreciating at about a quarter of the national rate.

Compare that with today. Median home prices locally are still rising at about the same pace

— just under 3 percent in 2009 — but because the bottom has dropped out of the

national housing market, the Buffalo Niagara region has gone from a laggard into a hot spot.

During the third quarter of last year, the Buffalo Niagara region's 4.8 percent increase in

median home sale prices was the highest in the Northeast and the eighth-highest nationally.

In short, not much has changed in the Buffalo Niagara region's slow and steady housing

market.

But a lot has changed nationally, where median sale prices have dropped for three straight

years, leaving them more than 20 percent lower than they were at the end of 2006, and even

steeper declines in some regions have spawned a flurry of foreclosures.

A key difference between the Buffalo Niagara region and the rest of the country, however,

is that local housing prices have risen only modestly over the last 20 years. The median sale

price of a home locally has risen at a compound annual growth rate of 2.5 percent since 1989.

Nationally, the average annual growth in housing prices has averaged almost a full percentage

point more annually, even after the recent collapse.

"We had suffered in our market, while other parts of the country had explosive growth,"

said John Leonardi, the chief executive officer of the Buffalo Niagara Association of

Realtors. "It helped protect us when the bottom fell out everywhere else."

As a result, the local median sale price of $119,700 during the third quarter, while a

record high for the Buffalo Niagara region, was almost a third lower than the national median

of $177,900, according to data from the National Association of Realtors.

"Having largely missed the housing bubble, and now experiencing moderate unemployment,

housing markets in these [upstate] metros are much more stable than those in Florida and the

inland West," Brookings Institute researchers said in a recent report on the Great Lakes

regional economy.

Those lower prices make housing in the Buffalo Niagara region more affordable, which opens

up the potential of home ownership to a broader pool of buyers.

The National Association of Home Builders, which issues a quarterly index that measures

housing affordability, ranks the Buffalo Niagara region as the nation's 39th most affordable

housing market.

The trade group said 85 percent of the homes sold in the Buffalo Niagara region during the

third quarter were affordable to families earning the area's median family income of $63,500.

That affordability level hasn't changed much over the past two decades, averaging 81

percent over that period.

That's in stark contrast to the national affordability figures, where the housing group

says just 56 percent of the homes sold over the last 20 years have been affordable to families

earning the median household income. While that national affordability figure improved to just

over 70 percent in the third quarter, it still was lower than it's been during any quarter in

the Buffalo Niagara region going back to 1989.

Leonardi, however, believes that high local property taxes hurt affordability in the region

and keep a lid on potential price growth in the local housing market.

Even so, the slow-and-steady local housing market also is grounded in fairly sound

fundamentals. The supply of homes for sale has stayed in relative balance, with the number of

homes listed for sale equaling a little more than six month's worth of sales.

Mortgage rates hovering around 6 percent have further bolstered affordability. The $8,000

first-time homebuyer tax credit included in the federal stimulus package bolstered the demand

for lower-end homes last year, and the extension of the credit to provide up to $6,500 to

current homeowners through the end of April will provide a further boost on the demand side.

The pace of home sales also has held up fairly well, sliding by 3 percent through November

of last year. Home sales were especially soft to begin 2009, with the declines topping 20

percent through the first three months of last year. But sales rebounded during the summer,

buoyed by a surge of first-time buyers.

"There is no question that the federal first-time homebuyer tax credit has been a

significant driver of home sales," said Duncan R. MacKenzie, chief executive officer of the

New York State Association of Realtors.