BY MICHAEL DEMASI AND JAMES FINK
American City Business Journals

The New York residential real estate market is a story of contradictions.

Depending on where a property is located, a home might sell in a matter of days or weeks for above asking price. That's certainly the case in the City of Buffalo.

A few weeks ago, veteran Realtor Carole Holcberg had a client who made a bid on a house in the city's Allentown district. The bid was $11,000 above the asking price, yet the client was outbid.

"This is a 180-degree turnaround from not so long ago, when the suburbs were hot and Buffalo was slow," Holcberg said.

The suburbs, especially choice neighborhoods in Clarence, Amherst, Orchard Park and Hamburg, are still seeing large-dollar sales, however. In Hamburg, adjoining homes on Boston State Road may be sold to a Cleveland investor for a combined $6.3 million.

"The one good thing about Buffalo is, we seemed to have avoided the dramatic peaks and valleys that other areas have seen," said Susie Lenahan, vice president of M.J. Peterson Real Estate Corp. "The Buffalo area is finally being rewarded for being slow and steady."

In other parts of the state, that's not so.

Through early August, there was a sharper decline in total homes sold this year in the Capital Region than in Rochester, Syracuse or Buffalo, according to the boards of Realtors in each area.

And while median prices remained flat in the Albany area at $190,000, prices increased 6 percent in Buffalo, 2.2 percent in Syracuse and almost a half-percent in Rochester. In July alone, Buffalo boasted one of the strongest residential sales numbers in the Northeast, according to the National Association of Realtors.

In the second quarter, Buffalo had a median sale price of $108,200, a 4.7 percent year-over-year increase from $103,200. The increase was third highest in the Northeast. Nationally, the median home sale price dropped 7.6 percent in July, falling to $206,500 from $223,500.

"Anything within reason is going for at least its asking price," Holcberg said.

The rate of home foreclosures went up faster in the Capital Region from January to June than in Buffalo, Syracuse or Rochester, according to RealtyTrac, a California company that tracks foreclosure filings in county courthouses. Foreclosure filings in the five-county Albany area measured by RealtyTrac rose 157 percent during the first six months of this year, to a total of 690 (half-year figures may include multiple court filings for one house).

That compares with a 51 percent increase in Syracuse, an 8 percent increase in Rochester and a 3 percent decline in Buffalo. Of the four metropolitan areas, the Capital Region had the second-highest per-capita foreclosure rate: one for every 690 households.

The results, which are a midyear snapshot, seem to contradict the presumption that the Albany housing market is healthy because of the stability provided by the large state-government workforce.

But housing officials point out the Capital Region had higher rates of appreciation during the boom years of 2003-06 than in other Upstate metro areas. As a result, when the market cooled, the Capital Region fell further than other areas, they said.

"The other markets didn't feel the appreciation that the Albany market has had," said Ken Raymond, a principal of Coldwell Banker Prime Properties in Latham. "Those markets have been flat for a number of years."

That's true, said Peter Hunt, chairman and CEO of Williamsville-based Hunt Real Estate Corp., one of the largest brokerage firms in the state.

"If you go back a couple years, you'll see Albany enjoyed a growth rate in both pricing and unit sales that we didn't see here," Hunt said. "It would make sense to me there's a lesser fall-off in Buffalo when the whole national market takes a turn for the worse."

Merle Whitehead is president and CEO of Realty USA, the largest independent real estate company in New York. He said many more new homes were built in the Albany area than in Buffalo during the boom years. Now that the market has slowed and the company is selling fewer new homes in the Albany area, the numbers there have dragged in comparison to Buffalo.

"I think the building industry has felt the big impact of this contracting economy," Whitehead said.

Unlike double-digit appreciation levels in Albany, median home prices in the Buffalo area increased an average of 2.3 percent to 4.7 percent annually from 2003-06, according to the Buffalo Niagara Association of Realtors.

"We've been able to survive on the fact you get more bang for your buck in the Western New York marketplace," said Jim Knight, president of the Buffalo Niagara Association of Realtors.

Amy Duggan-Moore, an appraiser at State Appraisal Inc. of Lancaster, agreed.

"People come from other parts of the country and are amazed what they can buy for their dollar," she said. A home that sells for $300,000 in Western New York, she said, would be $1 million elsewhere.

"The problem is, our taxes are so high," Duggan-Moore added. "You don't build equity as quickly as you would" elsewhere.

But all real estate is local. Just as in every metropolitan area, there are desirable neighborhoods in Upstate cities and demand for larger homes in the suburbs.

A 47-unit condominium high-rise that developer Carl Paladino is building in Waterfront Village has generated strong interest, with about 75 percent of the units sold prior to construction, accoridng to Maureen Flavin, an agent with Realty USA. Sale prices range from the high $300,000s to $1 million.

"Traditionally, when the market slows down, the condos and townhouses slow up first, but they're still going strong," Flavin said.

Michael Demasi is a reporter for The Business Review in Albany, and James Fink is a reporter with Business First. Both publications are affiliates of the Buffalo Law Journal.