Joe Santimaw and Morgan Goold raced through the front door of yet another house for sale, this time armed with flashlights, their phone cameras turned on, ready to split in two directions.
They needed to make the best of their time. They would have only 15 minutes to inspect a home that could either shelter their future family or sink their finances underwater.
They had learned many lessons after losing bids on nearly a dozen houses in a real estate market unlike anything the Syracuse area has seen in a lifetime.
“It was the most thorough 15 minutes you’ve ever seen,” Santimaw said.
This is how house shopping goes in a pandemic. Few people want to part with their homes at the same time others want to move up or just move in. Who would sell a home without a guarantee they will find another one?
A historic lack of inventory has created a seller’s market that veteran real estate agents say they have never experienced. Sellers are empowered to unload homes quickly, pass over any tricky negotiations and ask for more. Buyers are left with risks, high price tags and broken hearts.
Buyers are resorting to strategies seen more often in competitive markets like Boston or Brooklyn.
The activity in this hot market raises questions about the long-term consequences of paying high prices for a house. First-time buyers are especially nervous. So far, experts say, Syracuse is not in danger of becoming the next Austin or Phoenix, where housing costs have outpaced income for years.
In Syracuse, the activity points to a one-time bubble – the result of more demand than supply in an otherwise steady region.
And prices in the Syracuse area are still low compared to other metro areas. The region’s median sale price ranks in the bottom 20% of the 100 largest metro areas tracked by Zillow.
Still, for Syracuse, the numbers are staggering by every measure: High list prices, high sales prices, fewer days on the market, low inventory.
If you wanted to buy a house when school let out in June, you had a choice of only 1,857 homes in Cayuga, Madison, Oneida, Onondaga, Oswego and Seneca counties. That’s compared to 2,817 in June 2019, according to the Greater Syracuse Association of Realtors.
The 12-month average number of homes for sale has decreased by about 36% in the Syracuse metro area, according to Zillow economists.
Overall, home values in the Syracuse area have increased about 24% over the last three years, according to a measure by Zillow economists that considers sales trends as well as the value of homes that have not recently sold.
The average sale price of a home in the greater Syracuse area in June was $220,200 – an increase of 17.6% over the year before, according to the Greater Syracuse Association of Realtors.
In March, 32% of homes in the Syracuse area sold above list price, compared to 14% in March 2020, Zillow researchers said.
Lakeside properties are especially on fire. The average home sale so far this year in Skaneateles is $617,100 and in Spafford, $546,000.
But the hot market is not isolated to wealthy lakeside retreats. People shopping for homes in the middle are also getting crunched.
Santimaw and Goold needed somewhere to live. Their landlord was pressuring them to sign a year-long lease. Their dog needed more space.
There was so much competition, they knew they would have to bid immediately. They would have to waive a home inspection and radon test. They would need to offer tens of thousands of dollars more than the asking price.
Their competitors are offering to pay cash. Successful buyers sign guarantees to make up the difference if the bank appraisal does not cover the full price. They offer “earnest money deposits” – thousands of dollars that will be paid to the homeowner if the deal falls through.
They write in escalation clauses. For example, they will bid $2,000 over the highest offer up to $300,000, if necessary.
“It was heartbreaking. We kept feeling very defeated,” Goold said. “We felt like we were putting in good offers.”
Goold obsessively scrolled through home sales on her phone. She called their agent every day. There were tears and wine nights. Her father called the agent himself to see what the kids were doing wrong.
After about four months, they gave up. Finally, TJ Perkins, of Acropolis Realty Group, connected them with a couple who wanted to sell without the hassle of putting the house on the market.
They paid $185,000 for a three-bedroom split level built in 1978. The house, in Clay, last sold in 2013 for $105,000, according to county property records.
‘They just keep bidding’
Home prices are increasing quickly, but that doesn’t mean banks are willing to play along. Appraisers set home values based on previous sales and those trends are just starting to catch up with the pandemic.
An appraisal establishes how much a bank will loan a borrower, and appraisals are coming in lower than contract prices. And that means buyers have to make up the difference with cash – something unheard of in the Syracuse area.
