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Region's housing is hot

Buffalo Niagara region ranks 12th in first-quarter median home price rise

FROM STAFF AND WIRE REPORTS
Updated: 05/14/08 6:42 AM

Upstate New York has four of the top 12 markets with the biggest increases in median home sale prices during the first quarter.

Suddenly, the Buffalo Niagara region is one of the nation's hottest housing markets.

The median sale prices of homes sold in the Buffalo Niagara region during the first quarter jumped by 5.5 percent to $96,600, the 12th biggest increase among the 149 major metropolitan areas included in a survey released Tuesday by the National Association of Realtors.

The local increase occurred as median home prices fell in two-thirds of the cities surveyed during the first three months of this year, while 46 states reported experienced declining sales.

Median prices for existing single- family homes dropped in 100 of 149 metropolitan areas in the January- March period, while 48 metropolitan areas saw prices increase and one reported no change.

Upstate New York, however, was an oasis amid the turmoil in the housing market. Binghamton was the hottest housing market during the first quarter, with prices jumping by 11.8 percent to $109,700. Elmira ranked fourth, with a 9.6 percent price increase to $82,500 and Glens Falls was eighth at $163,100. Syracuse, with a 2.6 percent price jump, ranked 28th at $110,300, while Rochester was 37th with a 1.6 percent price rise to $108,500.

Median sale prices in all of those upstate markets, however, rose far more slowly during the housing market?s boom times earlier this decade and are well below the national median of $196,300, which was down 7.7 percent in the first quarter.

The price declines in 67 percent of the areas surveyed was the largest percentage of areas reporting declining prices in the history of the Realtors? survey, which goes back to 1979. Prices had fallen in 34 percent of the cities surveyed in the October- December survey.

The biggest percentage price decline by metro area was a 29.2 percent drop in the Sacramento, Calif., metro area.

Sales of existing homes were down in 46 states. The largest percentage plunge was a 38.6 percent drop in Maryland during the first three months of this year compared with the same period in 2007. Only Alaska, Illinois and New Jersey reported sales increases during the survey period. Data for New Hampshire was not available.

Nationally, sales fell by 22.2 percent in the first quarter compared with the same period a year ago.

The steep decline in prices and sales were the latest indication of the problems facing the housing market, which is in a prolonged slump that has dragged down sales and home prices.

Lawrence Yun, chief economist for the Realtors, said that part of the problem in the first three months of the year was that it was hard to get so-called jumbo loans because of the credit squeeze triggered by rising mortgage defaults, particularly for subprime loans, mortgages made to borrowers with weak credit histories. Jumbo loans are critical to finance homes in high-cost areas of the country.

?These are highly unusual results because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time foreclosures related to subprime mortgages rose,? he said.

Yun said that subprime mortgages are accounting for more than half of all mortgage foreclosures and that sharp price declines are principally occurring in neighborhoods where subprime loans had been prevalent.

Many analysts believe that prices will continue to fall for the rest of this year until the inventory of unsold homes gets worked down to a more manageable level.

?The bottom line is that construction spending and house prices seem likely to continue to decline well into 2009,? Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Tuesday.