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A Look at the Current Rochester Housing Market

Rochester Real Estate Market May Loosen Up for Homebuyers in 2019

By Tina Lookup
Mortgage Lending, ESL Federal Credit Union
Updated March 2019

Ask anyone who has entered the Rochester real estate market in the last three years and you will likely hear a tale of low inventory and high demand for homes. Recent supply-and-demand trends are tight across many US housing markets, with Rochester seeing similarly dwindled figures for housing availability.

Data from the Greater Association of Realtors highlights this trend further as the number of Monroe County homes for sale in 2018 dropped 9%, while median sales price increased 7.4% to $145,000.

A couple factors exist that suggest this tight-market may be loosening up a bit in 2019. These factors include the mortgage rate environment that impacts affordability of a mortgage, while generational shifts could lead to more available inventory than what we saw in 2018.

The Case for Shifting Affordability

Many consumers have questions about housing affordability, especially in an active market. A recent Redfin poll found affordable housing and rising interest rates are two of the highest economic concerns for homebuyers.

A recent dip in mortgage interest rates could translate into real savings for homebuyers. The Federal Reserve indicated in January its intention to pause Federal interest rate hikes in 2019. While mortgages are not directly tied to Fed short-term interest rates, this pause could also help moderate mortgage interest rates.

Average 30-year mortgage rates sit near 4.35% in early 2019 after peaking at more than 5% in 2018. These few basis points translate to roughly $60 less in a monthly 30-year mortgage payment, and thousands in interest over the life of the loan.

Changing Lifestyle Could Add Supply

For many consumers, buying a home can occur at one (or several) life stages: starter homes for single buyers or couples with no kids, move-up purchases or family expansion, and later downsizing.

Several years ago, many homeowners opted to refinance their current homes at all-time-low interest rates rather than enter the rising-rate environment. These buyers may still own a home that does not meet their current needs, and they may soon be eager to enter the market now that rates have moderated.

It is important to remember interest rates are still historically low, with much of the 1980s seeing rates of 15% or more. The current period of moderated rates should encourage more sellers to list their home and find a house that better meets their needs. Keep an eye out for homes in the $110k-$175k range for much of this movement.

Prepping for a Home Purchase

You might ask a few questions before buying your first home: Do I have enough for a down payment? Can I afford the town or neighborhood I’d like to live in? These are valid questions.

For those concerned with coming up with 20% for a down payment, there are programs available to assist you. First-time buyers may be eligible to take advantage of grants, like the First Home Club, to assist with down payment and closing costs.

In fact, the First Home Loan Bank of New York recently announced changes to the First Home Club℠ (coming in July) that increases the possible grant amount up to $15,000 per household. These changes will help assist a greater number of homebuyers with their upcoming purchase.

In any circumstance, the best advice I can provide is to speak with your lender and realtor before you plan to buy. These experts can often help guide you through the homebuying process and answer any questions you have along the way.