So, talk about an interesting dichotomy: strong residential sales and declines in home ownership. While clearly there are market differences in the areas we serve, there is evidence that overall, real estate sales have been showing solid strength for the first half of the year, continuing a three year trend. In all three markets we serve, Unit Volume and Dollar Volume have increased year over year while Days on Market have declined. Clearly there is on going, unsatisfied demand.
Every neighborhood in each market exhibits trends unique to that area with several experiencing healthy activity.. But when looking at our marketplaces overall, Ithaca has seen the strongest growth in Average Sales Price, though Elmira-Corning is experiencing a modest improvement as well. Binghamton overall, on the other hand, is experiencing price deflation which is somewhat counter-intuitive given the demand and volume of activity there. This link shows charts using data from all three of the MLS markets where we have offices.
The following article shows that our regional experience is largely being seen in most areas of the country.
What impact does this have on home ownership in our markets? For Ithaca, it’s no surprise: rapidly rising rents (up 7.5% from 2012 to 2014, median $989) are also influencing rising sales prices. This is potentially exasperating persistent low rates of owner-occupied housing, primarily in the City of Ithaca, reported by the US Census Bureau at 27.5% in 2014. Elmira has also seen average rents increase by 10.8% over the three year period ending 2014, according to the US Census Bureau, while home ownership rates there have declined to 46.6%. Corning’s decline has been even more dramatic, from 55.2% owner occupied in 2012 to 49% in 2014 with rents increasing 2.7% to a median of $706.
In Binghamton, home ownership has actually grown modestly to 46.6% from 45.1% in 2012, according to the Census data. Rents there have increased about 5% to a median of $660 in 2014. The net effect of these trends? Significant drops in home ownership across the country, now at 50 year lows.
This suggests two things: a changing buyer pool and re-thinking our role as REALTORs. While REALTORs may be experiencing greater interest coming from investor buyers, owner-occupied buyers are facing competition from these investors when making offers on property, largely in the urban areas of the markets we serve. Investor buyers evaluate property quite differently from home owner buyers. As a REALTOR, It is to your advantage to become familiar with investment pricing evaluation, return on investment calculations, and commercial lending practices. As a home buyer, it’s important that you seek the counsel of an experienced agent in determining possible strategies for successfully competing for these properties. Warren Real Estate is fortunate to have many of the most experienced, successful real estate agents in the market, many of whom work regularly with both investors and homebuyers.
The other issue this raises is our role as advocates for our buyer clients. As REALTORs, we are committed to a set of principles that calls on us to promote and protect home ownership. The question raised, therefore, is how can we both represent investor client activity while also playing an important role in promoting home ownership? These are not, in our opinion, irreconcilable roles. For instance, many investor buyers are looking for opportunities to acquire sub-standard properties and bring them up to current standards for re-introduction into the owner-occupied marketplace. Similarly, many home buyers are beginning to consider their future home purchase as both a home and income opportunity, exploring ways to have their home also provide legal rental space in order to get financial help in paying for and maintaining the home or accommodating multi-generational housing for aging parents or rebounding children. For both of these buyers, an experienced Warren agent can help sift through the properties, and offer guidance on improvements with the highest potential for reasonable returns on investment.
One thing both REALTORs and buyers can do is to get involved in zoning and comprehensive planning initiatives that may be underway in your local community. Attending planning board meetings or meetings of economic development agencies can begin to inform you of areas of focus and interest that our communities are pursuing in efforts to spur additional residential and commercial development or re-development in urban areas. A REALTOR is uniquely qualified to offer insight into marketplace conditions, housing demand, demand for services and affordability issues that our buyer clients face.
Clearly, we are fortunate to have so many signs of strength in our local markets. Add to this the strength, energy and success of the agents working here at Warren Real Estate, and great things are possible for all of our clients.