On Saturday, high temperatures in Rochester, New York, will plummet to a frigid eight degrees Fahrenheit and the city has already seen over 18 inches of snow since the start of the year.
That’s standard for Rochester, a city on the banks of Lake Ontario that quickly grew after the American Revolution and gave birth to Eastman Kodak and Xerox, but whose population has tumbled from around 350,000 in the mid-20th century to just over 200,000 today.
In November, Rochester’s median home sales price was $154,838, according to Redfin, less than half of the national median that month of $335,519.
Still, there’s a sustained, nationwide surge in housing demand, plus a crippling lack of inventory – and Rochester is hardly impervious to either of these historic trends.
“The market last year was unprecedented,” said Mark Siwiec, a Keller Williams agent in Brighton, a town just southeast of Rochester. “It left us breathless. Until about mid-May of this past year the market was unlike anything we’d ever experienced. Then we downshifted from securing 20-25 offers and selling for $15,000 to $75,000 over asking to a market that was still a great seller’s market, but just not as insane, and that market lasted until about mid-September.”
That median sales price is up 3.8% year over year, per Redfin, and the November 2020 price was itself up 12.4% from 2019. In addition, the sale-to-list price ratio was 106.3% in November, per Redfin, suggesting listing agents perhaps underestimated continued market demand.
“While we are finding some pockets of the market that are cooling off, others, like suburban Rochester, are even more competitive than they were a year ago,” local Berkshire Hathaway HomeServices Zambito agent Sichel Cignarale said. “The city of Rochester itself is still very competitive. People are using escalation clauses [a clause in an offer that automatically increases the purchase price by a certain amount over competing offers] and other strategies in their attempts to outbid the competition.”
Cignarale noted signs of cooling off, including some properties appraising for lower than expected and once desperate buyers no longer waiving home inspections. But the market remains elevated, especially for the winter season when things typically slow down in Rochester as illustrated in the number of homes on the market and percentage of homes selling for over list price.
Agents claim that buyers are leaving pricey, big cities for Rochester including “boomerang buyers” who grew up in Rochester but moved away.
“We are seeing a decent amount of boomerang buyers, who, due to job changes or just being able to work remotely, are able to return home,” Mandy Friend Gigliotti, a local Keller Williams agent said. “Truthfully, Rochester is just a beautiful place and a great place to raise a family. There are so many amenities, there is not a lot of traffic and the culture is really strong here.”
Aside from Brooklyn, Siwiec and other local agents have helped buyers from Manhattan, New Jersey, Connecticut, Chicago, Los Angeles and San Francisco move to Rochester.
“We are experiencing the phenomenon of people realizing that their job is portable, so they sell the Brownstone in Brooklyn for $1.5 million, pocket $750,000 in equity and use the remaining money to buy a house in Rochester that is three times the size of what they were living in, with the added benefits of a larger yard and less congestion,” Siwiec said.
Many agents also cited the area’s public school system and the many local highly-rated universities, including Rochester Institute of Technology and Eastman School of Music, as well as the city’s proximity to the picturesque Finger Lakes region.
This increase in demand for housing has resulted in high levels of competition and multiple offer situations.
“We are still seeing 15 to 20 offers on properties and that has been during the holiday time,” Tiffany Hilbert, a Rochester Keller Williams agent, said. “I think a lot of buyers want to try to buy a house and lock in before mortgage rates potentially go up, so people are still seriously looking to find a home.”
“Generally, you pretty much have to go in at or above ask, if you really want to be competitive on a house and you definitely want to use an escalation clause,” Hilbert said. “I think the big thing, if you are representing a buyer, is to have a strong and fierce conversation with them prior to even going out and looking because you’ve got to set that expectation the correct way for them and you have to gain their trust so they will listen to you when it comes time to put a competitive offer in.”
In addition to heightening the level of competition for properties, this influx of homebuyers has placed increased stress on the area’s already tight housing inventory.
“In the six county region, which Rochester is part of, six years ago or so there were typically around 7,500 homes on the market,” Siwiec said. “But for the past three or four years that number has not risen above 1,000 units and right now we have less than 560 homes on the market in this region.”
Since the start of the COVID-19 pandemic, the median number of days a home has sat on the market in Rochester has not risen above 12. Currently, it is less than 10 days on the market.
“Some new properties came on the market last Friday morning and they are not accepting offers until Monday,” Cignarale said. “So some of these homes, agents are only giving one weekend and then they are gone.”
Local agents do not see any hope on the horizon for the city’s low inventory issues, especially with starter homes suited to first time homebuyers.
“People are staying in their existing homes longer, so less inventory is hitting the market and there just aren’t enough starter homes being built, so we are struggling with that too” Siwiec said. “Of course, COVID plays into things as well. With all the uncertainty we have seen a lot of people decide to invest in their current home rather than find something new. Even with it being such a strong seller’s market people are thinking, ‘Well, I just dropped $125,000 in my property to make it what I want, why should I sell now?’”
Local agents expect things to continue escalating, but hopefully at a slower pace.
“We are forecasting the spring market will begin sometime in the middle to the third week of January, Siwiec said. “Once again we are anticipating that the first six months of this year are going to be reminiscent of last year with lots and lots of buyers and very few properties available. Values will more likely than not increase again, but due to inflation and rising interest rates, we are thinking that come Memorial Day, things will start to cool off significantly.”