Congressman Paul Tonko was in Latham Thursday for a roundtable discussion with new homebuyers and realtors about what the Democrat calls a housing crisis.
Tonko, a Democrat from the 20th district, sat down with three first-time homebuyers. They told him that in navigating a tight housing market, they had to brave inflated home prices, limited inventory and stretching their budgets.
President-Elect of the Greater Capital Association of Realtors Melissa Woodcock owns Staged Nest Real Estate.
"I helped these three women purchase their first homes, and I think our biggest challenge was inventory," said Woodcock. "They were competing with cash buyers, people willing to waive inspections, inflated home prices, which really made them look at affordability versus sacrificing some of the things that were very important to them. And I think that for the three of them, in my opinion, was their biggest challenge, having to make those concessions in order to become a homeowner."
For first-time homebuyer Katie Russell, the biggest concession was settling down in a place she and her husband were used to. Russell is from Colonie; her husband from Bethlehem.
"The prices and the square footage," said Russell. "Could we afford it on paper with our approval? Yes, but would it have been a great financial choice? Probably not, because we have other expenses that, you know, we have to think about on top of that. So we did buy in Troy. We're so happy that we bought in Troy. We're in a great spot. We're happy to have something to call our own."
Russell says the couple initially tried doing a 2.5% first-time buyer loan, with no success. They went to 5% down and managed to cut a few financial corners while borrowing from their 401k's to become more competitive against other buyers.
The realtors say that competition includes equity-laden empty-nesters looking to downsize and "flippers" looking to buy houses, do minor fix-ups and cosmetic work then sell the properties at huge profit or charging well above market rent.
Executive Director Mark Castiglione says a report the Capital District Regional Planning Commission released in May shows that individuals making the median income in Albany County, (near $55,000 according to Census data) do not make enough to afford a house at the median sale price, and affording rent can be a challenge.
"So the average fair market rent for one bedroom apartment in the Capital Region is $1,079. And for a two bedroom, it's $1,313. So taking a look at what you would need to be able to afford a one bedroom apartment in the Capital Region, a person would need to earn at least $20.25. And that's approximately one and a half times more than the minimum wage in our area," Castiglione said.
That leaves little money for savings and pushes home ownership farther from reach.
Until inventory increases, Woodcock says the dynamic will remain in place.
"A lot of the starter homes are purchased by investors, and they're kind of taken away the opportunity from first time home buyers and these investors are then renovating them and putting them on the market at the higher prices," said Woodcock.
Another report issued by New York State Comptroller Ton DiNapoli finds 1 in 5 households experiencing a severe cost burden of more than 50% of their income going to pay for housing, with New York consistently ranking as one of the states with the highest cost burden for both owners (3rd in 2022) and renters (13th in 2022).
After hearing buyers’ and realtors’ concerns, Tonko vowed to roll up his sleeves when he gets back to Washington in an effort to seek out ways to make purchasing a home more fair and equitable.
"I'll be working to get, in whatever format, cash on the table, credits available to the buyer to help them ease the financial pressure," said Tonko. "It seems to be, you know, that, along with the struggle to build the stock that's available. So that one is a difficult one with, you know, the two way street of the seller/buyer. But I think what I'm hearing too, is available resources on the table are a great... you want to really do your best by that first-time home buyer, because want to see them develop the equity in the system so that they can move through the process over the years."
According to a state study, rents outside of New York City have risen from 40 to 60 percent since 2015. Home prices have risen 50 to 80 percent.
