In Western New York, hesitation leads to shortage of homes for sale
Margarita Gonzalez has dreamed of moving back to Florida for years.
The 67-year-old retired teacher's assistant was born in Miami, and most of her extended family still lives in the Sunshine State. Her own children and grandchildren are in Buffalo, but she was ready to leave the Lower West Side for a warmer climate.
Then the pandemic hit, and now Florida is one of the nation's hot spots in the coronavirus pandemic. Given her age, she's scared to go.
So Gonzalez is staying for now. And that means she won't be selling her house on 10th Street.
She's not alone. Despite a housing market that has remained solid during the recession caused by the COVID-19 outbreak, the hesitancy of potential sellers like Gonzalez is contributing to one of the most acute shortages of available homes across Western New York in decades.
That shortage is spurring bidding wars for well-kept homes in sought-after neighborhoods. It's frustrating buyers who lose out on homes, despite making offers that often exceed the asking price. And it's making the hunt for homes stressful and daunting.
Local real estate agents say there are several reasons behind the reluctance of sellers.
For one, the strong housing market has pushed up prices, so sellers know they'll have to pay higher prices for whatever home they decide to buy next. Faced with that prospect, some would-be sellers are deciding to stay put.
Others are wary from the COVID-19 outbreak, unwilling to open their homes to showings with strangers whose health is unknown, despite the precautions instituted by the real estate industry and mandated by state officials to reduce the spread of the virus.
And the spurt of home buying by millennials often puts them in direct competition for the type of homes sought by downsizing older homeowners, further pushing up prices for those homes as the competition intensifies.
"I think people that were considering selling or moving are more hesitant to move or sell due to the current state of COVID, whether it's moving during this now, or looking at how hard it is to buy a house and having to overpay for a house," said Brian Hillery, an agent with Hunt Real Estate Corp., who is working with Gonzalez.
"They don't want to go down there right now with the current state of COVID," Hillery said. "They don't see an end in sight when they can go to Florida."
Fear of COVID-19 is one of several reasons cited by homeowners for not listing their homes for sale right now, even though they could pretty much write their own price.
That's why there's such a record low inventory of houses on the market in Western New York. According to the latest figures from the Buffalo Niagara Association of Realtors, the Western New York housing market now has only enough homes available for purchase to last a little over two months at the current pace of sales. That tilts the market strongly in favor of sellers. For buyers and sellers to be on equal footing, experts say it takes a six-month supply of homes to be for sale, something the region hasn't seen for five years.
Despite the recession and unemployment topping 13%, interest rates remain at record low levels, enticing buyers who have held on to their jobs to keep shopping for a house. And the millennial generation, the largest since the baby boomers, is now in a position to buy after delaying their hopes for several years following the 2008 recession.
"The housing supply and demand never fully balanced after the last recession, and now with extreme factors affecting the market on several fronts, the market cannot adapt quick enough," said David Weitzel, an agent with Re/MAX North in Amherst. "A lot of factors have contributed to the current market conditions, and unlike a consumer electronic or cars you simply cannot just manufacture inventory overnight."
The result of the extreme mismatch has been a wildly frenetic market. Prospective buyers are competing for many of the same homes, especially those that are priced affordably, and in reasonably attractive neighborhoods. Even those on the edges of such areas, or in so-called "up-and-coming" areas, are getting significant attention.
Open houses are drawing scores of people, even more than 100 over a weekend. Home are reaping dozens of offers. And they're fetching prices as much as $30,000, $40,000 or even $50,000 over the asking bid.
That's fantastic for the sellers, but not for all the buyers who repeatedly lose out on their dream homes. And that's deterring many other potential sellers from listing their house, for fear of facing the same quandary themselves when it's their turn: how long will it take them to find a new home, and where will they live?
The extra cost they now expect to pay just to get a new house may be daunting, not to mention the expense of any improvements they want to make to it. And alternatively, for those who might downsize from a house they've lived in for decades, there's the sticker shock that comes with many of the newly built patio homes that are becoming popular among retirees.
"Sometimes the condo or smaller house they're buying is more expensive than what they're selling," said Susan Lenahan, a longtime agent at M.J. Peterson Corp. "And they sit there, because they have no place to go. That's the real issue."
Still others simply have no incentive to move. They already took advantage of the low interest rates that have been prevalent over the past decade, either buying a new home or refinancing their mortgage. Or they've invested heavily in renovations or expansions of their home, and plan to stay there. And the growing trend of "aging in place," along with new resources to facilitate the movement, mean that older homeowners no longer need to move.
"They've improved where they are to the point where they're happy," said Jerry Thompson, broker-owner of Century 21 Gold Standard in East Aurora. "Once you put in $60,000 and a couple of bathrooms, a lot of times, it makes your move a lot harder."
Finally, there's the uncertainty many feel over their financial situation, whether it's the stability of their jobs, or the need to qualify for a new mortgage, especially if they needed repayment help in recent years. "That's a big piece of it," said Greg Straus, broker-owner of 716 Realty Group. "They may say why bother."
The result is the same: the current tightness in the market shows no signs of abating.
"There's no end in sight to the shortage of inventory," Hillery said. "There's just far too many buyers and not enough sellers. People are waiting it out for it to calm down."