The Spotlight Is On Buffalo, NY

By ERIN FLYNN JAY

In recent years, cities in warmer weather states have boasted the nation’s hottest housing markets but now the spotlight is on one of the snowiest places in the country.

Last month, Zillow released its annual predictions for the hottest housing markets of 2024. Buffalo, NY, took spot number one based on its affordability.

The predictions are based on an analysis of home value growth, recent housing market activity, projected changes in the labor market, home construction activity, and the number of homeowner households in the top 50 metropolitan areas according to population.

Buffalo makes homeownership a real possibility, especially for younger generations looking to purchase their first home. The average home price came in at $248,445, significantly lower than the national median of $389,800.

That would make a 3% down payment (the minimum down payment requirement for a first-time home buyer) less than $10,000.

In addition to affordability, Buffalo’s job market is expected to grow. Buffalo currently has the highest number of new jobs being created compared to the number of home construction project approvals. And new jobs typically equate to new residents.

Patrick Clouden, mortgage consultant with Hunt Mortgage, said compared with most of the country – and especially major cities – Buffalo still has extremely affordable real estate prices, despite the high demand and lack of inventory.

“These are problems all over the country (not exclusive to Buffalo) and though we face these same issues, it pales in comparison to major cities that a lot of people are relocating from,” Clouden said. “Our cost of living is still relatively low in comparison.”

Clouden said remote work has allowed people to move to less expensive markets, while maintaining employment elsewhere. Additionally, Buffalo has opportunities for employment, and is continuing to grow on that front.

Clouden thinks word is getting out that Buffalo has a lot to offer.

“The people here are second to none – it really and truly is the ‘city of good neighbors’ that many cities claim to be,” he said. “The winters can be harsh, but the summer and Fall months are beautiful. There’s plenty to do, and I may be biased, but the restaurant and food scene here is as good as it gets.”

How competitive is the housing market in Buffalo?

Dianne Michlinski, a licensed associate real estate broker with Hunt Real Estate, said most Buffalo homes from 2020 to 2023 were sold in a multiple-offer scenario.

“We witnessed homes selling $50,000 to $100,000 over list price or higher, buyers waiving home inspections, escalation clauses (I’ll pay $5,000 more than your highest offer), buyers agreeing to pay any gap in appraisal (the difference of the appraised value and purchase price),” said Michlinski.

Michlinski said some buyers have been priced out of the market due to the current inventory and increased interest rates.

Clouden said his company also witnessed bidding wars during the pandemic.

“The combination of the shutdown, extremely high unemployment pay during the pandemic, and stimulus checks meant a lot of people had much more savings available to them in a short period of time – a lot of people were earning more on unemployment during COVID than they did while working, and they couldn’t spend any money with everything shut down,” said Clouden.

This helped many people produce enough savings for a down payment who were previously short on funds.

“Couple this with historically low interest rates, and you have a ton of buyers flooding the market, and not enough inventory,” said Clouden. “Every borrower I had qualified was bidding on multiple homes, and rarely getting their first, second, or even third offer accepted.”

Clouden said there are still buyers on the sidelines waiting to hop back into the market. They dropped out during the bidding wars because they didn’t want to buy a home at what they perceived to be an inflated price.

Conversely, now that rates have risen, Clouden said some prospective borrowers say that they will wait for rates to fall before buying as they do not want to take on a mortgage with a “high” interest rate.

Other cities that top the list of 2024’s hottest housing markets in Zillow’s forecast include Cincinnati, OH; Columbus, OH; Indianapolis, IN; and Providence, RI.

Atlanta, GA; Charlotte, NC; Cleveland, OH; Orlando, FL; and Tampa, FL, round out the top 10.