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Housing market expected to pick up in spring

By: Denise M. Champagne//April 22, 2011

Housing market expected to pick up in spring

By: Denise M. Champagne//April 22, 2011

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Better weather is expected to provide a sunnier outlook for the local housing market, which saw a sharp decline in sales from the end of last year, but is relatively on par with the first quarter of 2011.

Year-end and fourth-quarter statistics on the regional market were released Thursday by the Greater Rochester Association of Realtors Inc.

The number of listings for the 11-county Genesee Region is up 32 percent from the fourth quarter, but down 24.5 percent from a year ago, while actual sales are down 23.7 percent from the fourth quarter of 2010, but down less than 1 percent from a year ago.

Carolyn Stiffler, president of the GRAR board of directors, said the year-end holidays and bad winter weather in the first quarter were a factor.

She said January is always a big push for new listings and that last year was up because of federal tax incentives for first-time and repeat homebuyers.

“While we were wondering how much influence the tax credit would have on buyers, looking at this past quarter’s inventory, it is abundantly clear that people looking to sell took advantage of listing their home in the closing months of the credit,” Stiffler said.

Transactions for the first quarter showed a 9.3 percent decrease with 1,634 homes sold the first three months of 2011, compared to 1,802 in 2010. In Monroe County, 842 homes were sold in the first quarter of 2011, compared to 1,104 in the fourth quarter of 2010 and 868 in the first quarter of 2010.

Several towns experienced year-over-year sales gains including Gates, Hamlin, Henrietta, Ogden, Perinton, Pittsford, Sweden and Rush, as well as the town of Victor in Ontario County.

“The purchase offers right now have been slow in this first quarter,” Stiffler said. “We’ve had some very challenging weather from snow, more snow and even snow today. Our whole first quarter has been very challenging for weather — when you look at April 21 and it’s snowing.”

She said when the weather is bad, people will put off house hunting. Better weather and a national marketing push in June are expected to improve sales.

The National Association of Realtors, joined by GRAR and others throughout the country, is planning a national open house weekend June 4 and 5.

“For homeowners who may not be on the market, that is an excellent time,” Stiffler said. “Nationally, a lot of focus is going to be on that open house.”

Sales prices have remained relatively stable. The median 2011 first-quarter sale price of $114,900 reflected a 1.7 percent increase compared to a year ago when the median sale price was $113,000. That is down 3.8 percent from $119,500 for fourth quarter 2010.

Ryan Tucholski, GRAR chief executive officer, said prices have grown from 2009 and are at realistic and sustainable levels. He said the market, aided by low mortgage rates, remains very affordable and favorable for qualified homebuyers.

“Locally, Realtors remain optimistic about the 2011 housing market, especially if both consumer confidence in the economy and access to mortgages for those with good credit improve,” Tucholski said.

The Mortgage Bankers Association of the Genesee Region predicts interest rates will rise slightly in 2011 with a steady trend to 5.6 percent by the end of the year. However, MBA President James Condello said rates are about 20 basis points below the 2011 first quarter forecast because of mixed data on the job market and the economy.

He said conforming loan size interest rates in Rochester and surrounding counties are essentially on par with most areas of the country, remaining close to a 40-year low, which has a major impact on affordability.

For example, Condello said between January 2006 and January 2008, the 30-year fixed rate mortgage was at approximately 6.5 percent. On a $200,000 home purchase with a 20 percent down payment, a family would pay more than $150 more a month compared with payments based on current interest rates.

He said despite the forecast of a slight interest rate increase this year, purchase transactions are expected to rise in total units and as a percentage of total purchase and refinance transactions.

Winter weather also affects homebuilders who report traffic is up in their model homes although consumers are not yet buying.

“There has been an increase in activity the last month or so despite the weather,” said Dan Viola, 2011 chairman of the Rochester Home Builders’ Association and president of Viola Homes in Penfield. “Part of it is the normal spring market; however the poor cold weather has not inspired the ‘real’ buyers in the marketplace yet.”

The Rochester Home Builders’ Association reported a decrease in building permits the first quarter of 2011 compared to 2010. Decreases in Monroe and Wayne County were somewhat explained by a surge of building permits in December due to new state energy and electrical codes.

“A new code went into effect in January, so a number of builders took out permits prior to the new code to save their buyers money,” said Rick Herman, the association’s CEO. “December 2010 was double that of ‘normal’ Decembers due to the new and more expensive [state] code.”

Viola said many area builders are still optimistic and look forward to an increase in homebuilding the second quarter.

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