By: Denise M. Champagne//October 22, 2012
By: Denise M. Champagne//October 22, 2012//
Increased consumer confidence is showing up in the housing market where sales and the number of new building permits are increasing.
Home sales are up for the fifth consecutive quarter, according to Stephen J. Babbitt, president of the Greater Rochester Association of Realtors, who released third-quarter results Friday.
The number of quarterly closings increased 7 percent to 3,084 for the quarter that ended Sept. 30, from 2,887 for the same quarter in 2011. Sales are up 17 percent from the second quarter when there were 2,640 closings.
Babbitt said interest rates remained the same for the last five quarters and there was no federal stimulus money, so the figures are an indication of what is really happening in the market.
“It’s the beginning of consumer confidence,” he said. “It’s still a cautious market; by no means a very explosive market.”
Babbitt said prices are remaining stable because there is not a lot of excess inventory. That coincided with a decrease in sales activity, which he said is unusual.
“That’s been an interesting factor about our whole local statistics,” Babbitt said, noting they matched each other; each dropping about 20 percent. On the flip side, if inventory went up at the same time sales activity decreased, there would have been a larger excess in inventory and home prices would have dropped.
Babbitt attributes that to most local sales being made by local purchasers. He said a lot of people put their plans on hold and decided to make do with what they had for the time being, but that is beginning to change.
“They’re seeing that the national economy is just the national economy and I need to do what I need to do for my situation,” Babbitt said. “What we’re seeing, I think, is a return of consumer confidence.”
As for the outlying areas, he said they exploded with double digits, which he also attributes to growing consumer confidence.
Babbitt pointed to Wayne County, which he said has been struggling — it showed growth of 6.1 percent from quarter to quarter, although it is down 5.5 percent from a year ago — in terms of the number of homes sold. The median price of homes in Wayne County has increased 17.5 percent from the same quarter a year ago, from $106,000 to $124,500. Prices are down slightly, from $125,000 to $124,500, when comparing the second quarter of 2012 with the third.
The biggest gainer in Monroe County towns in terms of the number of homes sold from year to year is Perinton, including the Village of Fairport, which saw a 47.4 percent jump from 116 in the third quarter of 2011 to 171 this third quarter, although the median sales price dropped by 0.8 percent. In terms of median price increase from 2011 to 2012, Parma, including the Village of Hilton, saw a 22.4 percent rise from $125,000 to $153,000.
The largest decrease in number of homes sold was 23.2 percent in the Town of Ogden, where 43 homes were sold in the third quarter of 2012, compared to 56 in the third quarter of 2011. The largest drop in median home prices was 13.2 percent in the town of Webster, including the village, where prices declined from $189,900 for the third quarter of 2011 to $164,900 for the third quarter of 2012.
The number of homes sold in the city of Rochester dropped 20.4 percent from 348 in 2011 to 277 for the same quarter in 2012. The median price, however, increased 19.7 percent, from $71,000 to $85,000.
Babbitt said the figures will vary from quarter to quarter, but across the board, year in and year out, the Town of Brighton is always strong.
He is predicting an increase in activity for the fourth quarter, noting a lot of pending sales will show up by then as closings.
“The market is extremely well,” according to Rick Herman, chief executive officer of Rochester Home Builders’ Association Inc., who said model home activity is at its strongest in more than three years.
“We’re seeing much more activity in the last six months than we have in several years,” Herman said. “It doesn’t mean we’re back to normal. I don’t know what the new normal will be.”
New home permits have risen 16 percent in Monroe County, from 557 issued in the first three quarters of 2011 to 648 through Sept. 30. Ontario County saw a 25 percent drop, from 209 to 157, while Wayne County decreased 36 percent, from 77 to 49.
Herman said not to be alarmed by the figures in Ontario and Wayne counties; that they’re skewed a bit from special projects. For instance, some permits were pulled all at once for some larger housing projects still under construction.
Herman said most builders at the recent Parade of Homes told him traffic was double or more in a lot of places.
“Consumer confidence is starting to come back,” he said. “I think things are starting to pick up in a lot of different areas in our region. Our job market is solid, not like other parts of the country. I think this is what we needed. We needed to get the housing market back on its feet. We employ a lot of people.”
He acknowledged an increase of people looking at homes does not necessarily translate into sales, but that is expected to follow.
“I think the spring will tell a lot; the first half of 2013,” Herman said. “Then we can identify what the new normal is going to be because I don’t think we’re going to go back to the numbers we saw in the 1970s or the 1990s. I think you’ll see our numbers will stay on the increase as other parts of the country start to recover, as well.”
He added that new home building has picked up nationally in the past three quarters with the National Association of Home Builders predicting housing will continue to improve over the next few years due to pent-up demand that built up during the recession.
James Condello, past president, Mortgage Bankers Association of the Genesee Region, predicts that interest rates will increase slightly this year to about 4.1 percent for a 30-year fixed-rate mortgage, but said current rates of about 3.5 percent are still below what has been forecasted.