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Buffalo’s Housing Leads the Nation

Author: Randy Reade

The Erie County and Buffalo housing market now leads the US and is among the top regions for growth in the value of houses.  Since 2004, every part of the city of Buffalo has seen a rise in housing prices, some as high as 100%.  This is quite remarkable, and this time period includes the Great Recession, where housing prices collapsed throughout the country, and many places never recovered.  The Washington Post has recently created an interactive website so you can see how any zip code has fared since 2004.  

Erie County is in the top category, which is growth of 40% or more.   In fact, sections of Buffalo bested the best neighborhoods in Washington, DC.  Even such hard hit areas such as the East Side have shown an impressive increase in valuation.  

We can debates the causes of this spectacular growth, but it is undeniable.  No doubt many factors come in to play, not least of which is the fact that housing prices were so low to begin with.  Nonetheless, this can only be a positive sign of Buffalo’s rebirth.  With prices going up, wealth is being created.  This attracts more investment because now people can buy a house with confidence that they will not lose their money, but actually gain.  More investment means more money, and you have a virtuous cycle.  People can take out a home equity loan to make improvements in their houses, which benefits our local banking industry, home improvement industry, and creates more wealth as the value of the house increases even further.  Government coffers swell because it gets taxes on all those transactions, helping to balance the budgets.

We can debates the causes of this spectacular growth, but it is undeniable.

In addition, with rising prices comes higher tax bills.  Of course that hurts the homeowner, especially those who plan to stay in their home and not sell for a long time, but it has the effect of encouraging those people to sell their house to buy something more affordable, and that creates more transactions, which also benefit realtors, government, and other industries.  But the main beneficiary is that local government revenue will increase substantially, providing much needed funds for infrastructure and amenities that will attract more investment, business, and home buyers.

Some will argue that rising housing costs will put houses out of reach of some people.  But prices remain low in many parts of town, and houses can still be bought for less than $100,000, which is quite affordable.  Buffalo would have a long way to go before it starts pricing out even the lower middle class.  It is true that some people will no longer be able to afford to live in the best parts of town, but no one ever said that every street in Buffalo must be affordable to even the poorest of people.  

After decades of negative population growth and investment, it is a welcome sign to see confirmation that the cycle has finally reversed.  Everyone benefits from this.

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