Last year was marked by strong sales when federal tax credits were in effect to spur homebuying. But when the credits expired, the market slowed dramatically.
According to data released Friday by the Greater Rochester Association of Realtors, the 10,261 existing homes sold in the region last year were the fewest since the market’s recent peak in 2005.
The volume of sales is important because, by some estimates, the real estate industry accounts for at least 10 percent of the overall economy.
The good news is that home prices edged up in 2010 — a sharp contrast to many parts of the country where values continued to fall because of overbuilding and inflated prices.
As the new year begins,Real estate agents in Rochester said they’re seeing renewed signs of activity. Would-be buyers are increasingly eager to make a commitment as they see interest rates creep up, making them realize that monthly payments are likely to get more expensive as rates rise.
“Since Jan. 1, we have definitely seen a more vibrant marketplace,” said John Antetomaso, an agent and partner at ReMax Plus in Brighton. Buyers have stepped up the search for a home compared to just a month ago, he said.
The economy remains the biggest challenge, said Michael Haymes, president of ReMax Realty Group in Pittsford. But he noted that consumer confidence is improving and said he is “bullish about 2011.”
Ryan Tucholski, chief executive of the Realtors association, said that despite the decline in sales in recent years, the Rochester market has fared better than many other markets. While the drop in sales activity from peak to trough was 23 percent in Rochester, much of it due to the recession, the decline was more than 40 percent in the St. Petersburg area of Florida, for example.
Tucholski, who had been CEO of the Lakeland Association of Realtors in Polk County, Fla., said that Rochester doesn’t have the type of speculative building that occurred in Florida.
“It’s very steady compared to other parts of the country,” he said of the local market.
Improving consumer sentiment may keep the market steady. According to a study released by the Siena College Research Institute on Thursday, New Yorkers expect the overall real estate market and the value of property to increase over the next year.
And with interest rates inching up but still low by historical standards, there’s more of an urgency to buy, said Karen Leonardi, vice president of corporate affairs at Nothnagle Realtors, the largest real estate agency in the area.
“Even though we’ve been telling people to buy now while interest rates are low, until the rates actually started to rise there wasn’t much movement,” she said.
“But now that buyers are seeing them finally start to rise after previously only hearing that it was going to happen, they’re acting.”
Carolyn Stiffler, board president of the Realtors association, said she expects a more level market in 2011 without the ups and downs created by the federal tax credits. The hottest price range this year should be homes costing between $110,000 and $150,000, she said, compared with homes from $80,000 to $100,000 that were hot in 2010, when first-time buyers dominated the market.
Regardless of the price range, buyers will continue to seek value this year, said Armand D’Alfonso, CEO of Nothnagle Realtors. “Homes need to be priced right,” he said.
The first question a buyer will ask an agent is “how long has the home been on the market?” D’Alfonso added. The longer a home sits on the market, the less desirable it appears to a buyer so it’s important to price it compellingly right from the start, he said.
D’Alfonso said he expects hot areas this year to include Greece, Brockport and Batavia as well as east-side suburbs such as Pittsford and Fairport.
Keller Williams Realty of Greater Rochester also is seeing increased activity, said Sharon Quataert, partner and agent in Greece and Brighton. The new year has brought in more requests from buyers looking at homes, she said.
That’s a change from the fourth quarter of 2010. The Realtors association data showed that home sales in the 12-county region fell 31 percent during the October-December period compared with a year earlier, largely due to the expiration of the tax credits.
The credit for first-time buyers was in effect during the fourth quarter of 2009.
But that credit, along with a tax break for repeat buyers, had expired by the time the fourth quarter of 2010 rolled around, and sales fell to 2,134 houses from 3,081 in the fourth quarter of 2009.
“With the tax credit, we essentially experienced nine months’ worth of buyers that went though the market in a period of four months,” Stiffler said.
The median selling price increased 5 percent in the fourth quarter to $119,500, compared with $113,500 during the same quarter in 2009.
Pending sales were down 47 percent, with 887 purchase offers accepted during the October-December period. Pending sales are often an indicator of future market activity.
For the full year, sales fell 5 percent, though the median selling price rose 3 percent to $119,900.
