Friday, May 5, 2017

Market Match in Albany, Buffalo, Rochester & Syracuse

By Jennifer Riner, Trulia

The gap between what buyers want compared to the current home supply is widening in many U.S. metros, predominantly affecting starter and trade-up homebuyers. Not only are their options slim, but homes available in the low-to-mid price range are more susceptible to multiple offer scenarios and bidding wars. According to an online, Harris Poll conducted on behalf of Trulia, 58.5 percent of Americans who’ve been looking to buy over the last two years say the home purchase process was either somewhat or very competitive.

The difference between demand and supply within the three primary home price tiers (starter, trade-up, premium) is a real estate phenomenon aptly-named the “market mismatch.” As of the fourth quarter in 2016, the national market mismatch score across home price categories jumped to 7.4 percentage points. On average, homebuyers throughout the country are repeatedly searching for starter and trade-up homes in markets with a larger supply of premium properties.

For instance, the Dallas real estate market holds the highest mismatch score in the nation at 17.5 percentage points. On the other hand, Bakersfield homebuyers can rest easy knowing their market has the smallest average market mismatch gap (1.4 percentage points) across all home price tiers.

Despite low inventory creating tough home buying conditions in many markets, the Western, Central and Upstate New York markets are encouraging for homebuyers. Consider the following four markets with relatively balanced supply and search conditions, in order of their market mismatch scores.

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Syracuse is no. 10 among U.S. metros with the smallest market mismatch at 3.4 percentage points. Almost a third of Syracuse home searches fall within the starter home category, giving way to 31.9 percent of listings that fit the typical entry-level budget. Meanwhile, the 24 percent of local searches earmarked for trade-up homes pair with 19.3 percent of Syracuse homes for sale. Premium homebuyers have the most flexibility, accounting for 43.8 percent of home searches with access to nearly half of all residential inventory.

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Rochester is the second best matched market, following Syracuse, at an average variation of 3.8 percentage points. Starter home supply and demand is almost entirely balanced, accounting for 29.9 percent of searches and 30.6 percent of listings. Trade-up homes have greater demand than supply with 26.5 percent of searches and 20.8 percent of the inventory. Again, premium homebuyers in Rochester have the most wiggle room. High-end properties make up 48.6 percent of the market and 43.6 percent of searches.

Across price segments, there is a 4-percentage point difference between search demand and homes for sale in Buffalo. For entry-level homes, Buffalo has a for-sale surplus at 32.5 percent of all listings compared to a corresponding search rate of 30.1 percent. Trade-up homes are scarcer, representing just 20.5 percent of available listings compared to 26.5 percent of all searches. Premium homes make up 43.4 percent of searches and 47 percent of listings.

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Albany’s market mismatch score is below the national average at 5.1 percentage points. The starter home segment is nearly level at 33.8 percent of all searches and 31.8 percent of all homes for sale in Albany. Trade-up buyers are at a slight disadvantage, however. They make up 24.5 percent of home searches, but only 18.9 percent of homes are a suitable match, financially speaking. Although benefiting buyers, the largest discrepancy between demand and supply lies within the premium home market. In the first quarter of 2016, premium homes accounted for 41.7 percent of searches, akin to nearly half of all residential listings at that time.

Low supply feeds high competition bidding wars and multiple offer scenarios, particularly during the swift spring selling season. But, in markets like Syracuse, Albany, Buffalo and Rochester, the distinctive stability between supply and search demand helps preserve affordability and opportunities for everyone.