The Rochester housing market has quite a way to go if it ever hopes to catch up with New York’s downstate economy. For now, it is best to not even compare the two. While the downstate economy of places like Brooklyn and Manhattan continues to bolster the states reserves, cities like Rochester, Buffalo and Syracuse are fighting an uphill battle. However, that is not to say Rochester is without any hope – quite the contrary actually. While the recovery has yet to take hold as we had hoped, appreciation rates have witnessed the Rochester housing market increase gains for three consecutive years. So while things may not be where the residents of Rochester would like, they are on the right track. In fact, Zillow has already forecasted a 2.4% increase in home values over the next year.
Thanks, largely in part, to historically high appreciation rates, the median home price in Rochester is currently $128,100. However, while the rest of the country saw an average increase of nearly 5% over the past year, Rochester homes appreciated just 1 percent. Comparatively, the average home in the United States appreciated by 25.8% over the course of three years, whereas Rochester home values only increased 7.7 percent. As you can see, Rochester homes are heading in the right direction, just not at the same rate as the rest of the country.
Rochester homeowners have a little more room to breathe after three consecutive years of appreciation. Accordingly, many residents have more equity now than they did at any point of the recession. The influx of equity could be just what the Rochester housing market needs, as it could promote owners to sell and increase inventory levels. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Rochester housing market one year ago have appreciated, on average, by $3,444. The national average was $12,731 over the same period.
- Homes purchased in the Rochester housing market three years ago have appreciated, on average, by $14,561. The national average was $51,204 over the same period.
- Homes purchased in the Rochester housing market five years ago have appreciated, on average, by $17,874. The national average was $48,225 over the same period.
- Homes purchased in the Rochester housing market seven years ago have appreciated, on average, by $21,514. The national average was $1,750 over the same period.
- Homes purchased in the Rochester housing market nine years ago have appreciated, on average, by $32,435. The national average increased $5,043 over the same period.
While Rochester’s job sector is better than that of the national average, it still has room to grow. The job sector has demonstrated an ability to keep the Rochester housing market afloat, but circumstances could serve to improve. Rochester has a lower unemployment rate than the national average. At 5.8%, it is close to that of Kansas City. Of particular concern, however, is the city’s job growth rate. Over the course of a year, Rochester has only demonstrated a job growth rate of 0.5 percent. At that rate, Rochester is nearly one-quarter of the national average. Local employment growth for the rest of the country is just under 2 percent.
The current state of the Rochester housing market has not promoted new housing developments. In fact, construction appears to have bottomed out, falling 3.2% bellow the long-term national average. A distinct lack of new construction should limit new supply to the market. With fewer properties available for purchase, inventory will temper just enough for demand to catch up. However, foreclosures and short sales in the Richmond housing market will add more properties to the market than in previous years. The presence of distressed inventory should place downward pressure on median home prices.
More than 6% of homeowners in the United States are delinquent, or behind, on mortgage payments. However, the Rochester housing market nearly doubles the national average. Accordingly, about 13% of all homeowners in the Rochester area are behind on payments. Surprisingly, with delinquencies as high as they are, only 11% of Rochester homeowners are underwater, that is to say that they owe more on their property than it is worth.
Affordability in the Rochester housing market continues to drive demand. In fact, Rochester is more affordable than most markets across the country. While the average homeowner typically allocates 16.1% of their monthly income to their mortgage premiums, homeowners in Rochester are under half of that. The average Rochester homeowner puts about 6.4% of their monthly income towards mortgage payments. At that rate, Rochester should remain considerably attractive to younger populations looking to buy their first home.
As with any major metro, individual neighborhoods perform at different levels. That said; some neighborhoods have outperformed others on an annual basis – even a weekly basis. According to research by Trulia, the following neighborhoods represent the most popular areas in Rochester:
- East Avenue
- Park Avenue
Of those neighborhoods in the Rochester housing market, Maplewood and East Avenue are drawing the most attention. However, investors considering the area are advised to look into Upper Falls, where prices may be at their lowest point. With listing prices dropping nearly 59% over the past week, Upper falls may provide investors with the deals they have been looking for.
The current status of the Rochester housing market is not exactly where we would like to see it. However, much like the rest of the country, things are looking up. Appreciation rates are still driving up home prices, allowing more homeowners to take action. Perhaps even more importantly, affordability continues to favor the entire market. Younger generations, millennials in particular, will likely consider Richmond a great place to purchase a first home. For all intents and purposes, Rochester should benefit from the coming year.
Rochester Housing Market Summary:
- Current Median Home Price: $128,100
- 1-Year Appreciation Rate: 1.0%
- Unemployment Rate: 5.8%
- 1-Year Job Growth Rate: 0.5%
- Population: 210,358
- Median Household Income: 51,857