Andy Burke

Statistics released by the Greater Rochester (New York) Association of Realtors showed that the residential housing market improved from the first quarter of 2009.

Closed sales of houses were up 49% over the first quarter, and purchases offered accepted were up even more, at 55%. Even so, sales were still down 13.7% from 2008, which is an improvement over the 2008 results. And for the second quarter of 2009, accepted purchase offers were only down 2.2%, which indicates that closings for the third quarter should be close to the 2008 numbers, predicting improvement over the second quarter.

A large part of the growth in the second quarter is probably attributable to the first time homebuyer's credit which was implemented early in the year as a part of the stimulus package. We continue to see the impact of that credit in the third quarter, and buyers have little time left to find a home so that they can close by November 30 to qualify.

Another important statistic is median sale price, which increased 12.3%, from $105,000 to $117,900 in the third quarter. More importantly, the number remains flat from last year, meaning that prices in the greater Rochester region have not declined from last year. And if you remember, they didn't decline from 2007 to 2008 either, so we continue to have stable prices while other markets in the country have seen housing values declines of up to 20% and more.

Another factor in keeping raising rising and prices stable is the inventory of houses for sale. In the third quarter, listings were down 3%, which is consistent with the annual figures for 2008. So we do not have excess inventory of houses, and in fact have fewer than usual on the market. The popular opinion is that there are too many houses on the market, which isn't the case. However, some of these houses are staying on the market longer, which provides more options for buyers to choose from. This tends to apply more in the over $200,00 market; houses under $200,00 which are fairly priced tend to sell quickly, or in "typical" time periods, and often with multiple offers

All in all, the market is steady, steady, steady. Fewer homeowners are trading up to the expensive luxury homes, as concerns about jobs, investments and the economy keep people in their homes longer. This is helping to keep inventory low.

It's a great time to buy, and a good time to sell if you are fairly priced under $200,000!

The U.S. Department of Housing and Urban Development gave FHA-approved lenders the go ahead to develop bridge-loan products that enable first-time buyers to use the $8,000 federal tax credit up front. This eliminates a major stumbling block for first-time homebuyers: getting up to $8,000 NEXT YEAR doesn't help you find the money for the downpayment and closing costs THIS year.

Details are still fuzzy on this. As I understand it, buyers using FHA mortgages may be eligible for a bridge loan (presumably offered by the same lender) to allow them to use their future tax credit at the time of purchase. However, the loans can not be used to cover the minimum 3.5% required for a downpayment, but would be used to increase the downpayment above 3.5% or for closing costs.

In my market, Rochester, New York, this is very important, since closing costs can often be a bigger item than downpayment, due to our high property taxes resulting in large up-front pre-paid items. I have had many potential buyers tell me recently that even with the promise of a tax-credit, they were still not able to handle the additional closing costs necessary to buy a home. This program will help them.

It is best to consult with your bank or mortgage company about available bridge loans. Remember that the credit is for first-time homebuyers only (including those who have not owned a home for the past three tax years), the purchase must be closed by December 1, 2009, and there are income limitations (see my previous blog post). These bridge loans are not available at this time on conventional, SONYMA or other loan products, although my guess is that private lenders will jump on this bandwagon soon. You must be qualify for, and be willing to accept, an FHA mortgage to be able to use the HUD-approved bridge loan program.

Ironically, this change in the program will probably be TOO MUCH stimulus for the Rochester region. First-time homebuyers have been snapping up all of the properties under $150,000, resulting in quick sales and even multiple offers. The market does not currently have enough inventory of affordable homes for these buyers. This change will bring even more buyers into the market. Sometimes, too much of a good thing is bad. I have a number of buyers looking today that can't find a house fast enough...who would have thought we'd have buyers but no listings??? It proves, once again, that the Rochester market has weathered the real estate storm very well.

The results for first quarter homes sales in the Rochester, NY region are a mixed bag with a silver lining. Closings (completed sales) for the first quarter were down 22% from 2008's first quarter. Closings in the first quarter typically result from sales contracts written in the fourth quarter and January, which were very tough months. There was also a decline in purchase offers accepted of 19.8% from the first quarter of 2009 compared to 2008. Median sale price declined 3.4% in the first quarter, a steeper drop than we saw for all of last year.

So where's the silver lining? Well, we now know that the first quarter of 2009 showed the greatest decline in GDP since the 1950's. And the fourth quarter of 2008 wasn't much better, especially after the dramatic decline in the stock market that occured in October. In general, the economy was struggling and consumers put everything on hold. Retail sales were down, car sales were down and home sales were down. There is a great deal of uncertainty as companies lay off workers and our government struggles to turn the economy around. We should consider these past two quarters as great anomalies that won't soon be repeated.

But the Rochester home market still seems to outperform the nation. As the spring selling season got into full spring in March and April, houses seemed to sell quickly. The inventory of homes continues to be less than normal, and listings are down 2.3% over last year's first quarter. But the tax credit for First-Time homebuyers has brought many buyers into the market. And other buyers, who sat on the fence during the uncertainty of the past few months, are now making purchase decisions. As we hear of more positive indications of economic improvement (consumer sentiment, inventory declines, home sales, etc), we see it reflected in home sales.

The last three listings I put on the market, one in Henrietta and two in Honeoye Falls, all sold within days, and I continue to get calls from buyers desperate to find similar homes. I have seen other listings sell just as quickly, as long as they were under $200,000, a price range that attracts first time homebuyers. And home SELLERS that have been sitting on the fence are slowly getting the word that houses are selling at stable prices, so they are considering putting their house on the market after all.

