Buffalo, N.Y. (WBEN) - Over the last several years, it seems as though the state of the housing market in Western New York has been in flux. While the market is currently considered steady and a seller's market, CEO of Hunt Real Estate, Peter Hunt can characterized it by two things.
"Higher interest rates, that have been really increasing since a year ago March, and then a shortage of inventory. And one is directly related to the other," said Hunt in an interview with WBEN. "Because there is a shortage of inventory and relatively high interest rates, compared to what we've been used to for 12 years, the fact of the matter is there's fewer units sales across the country, which are down roughly 20% from the beginning of the calendar year."
Associate broker with Howard Hanna Real Estate, Donna Littlefield admits she gets asked about the current state of the housing market multiple times every single day. While interest rates have increased just a tad, she says it's somewhat balanced out the market.
"I'm still listing homes and receiving multiple offers, so this is a good market," said Littlefield with WBEN. "I think people get a little nervous when the interest rate rises. When you think about 6% or 7%, that is not a high interest rate. That actually helps balance out the market. So this is a great market, in my opinion, to buy and/or sell."
Susie Lenahan, associate broker with MJ Peterson Real Estate, explains while higher interest rates may be a problem for some first-time homebuyers, people are still doing what they need to do if they are in the market to buy a house.
"One interesting situation that most, if not all local lenders are doing is a very nice thing, which is quite a discount on a refinance in anywhere from the first 1-to-3 years. They are encouraging people to buy now, and when the rates come down next year, and they definitely will, they will have a very attractive refinance package with very significant reduction in fees," explained Lenahan to WBEN.
So how does this all effect first-time homebuyers when they look to buy a home? Hunt says it's frustrating, because demand is considerably higher than supply.
"The average time for a home to stay on the market is still very short, although it's slightly more than was a year ago, but slightly by four or five days. So as a result, if someone is new to the market, they have to be ready to move, and ready to move on a particular house when something becomes available that's in their price range in the neighborhood where they'd like to live," Hunt said.
In the current housing market, some first-time homebuyers appear to be missing out on chances to purchase a home due to being outbid, or straight up shut out by other buyers. For instance, a first-time homebuyer could bid as much as another person willing to pay for the house, only to lose out due to not having enough to beat out another down payment.
Generally speaking, Hunt says first-time homebuyers are experiencing the usual challenge of putting enough money together to make a reasonable down payment.
"Unless they have some other source, for example, a relative or family member - referred to as the 'Bank of Mom and Dad' - if they have that resource available to them, they can compete aggressively for a house when they find one that they like, assuming there's more than one offer. In that case, cash is very persuasive," he said. "A cash offer to a seller is going to look very good, because they don't have to worry about appraisals and other elements regarding the mortgage process. But even with a mortgage on the contract, you can still be competitive, depending upon how your real estate professional handles the transaction."
"Sometimes someone else is selling a house and they're taking the proceeds from one to buy another, that's always going to be more difficult for your first-time homebuyers. But parents, grandparents, friends, there's seemingly always a way to get around that and, at least, come up with a down payment. You can get in for as low as 3% down plus the closing costs," Lenahan echoed Hunt. "It's still significant for some people, but it can be done, and people are doing it, more importantly."
While Littlefield will also agree that some first-time homebuyers are getting shut out from competing with other homebuyers, she says if one happens to find a good realtor to help in the process, they should get that homebuyer in contact with a mortgage consultant.
"They're going to sit you down and get a plan," Littlefield said. "Is it selling your home? Well, my suggestion is you make sure that it's sold and get past all the contingencies before you even decide to put an offer in. Getting past the contingencies is important, so if you're going to be a sold contingency rather than a contingent offer, which of course your house isn't sold, there is a way to go about it. A lot of these new products that we have, the mortgage consultants have great products in place for people in this certain type of situation. Again, it's a plan, it's a strategy. You really need good consultation. I can't express that enough."
For some people that have been exploring the housing market for a while and have had no luck in buying their first home, they may end up deciding to wait things out in the hopes that the market may improve to numbers that will fit better down the road. However, real estate experts are advising to re-think that strategy.
"Are things gonna get better? Because my crystal ball, every Christmas I ask for it, and I never get it. So I don't know. Are things going to get better? Are they going to steady out?," Littlefield speculated. "Now's the time to buy. And if you think about it, it's not the interest rate that matters. What matters is what you want to spend per-month on a mortgage. When you buy a car, you never ask what the interest rate is. You say, 'This is the payment I want, this is what I can afford - that's my affordability - and that's where I'm gonna go.' That's where a realtor can get you a plan in place."
"We were expecting this year, frankly, that prices would level off and, perhaps, even go down a little bit, just because higher interest rates take a higher percentage of your income, and therefore it's harder to qualify. You would think prices would stabilize go down because they've been going up so rapidly over the last few years, but that hasn't been the case," Hunt added.
In some areas, there has been a year-over-year increase in pricing for houses anywhere from a 20%-to-25%. Some believe there could be another 10% increase next year if homebuyers decide to wait on buying a house for $250,000 or $300,000 this year.
So what advice do real estate experts have for people looking to purchase their first home in the current market?
Hunt's first suggestion would be to talk to a mortgage consultant, someone who can help first-time homebuyers determine what they can afford and how they're going to pay for the house. From there, it's about staying active in the market.
"Always be able to move and get your financing in place so you're able to move when the right house comes along," Hunt said. "One thing about real estate that people don't recognize, or fail to recognize sometime, is that every single piece of real estate, every single house is absolutely unique. If you've been driving by a house forever, and all of the sudden it comes on the market, you've got to be prepared to act. There will never be another one just like that. So our advice is always stay in the market, stay current on your financing, and be actively looking in the neighborhoods and price range that you qualify for and you're interested in."
Lehahan also recommends first-time homebuyers to get in the housing market, saying now is not the time to wait around too long.
"Hopefully we can help you," she said. "You can borrow against your stock account or 401 account, something like that. You can borrow against that, it may make it a little more expensive. But if you have to buy and get into the market, you should do it, because the rents now are so expensive. As people are starting to do the math regarding renting an apartment or buying a house, they're gonna see that the two or three bedroom apartment in the neighborhoods that they want are quite pricey."
As for Littlefield, she is suggesting first-time homebuyers to save as much money as you can to have a good down payment to entice more sellers.
"There's all different ways to strategize a contract, and there's nothing more important than contacting a real estate professional," she said. "The one mistake I find buyers make, or at least sometimes it's a mistake, they call the listing agent. Technically the listing agent is there to protect the seller. They have a fiduciary responsibility to that seller. So the buyer comes in thinking they're going to get some kind of a deal, and that is such a mistake. You need representation, smart representation to get a plan in place."
