is there a real estate bubble in western new york?  

This has been a frequently asked question for the past several months from anyone who owns a house and has been invested in western New York.   Just read a national newspaper or a television newscast and there are references and concerns regarding a downward trend in the real estate market place for 2006.   Markets have been cooling across the nation, specifically California, southern Florida and some areas of the North East.   There are 33% more homes on the market than a year ago, and higher interest rates are also being considered a deterrent to buying at this time.

This nationally occurring trend has produced drastic price reductions on asking prices and causing creative marketing on the part of the real estate industry.   The New York Times reported that sellers as well as house builders are offering incentives for buyers that could range from the sublime to the ridiculous!   Some of these offers have included high-end amenities such as appliances, granite counter tops, marble and hardwood floors, and upwards towards offers of brand new automobiles and vacations and trips!   Sellers are offering incentives of   “buyer bonuses” as well as bonuses in addition to commissions for selling agents.   There has been heightened activity on the part of the agents in striving for increased and unusual marketing techniques as well as numerous open houses with incentives to lure the buyer.   What is at work here is the age-old law of economics of “supply and demand”.   Buyers have too much to choose from and there is no sense of urgency to purchase now, no motivation paired with plenty of time to keep looking and take their time to shop around.

SO WHERE DOES THIS LEAVE WESTERN NEW YORK?

First of all, our real estate market has never paralleled the national market!   We have historically experienced consistent and gradual increases in housing prices and the word “bubble” has never applied to our area.   We are not a BOOM-BUST market!   The National Association of Realtors has rated the median home sale prices over the past ten years and states that the median sale price nationally was $113,100.00 in 1995 and jumped by 83% to $207,300.00 in 2005.   While in Buffalo the median sale price in 1995 was $81,300.00 and by 2005 increased to $98,900.00, which is only a 22% increase in ten years.

Therefore, we have not experienced skyrocketing housing prices in comparison to the national statistics and what does not go up cannot go down. We have however, experienced a slowing of our local market in some price ranges and I believe that we were naturally affected by the negative press and general fear of a falling market from national media that was bound to affect the confidence level of the local buyers here.   On the question of high interest rates, we are still experiencing historically low rates with many innovative programs to choose from and should not be a major factor.

My assessment is that Buffalo and area is not in danger of a steep decline.   It is however the 6^th cheapest housing market in the nation and the 16^th most affordable and this makes for a desirable relocation destination.   So are we heading for a real estate bubble to burst?   I don’t think so, ...a slow down... a speed bump… no bubbles here!