Why is the market so flippin' expensive?
If you're interested in real estate in Buffalo, you know that prices are sky high right now. Not Toronto level or anything (over half a million for a 2-bedroom "bungalow"? No thanks, I'll stick to the rust-belt), but pretty high by Western New York standards! What you may not know is that this is happening all over the country - and for pretty specific reasons. Here are a few of those reasons.
1. Generational shifts: Millennials, a very large cohort of young people, are aging into the housing market. Their parents and grandparents, however, are not aging out - they are staying in their homes for longer and holding off on retirement for longer. This means there are just fewer homes to choose from.
2. Rising construction costs: To make up for higher construction prices, builders are going for higher-priced large homes, and not bothering to build entry-level homes. Overall, fewer and fewer houses are being built at all. This too contributes to a shortage of inventory.
3. A focus on the city: Previous generations were more willing to go farther and farther afield from city centers, creating "exurbs" that were easy to build in. Today, however, there is an increase in folks who want to live in the city or in the nearest, inner-ring suburbs. That increases the competition for a smaller supply of houses.
4. Low interest rates: While interest rates are slowly rising, they have been historically low for years. This makes mortgages more accessible to more people, creating more demand for housing.
5. Locally, disinvestment has hurt our supply: For decades, Buffalo faced population loss and disinvestment in the city. Many of our houses are in total disrepair, requiring expensive updates and renovations that buyers usually don't want to take on. So when a well-maintained, move-in-ready home comes on the market? Watch out for immense competition.
So it's not in your head - houses really are a bit ridiculous in their prices these days. The competition is steep and the seller's market looks like it's here to stay (for the foreseeable future, anyway). Does that mean you should give up? No way. In Buffalo, it is still totally possible to make dreams of homeownership a reality - it just requires patience and a willingness to make some compromises. Consider a fixer-upper, or a less popular neighborhood. As annoying as the lack of inventory is, we are not in San Francisco here. You can absolutely still find a reasonably priced house in the Buffalo market.