It is cities like Binghamton, NY that hold the key to any true real estate recovery. With its young demographic and high concentration of renters, the Binghamton real estate market can change on a dime. Binghamton is a small city in upstate New York with most of the population located near the riverbanks. There are only seven major neighborhoods in the local area. Despite its size, it was not immune to the market crash last decade. Recovery has been slow, but there are signs that things may finally be moving in the right direction.
The Binghamton real estate market currently boasts a median home price of $96,200. The national average, on the other hand, is almost $204,000; more than twice as much as much as the average home in Binghamton. All things considered, the difference in price is not surprising. Over the past three years, Binghamton real estate has seen its appreciation rate drop in the red. Over the course of three years, appreciation rates bottomed out at -11.9 percent. In the last year alone, appreciation rates improved to -8.3. For all intents and purposes, the Binghamton housing market is in a post-recession slump.
Of course, negative appreciation rates are a double edged sword. A drop in home values means that property is more affordable. Current rates could provide attractive spreads for the entire Binghamton real estate investing community. Now, in fact, may be the best time to buy in Binghamton. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Binghamton housing market one year ago have depreciated by an average of $7,115, whereas the national average increased $15,753 over the same period.
- Homes purchased in the Binghamton housing market three years ago have depreciated by an average of $7,461, whereas the national average increased $53, 565 over the same period.
- Homes purchased in the Binghamton housing market five years ago have appreciated by an average of $1,099, whereas the national average was $47,444 over the same period.
- Homes purchased in the Binghamton housing market seven years ago have depreciated by an average of $2,838, whereas the national average increased $17,200 over the same period.
- Homes purchased in the Binghamton housing market nine years ago have appreciated by an average of $17,511, whereas the national average actually depreciated $100.
While the equity appreciation numbers are weak compared to the national average, keep in mind that they didn’t have as far to go. Equity on a national level plummeted across the board with massive foreclosures and short sales. During this period Binghamton held up well and retained much of their average value.
Binghamton is an area populated by recent college graduates. This is a benefit to the local economy, but has an impact on the job market. The current unemployment rate of 6.3 percent lags behind the national average of 5.5 percent. The silver lining in that number is that this represents an improvement of the 7.4 percent from the same time a year ago. What is hurting the Binghamton housing market is the slow pace of job growth. New jobs are only growing at a 0.5 percent clip versus the national average of 2.1 percent. Job growth has a direct impact on employment, which impacts local real estate. The state of New York’s economy is growing and has grown over the last thirty six months. If this trend continues, the Binghamton real estate market should continue its slow growth. Subsequently, growth in the Binghamton real estate market should follow.
One major negative with the Binghamton real estate market that cannot be overlooked is a distinct lack of new construction. There have only been 16 new housing permits over the last twelve months. This number is more than 30 percent below the long-term average. Reduced construction limits the supply, which allows demand to catch up. Eventually, the supply will run out and prospective buyers will have to look at alternative cities to live in. If there is one positive to take away, it is that single-family permits are actually on the rise from a year ago, up more than 33 percent. The market may have stabilized, and could be ready to bounce back.
Due to the relatively low median home prices, Binghamton remains an affordable place to live. The local mortgage payment to income number sits at 5 percent, well below the national average of 14.3 percent. This indicates that Binghamton is much more affordable than most markets, and money can be distributed back into the local economy. This also shows that the number of future foreclosures should be reduced, as homeowners have residual income to combat short term cash flow issues.
The threat of foreclosure still looms over the area. However, this is something for the Binghamton real estate investing community to look forward to. Foreclosures are a great source of deals, and Binghamton has about 433 on the market, according to RealtyTrac. All of these homes are in some state of the foreclosure process: default, auction or bank-owned. That said, the overwhelming majority of distressed properties in the Binghamton real estate market are bank-owned (73.9%). These properties are currently sitting on the books of lenders as non-performing loans, meaning the Binghamton real estate investing community could acquire them if the price is right. The remaining distressed properties are actually pre-foreclosures, meaning the owners are simply at risk of having their home repossessed.
Regardless of the scenario, distressed properties offer those interested in Binghamton real estate investing a great opportunity. The distressed property discount in the area is well documented. The median sales price of a non-distressed home was $90,000. The median sales price of a foreclosure home was $61,875, or 31 percent lower than non-distressed home sales. That is a savings of more than $28,000 per home.
Binghamton is a city of just over 46,000 residents. Because of the size, every transaction has an impact on the big picture. The total number of real estate sales has declined over the past twelve months. Last month represented the fewest number of transactions in over fifteen years. At twenty two sales, this can be viewed as a bottoming out of the foreclosure inventory or a lack of new construction impacting the market. Either way, this is an alarming trend for the first half of this year. On the other hand, the number of total listings over the last 30 days is up almost 8 percent, and they are at a higher list price. While small, this could indicate a sign of things to come.
There are glimmers of hope for the Binghamton real estate market, but there are a few obstacles in the way of growth. Unemployment, job growth and a lack of inventory are all hurdles that must be overcome before Binghamton turns the corner. That said, the expansion of the economy could be just what the doctor ordered.
Binghamton Real Estate Market Summary:
- Current Median Home Price: $96,200
- 1-Year Appreciation Rate: -8.3%
- Unemployment Rate: 6.3%
- 1-Year Job Growth Rate:0.5%
- Population: 46,444
- Median Household Income: $46,836