Creative bidding, work-from-home space now housing market norms

Which space could become the home office, can more cash be accessed if the bidding takes off and are you willing to accommodate post-sale needs of the seller have become common topics of discussions between homebuyer and Realtor as the scarcity of houses on the market continues in the Monroe County area.

The number of homes for sale in the second quarter dropped more than 50 percent over the past two years, from 1,201 in 2019 to 550 this year, according to the Marketwatch Report numbers released today by the Greater Rochester Association of Realtors (GRAR).

New listings also fell 13.6 percent, from 3,686 in 2019 to 3,185 this spring while the median sales price soared to 201,001, a spike of 22.9 percent. With much of the real estate industry shut down in April and May of 2020, a comparison to 2019 likely provides a more accurate reflection of trends than the usual year-over-year look.

So with the months supply of available homes in the GRAR’s 12-county area still woefully low, association president Lanie Bittner said real estate agents are educating buyers on the best approach when making an offer as well as how to make a bid more attractive.

All-cash offers are by no means the majority of transactions, but they are much more common. And it may be imperative that a buyer have a little extra cash to close the sale just in case the appraisal comes in below the sale price, because the mortgage lender will only lend to the appraisal amount.

Also, sellers sometimes can’t move immediately, and may have conditions built into their sale demands.

“Can you accommodate if the seller wants to rent back for a period of time after the sale?” Bittner said.

That’s become a more real scenario since the seller may also be a buyer and the market can’t meet their wants. And even if the seller wanted to rent during their home search period, apartments may not be available. The low supply of houses for sale now is impacting apartments, said Jim Barbato, president of the Rochester Home Builders Association and president of Pride Mark Homes.

“We have very long waiting lists for our apartment communities,” Barbato said. “Homeowners are thinking they can sell at a high price and then rent, and finding there’s an overall shortage of housing.”

Builders have no difficulty selling homes, even with the cost of lumber and some other materials still three to five times higher than recent years. Those costs have added $40,000 or $50,000 to the average cost.

But, Barbato said, “there’s so much demand, we’ve sold everything we have. If you came to us today, with our construction lead time, it would be March before we get you into a new house.”

Lumber prices on the commodities market have come down in recent weeks, but the shift hasn’t reached homebuilders yet.

“We’re still working off high-priced inventory that distributors have,” Barbato said. “Plywood is as much as five times higher.”

Builders also continue to deal with labor shortages, which adds time to the construction process. As carpenters, framers, masons and other skilled laborers age out and retire, fewer and fewer young people are entering the trades.

To attract workers, pay rates are increasing, even those just beginning.

“We’re paying people more,” he said. “It’s a good-paying job now, it’s not an entry-level position anymore.”

Within the new-built homes, the open-space concept is attractive for buyers, Bittner said. As work-from-home arrangements become more permanent for some workers, deciding what space works best for a home office is now front-and-center during home tours.

“There may be a dining room but do you want a dining room? OK, what are other possible uses for the space?” Bittner said.

Work-from-home, educate-from-home and entertain-from-home are very much on the forefront for buyers in the post-pandemic real estate world.

And as interest rates remain at historic lows, homeowners are staying put longer. They know little exists on the market so rather than leave a house and neighborhood they’ve grown to love, they’re remodeling.

“When I started in this business 16 years ago, the average time in a house was five to seven years,” Bittner said. “Now it’s more like 15 years.”

As for mortgage rates, Sherri Forbes, president of the Rochester Mortgage Bankers Association said they should stay low for the foreseeable future, other than the usual blip in the fall.

“It’s been a very interesting and different real estate market,” said Rick Herman, CEO of the Rochester Home Builders Association, “but it’s been a good year.”

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