I expect to see this trend reflected in the statistics for the local Rochester housing market in future months. Stay tuned to this blog to so if I'm right! And be sure to visit www.AJBurke.com!

The past week brought some good news on the national level, for a change! The National Association of REALTORS (NAR) reported that sales of existing homes across the nation rose 5.1 percent from January to February, and in the Northeast, sales were up 15.6%. While January is typically a slow month for sales, especially after a dismal Fall (driven by the stock market plunge and economic recession), these numbers were better than expected and were well received by the stock market. But over 40% of these sales were attributed to distressed sales such as foreclosures and short sales!

Nationally, housing inventory (homes listed for sale) grew 5.2%, according to NAR. It seems to me that foreclosures and financial distress must be driving homeowners to list their homes in some areas. In the meantime, low interest rates have sparked a boom in mortgage refinancing, which is good for the banks and credit markets.

NOW FOR THE GOOD NEWS! In this same time period, Rochester saw a 6.9% increase in purchase offers accepted, and a 3.5% increase in median home prices. The number of homes listed for sale dropped 10.8%. This tightening inventory of homes reflects the relatively small influence of foreclosures in our market compared to the national scene.

The Rochester, NY market is solid. I reported earlier that FORTUNE magazine had ranked Rochester 15th on the list of 25 Best Real Estate markets. Last week, MONEY magazine published a housing forecast that named Rochester third on the list for median price performance! MONEY says that Rochester's market will bottom out in the second quarter of this year, and will see median price appreciation of +0.7%. Only Syracuse (+1.0%) and Pittsburgh (+0.8%) rank higher. The survey states that Syracuse, Buffalo (+0.6%), Pittsburgh and Toledo (+0.5%) have already bottomed out, followed closely by Rochester, Greensboro, NC (+0.3%), and Birmingham, AL (+0.2%). THE REST OF THE COUNTRY WILL STILL SEE NEGATIVE PRICE APPRECIATION OVER THE NEXT TWELVE MONTHS, and some cities won't recover until 2010 and 2011!!

As I've said for the past year, national news and housing statistics do not reflect our market here in Rochester. We've certainly seen a decline in the number of houses sold, but the concurrent decline in inventory of houses for sale has kept the market fairly balanced, so median prices have only fallen a fraction. With the lowest interest rates ever, and the recently passed First-Time homebuyer tax credit, I expect to see activity pick up here in the spring selling season. I will personally be putting five listings on the market over the next ten days. If inventory stays low, we good get a surprise later in the year!

The Democrat and Chronical, the local Rochester, NY newspaper, published an opinion piece from me in Saturday's paper. Unfortunately, some sections of my piece were edited out for space reasons. Below is the complete letter I submitted, which urged our local leaders to do some re-thinking of the Renaissance Square project in light of the changing times. While I do not favor abandoning the project totally, a major argument I made (which was omitted in the published version) was to redirect some of the spending to a revitalization of the Sibley Building as the new Renaissance Square, and allow the current Ren Square site to be redeveloped by the private sector, which seems far more feasible in the currentl environment than it did five years ago.

To the Editor of the Democrat and Chronicle:

I was very discouraged to read about the latest Renaissance Square developments. The inflexibility shown by some of our political and educational leaders does not demonstrate leadership or vision, but rather a stubborn unwillingness to accept the need for a course correction.

I fully supported the Renaissance Square concept when it was announced five years ago. But times have changed. Funding for the theater is not secured, and will be hard to raise in the current economic climate, and other theater projects have gotten underway to fill the void. Midtown Plaza will now be demolished and redeveloped. ESL is building downtown. Where once Renaissance Square was seen as the only good news for downtown, we now have other projects underway, largely driven by the private sector. In the meantime, the economy has faltered. Governments are running huge deficits. High speed rail was not an option when the first intermodal discussions occurred in 2003-04, but is now a reality with potential funding. In light of the current national desire for energy independence and improved transportation efficiency, it would be irresponsible to ignore it.

An issue that I have yet to hear addressed by the Renaissance Square leadership team is the impact of emptying the Sibley's building. We couldn't fill McCurdy's, so what good is it to have another unviable, empty behemoth on Main Street? Isn't there an option that could renovate the Sibley's Building to better accommodate MCC, renovate the tower for student housing, and preserve a landmark in the process? Recycling Sibley's would also be a "green" thing to do, following another of those trends that was not so hot when this whole thing got started. And perhaps private industry could find a better use of the current Renaissance Square site, as some have suggested, particularly as the parcel is now far more valuable than it was back in 2004 because of the neighboring redevelopment.

These course corrections would still provide jobs, and perhaps the current funding for a new MCC Downtown Campus can be re-directed to the Sibley's Building. Let the transportation issue be addressed separately.

Our leaders need to wake up, realize it's not 2004 anymore, and be courageous enough to admit that changing times require a serious rethinking of the project. Continuing to ignore the advice of Louise Slaughter, one of Washington's most powerful politicians, is foolish in these times. Walking away from the money might be the prudent solution, and may allow that money to be better spent on other projects that are more relevant to struggling taxpayers in these troubled times. In the meantime, the turn-around in downtown already underway will likely result in a higher and better use for the Renaissance Square site.

Andy Burke