By: Kevin Oklobzija//January 28, 2022
By: Kevin Oklobzija//January 28, 2022//
As the number of houses for sale remained at record low levels in Monroe County throughout 2021, prices continued to soar and sellers in every community routinely received more than they were initially asking.
The median sales price jumped to $190,000 last year, an increase of 11.8 percent, and the spike since 2017 is even more pronounced: up 37.8 percent.
But nowhere was the increase more dramatic than in the city of Rochester, where the median sales price skyrocketed by 68.8 percent between 2017 and 2021, from $77,000 to $130,000, according to data in the annual Marketwatch Report by the Greater Rochester Association of Realtors (GRAR).
“We have become less affordable,” said Lanie Bittner, associate broker at RE/MAX Plus and president of the GRAR. “When you compare it to the national average, we are still very affordable. But we need to figure out how to create more affordable options for the people that are having trouble affording what we do have.”
Simple economics have dictated the market shift. For 2021, there was less than a half-month’s supply of homes on the market on average as the inventory shortage rages on for a third year. A supply of 6 to 6.5 months is considered a balanced market. Monroe County was at 0.4, the lowest figure in New York.
The state-wide average month’s supply was 2.1. Just four other counties had a supply of less than one month: Genesee and Tompkins at 0.6, Erie at 0.7 and Wayne at 0.9.
“It’s all driven by the same thing,” Bittner said. “There are no houses and there is great demand.”
To prove demand far outweighed supply, sellers in the 21 Monroe County municipalities listed in the Marketwatch Report on average received more than their original listing price when the house sold. In fact, on average, sellers received 108.6 percent of original asking price, according to GRAR data.
“I don’t know if that’s ever happened, but that number scares me,” Bittner said. “It sets an unrealistic expectation for the seller in the future.
“Are sellers in the driver’s seat? Yes. But anecdotally, we saw more of that in the first quarter and second quarter, and then that shifted a little bit in the second half of the year.”
Still, homeowners may go into the selling process with the notion that the listing price is only a starting point for what surely will trend upward, which isn’t necessarily realistic. In 2017, the average home sold for 95.2 percent of listing and 96.5 percent in 2019.
“A sale at list price is still a successful sale,” Bittner said.
Houses that sold on average for highest price over asking were in East Rochester (111.8 percent) and Irondequoit (111.3 percent).
Affordability is one reason Rochester became a more enticing market, according to Mark Kunzer, manager, business development mortgage originations at ESL Federal Credit Union.
“The first-time homebuyer is being priced out of the suburbs and the look is to the city,” Kunzer said. “With 40 to 45 percent of the market first-time homebuyers, I think they’re looking at the affordability of the city.”
The increased demand and competition, in turn, drove prices upward within the city limits. And pushed many hopeful homeowners to the sideline.
“When it comes down to a higher income person or a lower income person competing for the same house, if you have more assets, you can go over and above that asking price,” said Carol Wheeler, manager of housing for the city of Rochester.
“Bids are 10, 20, 30, even $40,000 over asking price,” Wheeler said. “Does it push the little person out, the person with less income? More often than not, yes.”
The city tries to help close those gaps with three programs to assist homebuyer: Home Rochester, which is for households earning less than 80 percent of the area median income; the Homebuyer Assistance Program, which provides $3,000 for closing costs; and the Employee Assisted Housing Initiative, which works in conjunction with employers to provide incentives for employees to purchase a house within the city.
There are other programs to help the first-time homebuyers as well. ESL launched a program specifically for Black and Latinx buyers. If buyers provide $1,050 for a down payment, in six months it will turn into $10,500, Kunzer said.
The Federal Home Loan Bank of New York also offers $10,000 income-based grants to first-time homebuyers.
But as interest rates tick upward from recent historic lows, applicants won’t have the same loan qualification limits.
“It was roughly two-and-a-half times what you make, but as interest rates creep up, it might be two times your salary,” Kunzer said.
One thing that hasn’t changed in the market: the keys to a successful sale.
“Houses that are in great showing condition and priced appropriately sell,” Bittner said.
Realtors are able to help clients settle on a listing price based on features and by comparing similar recent sales in the area. But just because a house three doors down the block sold for $180,000 doesn’t mean the next house will match that price. Maybe the other house had a deck, or remodeled kitchen or home office.
Even so, it’s very much a seller’s market, regardless of the time of year. While springtime is still the start of the busy season in the residential market, sellers very likely will find plenty of buyers in the dead of winter.
“You’re seeing more people that might have waited until the big spring market who are listing now,” Bittner said. “We have so much demand that people are looking year-round.”
The February sale could come with a caveat, however. The seller may not be planning to vacate until May or June.
“Sellers are in a fortunate position so they can set their terms,” Bittner said. “Buyers have had to become more flexible in the last few years, and the more flexible you can be, the better.”
The $130,000 to $180,000 price range has been a very sweet spot, but even homes with a price tag of $100,000 are becoming more difficult for first-time buyers to afford and/or submit a successful bid.
“There is significantly more competition for buyers in that market,” Bittner said. “There’s not that much available and there’s a lot of people looking.”
The trends were not limited to Monroe County, either. In Orleans County, the median sales price soared by 68.5 percent between 2017 and 2021, from $81,000 to $136,500. In Wyoming County, the increase was 57 percent ($94,500 to $148,400) while the jump was 50.9 percent in Genesee County ($106,000 to $160,000) and 44.6 percent in Ontario County ($155,000 to $224.900).
“The question now is, ‘Is this where prices should be?’” Wheeler said. “If they stay at this level, then we will know. We’re hopeful things are going to level out.”
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