“It doesn’t seem to deter a lot of people,” said John LeClair, who has done bank appraisals in the region for 35 years. “They write it right into their contracts. ‘I’ll go $2,000 over the highest offer. I’ll pay cash.’”
It’s a risk. If the market returns to normal, those buyers may not be able to sell their homes for the amount they paid for them.
“I’ve never come across this kind of price increasing,” he said. “You get people bidding on a house and they just keep bidding until they get it.”
‘I want everybody to get a house’
Jason Caporiccio, an associate broker for Coldwell Banker Prime Properties, said a bidder had an escalation clause on top of an escalation clause for a home in Fayetteville.
The house went on the market the Thursday before the Fourth of July for $218,888. There was no open house. About 20 people made appointments for individual tours. There were 7 offers. By Monday night, it was gone. It sold for $40,000 more than the asking price.
“It was pretty vicious,” he said.
Jordan Burns and his wife bought the Fayetteville house two years ago, when they moved back to the area from China. They were first-time home buyers then and would have been petrified by the current market, he said.
“There were houses and you could get them for what they were asking, maybe you’d have to pay a few thousand dollars over,” he said.
In 2019, they paid $169,500.
A new job in Albany meant they would have to sell after just two years.
Over the Fourth of July weekend, they sold it for $260,000. In just two years, an ordinary 3-bedroom split level built in 1958 had increased in sale price by $90,000.
And that was not even the highest offer. Someone offered $275,000.
Caporiccio put the details of each offer in a spreadsheet for the couple to rank. The buyers were competing in different ways. Some offered to pay part of the agent’s fee. Some said they would pay cash. There was the escalation clause on top of the escalation clause. Six offers waived the home inspection.
One offer stood out. They offered to pay an earnest money deposit, a commitment in case they decided to walk away from the deal. That buyer was also willing to make up the appraisal gap.
Burns said they chose the strongest offer and not the highest offer. They wanted the sale to be successful and fast.
“We felt like, ‘OK, let’s not be greedy,’ ” Burns said. “At that point, we felt like we did really well. We could go for the highest number and then be sweating out the appraisal. There’s a possibility we left money on the table, but at the same time, it’s great that you’re not leaving people dry.”
He said he has compassion for families struggling to find a place to live right now.
“It’s funny, everyone wants it to be celebratory,” Burns said. “But it’s kind of tough because you feel bad from a normal human nature. I want everybody to get a house, and I don’t want people feeling like you have to spend a ton of money just to live in Central New York.”
‘There weren’t a lot of houses we liked’
Austin Mead and Jessica Rivera decided to move back to New York after the pandemic left them feeling crunched and lonely in their Chicago apartment. All of their friends had moved in with their parents in the suburbs.
“It was the two of us and the dog in a one-bedroom apartment,” Rivera said. “We got to thinking about what’s important to us.”
Mead and Rivera had jobs in finance and thought they could work remotely in the Syracuse area. He dreamed of a house with a few acres. She wanted to be near a Wegmans.
They come to each deal with good credit and the ability to pay 20% down. They didn’t need to sell another home, so there would be no contingencies.
“The hard part for me was there weren’t a lot of houses that we liked,” Rivera said. “When one popped up that was halfway decent, you had to run to it. But everybody else did, too.”
Four months later, the couple and their dog were still bunking with Mead’s mother in Brewerton.
They made it to the final stage on 10 different houses. But they lost each one.
He gave up on the idea of extra land.
Together, they set limits and decided they would not let their emotions get in the way.
“You have to be really comfortable with yourself and your partner with what you want to pay for,” he said. “As it happens, it’s easy to get confused.”
They were firm on one thing: They were unwilling to pay tens of thousands of dollars over the appraised value. That’s too big of a risk, they said.
“We would never, ever sell at that amount again,” he said.
Finally, they were successful. They expect to close in August on a 2003, four-bedroom Liverpool colonial. It was listed for $344,700. They paid $56,000 more. The bank loan covered the full amount.
Wegmans is 7 minutes away.
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Do you have a story to tell about buying or selling a house in this market? Contact Michelle Breidenbach | [email protected] | 315-470-3186.