Rochester real estate shaping up for second half

Daily Record (Rochester, NY), Jun 13, 2008 by Danielle Derringer

A gain in the level of home sales is foreshadowing an improvement for the second half of the year, according to the latest market health forecast from the National Association of Realtors (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.3 percent to 88.2 from a reading of 83 in March. It's the highest index since October 2007, but remains 13.1 percent lower than that of April 2007, when it stood at 101.5 according to NAR.

Locally, pending sales tend to be under-reported, said Mary Jane Mahon, a Realtor with ReMax Realty Group and president of the Rochester chapter of Women's Council of Realtors.

"Agents are sometimes conservative about putting a home in the [multiple listing service] as 'pending' for fear that the deal doesn't stay together," Mahon said.

According to Lawrence Yun, NAR's chief economist, sales contracts have picked up notably in areas of the country now undergoing significant price drops.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," Yun noted in the latest report.

Mahon said Rochester's market is seeing more multiple offers on houses than earlier in the year, which she said is a good indicator that more interested buyers are out there.

"If a home hasn't been on the market too long, buyers need to go in with really strong offers," she said.

NAR President Richard F. Gaylord said the residential real estate market may be breaking its holding pattern.

"It appears that more buyers are realizing they can take advantage of a favorable combination of mortgage interest rates, home prices and family income," he said. "Overall, affordability conditions are the best we've seen since the middle of the housing boom in 2004, but with far more choices and much less pressure than buyers experienced four years ago."

According to NAR, the U.S. housing affordability index is projected to rise by 15 percentage points to 128 for all of 2008. However, Rochester most likely won't experience this phenomenon, according to Mahon, who said the region's long-standing conservative mentality helps the market remain affordable and stable.

"It drives Realtors crazy when other parts of the country are going up those 15 points, but we're pretty certian we're not going to see that increase," she said. "On the other hand, we have to be happy to be in the middle, in a sense, because we're lucky enough to have continued to have a stable market through some rough times in other parts of the country."

Nationally, NAR expects existing-home sales to increase from an annual pace of 5.05 million in the second quarter to 5.83 million in the fourth quarter. For all of this year, existing-home sales are expected to total 5.40 million, then rise 6.3 percent to 5.74 million in 2009.

For more information visit www.realtor.org.