Well, we were finally able to say goodbye to a year that will spawn works of art for decades to come. There was enough drama and intrigue to keep Tolstoy, Dickens, and Spielberg occupied for quite a long time and I would imagine that Deepak Chopra and Dr. Phil are both sharpening their pencils getting ready to share some of their wisdom. Although my overview won’t be gracing Amazon’s Top Ten list, I do have quite a number of thoughts about what occurred in the local real estate market these past twelve months and how the year 2020 will influence things in the year to come.
The Year In Review
Let’s start with some top-line numbers. At the end of September (for some reason Greater Rochester Association of Realtor data is only updated through September), despite very strong demand, the number of closed real estate transactions decreased by 10.4%. Thinking back to Mr. Polisano’s economics class at Canisius High School, low supply and high demand mean that prices increase and, boy, did they ever. Local property values rose an eye-popping 9.8% over the previous year. (As fascinating as that is, I’m still intrigued, thirty-seven years later, as to how Mr. Polisano was saddled with the mysterious moniker, “Jungle Jim”. If you happen to know, PM me.)
The really fascinating data, however, requires us to look a bit further back in time. In the spring of 2016, there were more than 7,500 homes available for sale in Monroe County and the surrounding region. A year later, there were only 3,000 or so properties on the market. In the third quarter of 2019- in other words, pre-COVID- there were fewer than 1,000 homes available and the number hasn’t risen above 1,000 in any month since then. In other words, in the past 4 1⁄2 years, the number of properties available for buyers to consider has decreased an astonishing 87%!!! These numbers really help to explain why home values are increasing as quickly as they are and why it is that buyers are having such a hard time finding a structure to call “home”.
Personally, despite that 10% decrease in regional sales volume, my team and I are incredibly proud to have bucked the trend. We transacted more than $59 million worth of residential real estate last year– an increase of 25.5% over our sales in 2019. Stated another way, while the number of agents remains fairly constant (can you believe that there are approximately 3,000 agents licensed to sell real estate in the six-county region?) the number of transactions has plummeted. This means that the vast majority of agents are selling fewer and fewer homes while a small number of us are responsible for transacting an ever-larger share of the business.
My sense is that the year to come is going to be another boom for sellers and another difficult slog for buyers. There is still an army of men and women who have been looking to purchase since this past summer and, unless there is an unforeseen tidal wave of new listings that is soon to come crashing down on the sandy shores of our local market, it doesn’t look as though demand will be sated any time soon. Realtor.com recently forecasted that Rochester will be the 33rd best real estate market in the country in the coming year. Their ranking takes into consideration their forecast for sales volume and price increases. Although they made no prediction as to how much prices were slated to increase locally, they did forecast that, nationally, the country would enjoy a 5.7% increase in housing value.
All of this data looks great for sellers. Buyers, unfortunately, will still struggle to find opportunities. One of the few bright spots for buyers has to do with interest rates. At the moment, interest rates are at or near historic lows, however, there are several factors which could serve as a catalyst for mortgage rate movement. A newly elected president, Democratic- control of the US Senate, COVID relief, and vaccine distribution can and most likely will impact the cost of borrowing money. That being said, most economists are predicting that rates will remain low for the first half of the year. Favorable borrowing conditions do offer an opportunity for buyers to take advantage of a few key scenarios:
A buyer could elect to put less money down on their purchase and apply the saved cash toward other investments or endeavors.
Now is the perfect time for a buyer to consider a second or vacation home.
Buyers looking to upgrade can more comfortably afford more house than in the past when rates were higher.
If you have any questions about financing a new home or refinancing an existing property, contact Majuwa Kowai-Bell from Genesee Regional Bank at (585) 472-9345, mkowaibell@GRBbank.com, NMLS #379251. He’s an excellent resource to help you figure out your options!
As I look back on the past year, some of the biggest lessons that I learned, seemingly, had little to do with business or with real estate. Pre-COVID my team and I had discerned that people were so tied to their electronic devices and the exigencies of daily life that they were finding it increasingly difficult to connect with others in real life. The pandemic exacerbated these feelings and we soon realized that many of our clients were desperate for connection and community. They seemed increasingly grateful for those businesses that wanted something more than a transactional relationship. The world had changed and they were more interested in engaging with those committed to nurturing the social contract which binds us as a city. Whether they are friends, shopkeepers, or business partners, stronger bonds are created as a result of people behaving as good citizens, working toward the common good, and doing the right thing. Thirty years ago, when I first started selling real estate, it never occurred to me that delivering pies or baking bread would have such an impact. As difficult as this past year was, I’m grateful for the opportunity to begin the new year having my business philosophies recalibrated in the way that the crisis allowed.
So, in the year to come, personal relationships will remain paramount in our brokerage. However, we also understand the need to continually remain at the forefront of technology. It’s relationships that provide the opportunity, experience, and acumen that drive sales, and technology that provides efficiencies and an advantage over the competition. Some technology was obvious; this is the year that everyone learned to use Zoom. A lot of the other technology- our new Matterport virtual reality camera, and our turbocharged client relationship management software- will provide an enhanced client experience, however, they’ll operate quietly, behind the scenes. Our soon-to-be-revealed website, however, will be very much front and center. We’ll be revealing it sometime in the next few weeks and we promise that it’s going to be the most dynamic and robust real estate site in the area. We can’t wait to roll it out!
I always like to conclude my newsletters by saying thank you. We all know the challenges associated with the past year. There were moments of terror and there were periods of grace and solidarity. I wouldn’t have anticipated that, as a result of your support and kindness, I would have concluded the year having sold nearly $60 million in real estate. Thank you. If you’d ever like to talk about market conditions, secure some advice, or determine the value of your home, feel free to give me a call. I’d love to talk (585) 330-8750
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