Back in the fall of 2004, real estate agent Colleen Kulikowski was at a title attorney’s office in Florida’s booming Marco Island, helping close a deal on a $725,000 home.
Actually, it was the first of two closings she’d be attending that day — on that same property. The next was just down the hall, where another buyer offered $795,000. Kulikowski would find out later that the home would close a third time that day for $925,000, a same-day increase of 27 percent.
These days, Kulikowski has a calmer life, and a more low-key portfolio, in Western New York. Her hometown region missed out on the upward-spiraling prices she came to know in Southwest Florida, where prices are now plummeting and foreclosures are reaching record levels.
Here homes sell in 60 to 90 days, at reasonable prices to buyers who usually plan on moving their families into them. That slow-but-sustainable growth, once just another reason to look South and be shamed, has left the Buffalo Niagara region ranked 12th in the nation for growth, according to the National Association of Realtors.
“We’re not doing super-fabulous, we’re not booming, we’re just doing well,” said Kulikowski, now an agent with Hunt ERA in Wheatfield, a suburb north of Buffalo.
There were five fewer homes sold in April 2008 than April 2007, for a total of 808, according to the Buffalo Niagara Association of Realtors. And permits for new homes and condos have dropped, with just 240 permits here in the first quarter of 2008, a 16 percent decrease from the same period in 2007.
Yet median sale prices across the region, which includes the cities of Buffalo and Niagara Falls along with their suburbs, rose 5.5 percent to $101,000 in April, while national median prices fell 11 percent.
So how did Buffalo keep its housing attractively affordable, yet mostly secret from over-extended prospectors and quick-fix flippers?
A big part of the answer lies in the city’s slow transition to a fast-paced service economy. Most of the city’s neighborhoods are still tightly knit and rooted in blue-collar families and traditions — properties are seen as homes, much more than growth investments, realtors said.
While there are sprawling new buildings in outer-ring suburbs, the vast majority of the area’s housing stock is more than a century old, and any potential speculator has to contend with Buffalo’s trademark winters.
Susan Lenahan, a veteran agent at MJ Peterson focused on city properties, said that in the last few years she’s had dozens of out-of-towners call about multi-unit properties for sale.
“A lot of novices, rookies, [were] drawn in by the prices they [saw] … but they realized, especially with these lower-priced houses and rents, that management fees ate up whatever profits there were,” Lenahan said. “In the end, I didn’t have too many takers.”
That’s not to say Buffalo doesn’t have attractive buy-ins, especially for young professionals, empty-nesters and anyone looking to escape the current costs of car travel. Almost every developer in town has a condo conversion project on deck.
And developers aren’t just converting vacant apartment buildings: There’s the former TV-dinner factory in the outer Lake Erie harbor priced at about $200 million; a federal office building, priced at about $63.6 million, with a hotel and office space; and a 23-story tower, built on the site of an iconic restaurant, priced at about $55 million.
Even inner harbor development, long the economic counterpart to the city’s maybe-this-year sports championship drought, is getting a kick start, with a $30 million mixed townhouse/condo project slated for completion this year.
But loft conversions aren’t the real story behind Buffalo’s seemingly effortless ducking of the housing crunch.
James Knight, president of the Buffalo Niagara Association of Realtors and a commercial agent with MJ Peterson, said the subprime mortgage crash didn’t take root in Buffalo, mostly because subprime mortgages weren’t necessary for most buyers.
“You take a $70,000, $80,000 Cape Cod in [neighboring suburb] Cheektowaga, and it goes for $120,000 or $130,000 in markets that were once booming, if not more,” Knight said. “A family making $30,000 a year would really have to stretch to buy that home elsewhere, especially when you factor in cost of living. Here, they can just about afford it … they don’t need an artificially big mortgage out of the box to get it.”
But while the numbers may partially explain Buffalo’s respectable gains, Lenahan and others believe there’s a reality-checking character to Western New York that keeps the market steady. She remembers telling two southern California teachers in February not to visit if they were looking for cheap rental properties to turn around, but the duo flew out anyway. Lenahan took them around to tour some multi-unit properties.
“They had a total of $60,000 and wanted to buy two, or maybe three properties,” Lenahan said. “It was February in Buffalo. Ten degrees, snow on the ground … They knew right away it wasn’t like they’d probably thought.”
The investors found the cheaper properties needed real work, and the two-family houses they did like had realistic prices, Lenahan said. So she gave them directions to the famous birthplace of the chicken wing, Frank & Theresa’s Anchor Bar, as well as the modern art Albright-Knox gallery.
“I told them to consider it an unplanned getaway to Buffalo, to forget about finding a ‘steal,'” Lenahan said. “Later on, they e-mailed to say ‘thank you,’ that they were glad I did that.”
Kevin Purdy is a business reporter for the Buffalo News.