Rochester residential market shifts: ‘Inventory is worse than it’s ever been’

“Let me ride this out” is a common phrase Sharon Quataert is hearing of late from potential home sellers, many of whom have concerns about the current market, including rising interest rates.

Her advice to these potential sellers is don’t.

“It will cost you regardless,” says Quataert, a licensed real estate broker and owner of Sharon Quataert Realty. “Moving forward, this could be the most affordable time to buy.”

The residential real estate market continues to cope with persistent low inventory and rising mortgage rates and area professionals expect this trend to continue for the foreseeable future.

Quataert says the current residential real estate market is different from what it has been over the last several years.

“It’s not because of a lack of desire for homes, it’s because of a lack of inventory,” she says. “That lack of inventory is worse than it’s ever been.”

Those on Quataert’s team who are representing buyers have a 20-person deep pipeline, but a very limited number of homes for sale.

“If we had five to 10 times the number of houses for sale, they would all be sold,” she says.

She is seeing this trend in all price points, including the average purchase price in Monroe County, which is traditionally between $180,000 to $250,000.

While general fears about the economy and the state of world affairs play a role in the lack of inventory, another major reason is the fact that most residential mortgages held today have interest rates below four percent, meaning people won’t move unless they have to, she explains.

Quataert don’t know if that interest rate, which has recently risen, will go down any time soon.

It’s a double-edged sword moving forward, however, because if interest rates do go down, the price of the homes may go up. That means you may have a lower interest rate, but the purchase price will be higher.

It’s not just the economy, she says, noting millennials are at a key home buying age and are reaching their peak earnings years while boomers are aging in place and those with lower mortgage rates are staying put.

The result is a lack of inventory.

“It’s a perfect storm,” she said.

Quataert and her team are focusing on education on the buyer’s side.

She says it’s an exercise in patience for the buyers, who are frustrated because they are making offers and losing out or they can’t find a house that meets their needs or checks off all the boxes. She encourages them to be open-minded.

Quataert also talks to sellers who are on the fence about the advantages of selling in the current market.

“If you are on the fence, you should be jumping,” Quataert says, noting it is a seller’s market.

She advises homeowners to talk with a real estate professional sooner rather than later while sellers are still in the driver’s seat.

“Inventory is everything,” she says.

Trip Pierson, owner and broker at Mitchell Pierson Jr. Inc., agrees it’s a seller’s market.

This March, for example, there were less than 20 homes up for sale within the Brighton and Pittsford school districts.

“Lack of inventory is absolutely the biggest issue we have,” Pierson says, noting that has been the case since the onset of COVID-19.

To further illustrate the point, Pierson spoke of a home that was recently for sale in the $500,000 range in Victor, Ontario County.

Over three days, he had 52 showings there and nine offers that were well over the asking price.

People are so determined to have their offers accepted they are doing things such as forgoing inspections to sweeten the offer, he notes.

Sellers who have their properties reasonably priced are likely to get a parade of people looking and multiple offers, Pierson says.

For buyers, the limited inventory has been frustrating, he says, adding that several of them are putting in offers on homes that may not meet all their wants, but they proceed because that is what’s available.

One of the reasons for the lack of inventory is because people aren’t moving as much as they did in the past, he says.

And millennials are seeking different housing — like townhouses — where there is not as much maintenance for the residents, and it allows them greater flexibility.

Despite the challenges, Pierson advises people move forward with their plans to sell.

“It’s the biggest investment you can make and there’s no better time to take advantage of the market,” he says, adding it is a matter of supply and demand. “There’s not much supply and a huge demand.”

Mike O’Connor, president of the Greater Rochester Association of Realtors and a licensed associate real estate broker with Empire Realty Group, says rising interest rates are deterring people from putting their homes on the market.

“I’d like to say it’s normalizing, but I don’t see that happening yet,” he says, adding that the current market favors sellers.

O’Connor says that not only are their sellers who are receiving multiple offers, but some 25 percent are all cash deals, which is generally the most attractive — and accepted — offers.

That can present challenges for those who must get financing to buy a home, and banks have been finding ways to help these buyers become more competitive, he says.

Many financial institutions will provide a cash guarantee, which means the lender will ensure that the liabilities of a debtor will be met, O’Connor explains.

The low inventory has impacted area sales, O’Connor says, noting year-to-date closings are down nearly 30 percent.

“We are at a point of gridlock,” he says, adding that people should continue to work with their real estate professionals and not get discouraged. “We will ride this out.”

Mark Siwiec, associate real estate broker and team leader of Mark Siwiec and Associates, part of Keller Williams Realty Greater Rochester, says the current market largely consists of those who either have to buy or sell, whether that be due to a life change such as a divorce or re-locating for work.

Siwiec’s team, for example, has a slew of people who are moving to the area for work, but haven’t been able to buy a house because of the lack of inventory.

“There aren’t enough properties right now to satisfy the needs of the buyers,” Siwiec said.

He advises those who must sell to put their homes on the market now.

Given the demand for properties, Siwiec has not only been able to negotiate top dollar for the sellers, but he has also been able to negotiate closings that are four or five months down the road.

That extension gives sellers time to find a new home, he says.

Siwiec doesn’t expect the market to improve until a few things happen. That includes interest rates coming down, wages going up and more government incentives for builders which would increase the number of new homes on the market.

“I don’t think we will see a different market until the beginning of next year,” he says.

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