The housing market in Rochester remains steady with increased sales of new homes, home building in demand, and low mortgage rates, officials said Thursday.
But 2017 has presented some challenges to home building—mainly weather.
“We’re status quo,” said Rick Herman, CEO of the Rochester Home Builders’ Association. “The homebuilding industry is active right now, we’re doing very well, we’re seeing increases but our biggest problem right now is getting into the ground, pulling permits and staying dry.”
The Rochester Home Builders’ Association has reported increases in building permit applications during the first half of 2017.
Total building permits for Monroe, Ontario and Wayne counties were similar to the first half of 2016 with 344 single-family homes and 212 multi-family homes.
Ontario County had a small decrease to 132 building permits and Wayne County also had a slight decrease to 27 total permits, according to officials.
“It’s kind of a catch-22 system that we’re in: low inventory, which is always good for new construction, but then the weather and somewhat of a labor shortage,” Herman said. “There was so much pent-up demand on housing and so much that was going on in the markets after the recession that things are really starting to boom.”
Some hotspots for building locally include areas of the city that are being looked at for redevelopment and in the suburbs of Penfield, Perinton, Pittsford, Victor, Canandaigua, Farmington, Ogden, Parma and Webster, according to Herman. In comparison, areas that are not as active in building currently are around Gates and Irondequoit.
The earlier predictions for 2017 are largely panning out.
“We projected earlier in the year that 2017 would be similar to 2016 and I think with only a couple of permits being ahead of the game that just proves that we guessed right,” Herman said. “You never know—we don’t have a crystal ball, but we anticipate the year end will be pretty similar to 2016 and when we look at 2017 and then we see a little bit further of an increase in 2018.”
Issues for builders include a labor shortage—in the hundreds locally—for framers and masons. Compared to national rates, Rochester looks good in that regard, Herman says.
“I think we’re doing better than nationally,” he said. “We always kid about it we’re the steady Eddie of the real estate market and we do well. We’re probably at the hundreds of missing some masons and some framers and that, but you go to a larger metropolitan market and they’re really hurting.”
Sales of new homes gone up throughout the year, officials say. The home improvement and remodeling industry has also seen a strong increase in contracts the last 24 months.
“We have experienced a very active buying and building year,” said Joseph Sortino of Sortino Properties Inc. and chairman of the Rochester Home Builders’ Association in a statement. “Weather is always a factor in new home construction and this year has been a challenge. Unusual amounts of rain have caused re-scheduling of site work which causes delays. The demand from home buyers for newly constructed homes has been very strong again this year.”
Home buying and building is in demand; there are higher sales prices and homes for sale are receiving multiple offers. The trend is expected to continue due to the creation of more jobs and low mortgage rates, officials say.
Buyers are also open to more options.
“Buyers are becoming more competitive,” said Linda Wilson, president of the Greater Rochester Association of Realtors. “They’re getting preapproved, they know how much they can afford, they’re usually working more with realtors now because realtors can get them in there quickly and they’re being more prepared than ever before.”
Monroe County has a decline in the number of proprieties on the market in relation to last year.
“For the last couple of years we’ve seen historically low and trending down number of homes for sale and that creates lots of competition for the homes that are listed, which is an inhibitor to people actually getting into a home,” said Jim Yockel, CEO of GRAR. “Last year a lot of buyers became frustrated and just left the market completely. (They) came back in the spring and it was just a super competitive market again.
“There are plenty of qualified, interested, anxious buyers who just can’t find a house that’s available,” he added.
Regional markets have had sales increases year-over-year.
There were 1,597 houses available during the 2017 second quarter in Monroe County—down 37.5 percent as compared to the same period last year.
Conditions were similar in Allegany County—down 19.3 percent; Steuben County—down 19.9 percent; Ontario County, down 21.1 percent; and Yates County, down 27 percent.
Prices were generally up compared to last year at this time, lifted by the demand created by competitive buyers.
Monroe County reported a 4.1 percent gain in median sales price to $138,500. The median sales price increased by over 10 percent in Wayne County (11.2 percent) and Wyoming County (23.7) during 2017’s second quarter.
“What we’re seeing it’s no longer an issue of a homeowner is underwater on their mortgage; there’s also a component of people who see how hard it is to find a new home,” Yockel said. “The whole environment we’re in with not a ton of new homes on the market, people hesitant to put their existing home on the market—it’s creating this demand that creates a hyper-competitive market.
“For a while it was confidence in the economy, confidence that they could keep their job. Now I think it’s confidence that you’re going to be actually able to find a home once you sell yours,” he added.
People just are not selling their homes at this time, creating a low inventories, GRAR’s Wilson says.
“I can’t see why that many people aren’t selling their houses knowing they can get a lot more for them than in the past,” she said.
The Mortgage Bankers Association of the Genesee Region expects rates to continue to rise throughout the year.
Mortgage loan rates are down to 3.88 percent with ½ point as the national average in comparison to the close out of the first quarter, which ended at 4.14 with ½ point, according to officials.
“There’s a lot of good news: mortgage rates are still low, the economy is growing, people are more confident in their jobs,” Yockel said. “There’s a lot of good reasons that the housing market should be a little stronger, but when it comes down to a lot of options for people it limits activity.”
There were no significant changes in Regulatory and Agency loan programs and/or underwriting guidelines in this quarter, according to the MBA.
Today the local real estate market remains on track.
“The good news is we are probably one of the steadiest real estate markets both in existing and new construction in the country, certainly the northeast,” Herman said. “People in the Finger Lakes Region and the Rochester area should not be concerned at all. This is really a good thing that we are as steady as we are.”l