Sullivan County Real Estate

Farmstock '09 Working Farm Tours

I was out working in my garden (or what was left of it, after a huge hailstorm a couple of weeks ago) when an unfamiliar pickup came drove down my driveway. One of the local farmers got out to hand deliver a flyer for Farmstock '09 - Working Farm Tours, organized to help support the local working farms.

Click here to get a .pdf of the flyer.

There are 5 farms participating, each on a Saturday or Sundays between July 11th and August 15th. Each farm will feature different activities --- cow milking, cheese making, goat milking, honey extracting and wagon rides, depending on the farm. Each working farm tour is from Noon to 3PM. Each Farmtour for adults is $6 and children 5 to 12 are $4.

The Farmtour helps support the continuation of working family farms here in Sullivan County. It's a great cause, and also lots of fun. Kids love it. So make it a point to put one of the Working Farm Tours on your schedule this summer.

What's Up — or Rather, Down — With Toronto Reservoir?

We're well into summer (OK, I know in my last post I stated summer started just two days ago, but that was about the weather, not the calendar) and Toronto Reservoir, the second largest recreational lake in the county, is still way, way down. In fact, the once grand 800 acre lake seems like a puddle of its former self. I didn't take the photo on the left above on the road to the reservoir, but standing about 50 feet from the 'shore' on what was the lake bottom last year. The "road" has been rutted in by boaters towing their boats from the public access point on Moscoe Road to the receding water's edge. The photo on the right shows floating docks belonging to homeowners at the Chapin Estate lying like beached whales on the dry lake bottom.

Over the winter, the lake level was very low, but it didn't raise a whole lot of eyebrows. Lakes are often drawn down over the winter here, although not as much as we saw last winter at Toronto. And with a cover of snow, a lake bottom is as good as a frozen lake surface for snowmobiling and cross country skiing. The first article about concern about the lake drawdown on Toronto, in fact, didn't appear in the Times Herald Record, until March 31st. While Alliance Energy indicated in the article that the draw down was in compliance with NY DEC and FERC (Federal Energy Regulatory Commission Requirements), the general feeling among people I talked to was that with the spring snow melt and rain, Alliance would return to a 'normal' level in time for the summer boating season.

That hasn't happened, as you can see clearly from the photos above taken July 6th. The situation has become of such concern, that in early June local politicians held a meeting about it (also attended by Steve Dubrovsky, one of the developers of Chapin, as well as a representive of the recently formed 'Home Owners on Toronto' group). (Times Herald Record article about that meeting.)

Alliance Energy has been pretty mum about the situation, and did not return calls or emails asking for comment from the Record. Alliance did comment for an April article in the Sullivan County Democrat, where the company indicated that it's priority is electrical generation. In a Feb. 10th letter to Town of Bethel Supervisor Dan Sturm, the company stated "the concept of operating the Toronto Reservoir to increase the tax base of the town or the property values for any individual development project is not lawful and would not be in the interest of all the public."

So, what's up with Toronto? Is the low lake level simply a matter of dam maintenance requirements and lower than normal precipitation earlier this year (which resulted in a very low snow pack)? Or is Alliance Energy holding the water level in Toronto "hostage" to get something it wants?

That "something" pops up in conversation here as one of two things. First is a sharp reduction in the assessed values of the reservoirs and dams by township assessors. In 2007, soon after completing the purchase of Mirant-NY Gen for $5.1 million, Alliance sought huge assessment reductions. In Bethel Township (where Toronto Reservoir is located), Alliance wanted the assessments on their 1,600 acres (which includes the reservoir) cut from $3 million to $500,000. It seems that Alliance didn't win that battle, as the 2008 assessment on Toronto (including the dam) stood at $2,514,067. Now the chickens may be coming home to roost, although in the Democrat article Alliance denied that the drawdown had anything to do with it's tax litigation/

Summer Arrived ... Finally!

Well, it's about time. By my calculation, summer finally arrived yesterday (July 4th) at about 11AM. That's when the threatening black clouds finally blew over and we saw something that I was beginning to think only existed in videos and photos: sun and blue sky. The constant, and I mean constant, rain was getting old. It seemed as though summer was never coming. Today was glorious. Let's just hope it holds.

A Second Home, A Starter Budget in Today's Times

Thanks, Crosby, for posting this as a comment on another post. I thought it interesting enough to feature as a top level post. In today's NY Times, there's an article, A Second Home, A Starter Budget, about an NYC couple who bought a little house on 8 acres near Sparrowbush (in NW Orange County) last September, and have been working through the winter to bring it back.

A big thumbs up to the new owners, Christina Selway and John Moskowitz, for doing a stunning job bringing this house back on a very tight budget. I'd swung by this house early last summer to take a peek, just after it came on the market. It was pretty much a wreck, albeit a kinda cute wreck with great potential. (The listing agent remarks even said "In need of repair or demolition.") Clearly these buyers saw the potential, because they jumped on it almost immediately. This house was 'gone' only a couple of weeks after it was listed, and sold for 95% of asking price.

They got a great deal. And had enough experience looking at houses to know it when they saw it. But when you look at the photos in the article, keep in mind that these are the "after" photos, and bear almost no resemblence to the "before". The "after" photos are the function of good taste and the result of lots of sweat and elbow grease. That's the recipe that brought about the first generation of farmhouse and cottage renovations here, in the 1990's.

So how much equity did they likely create from their sweat? The house is a 700 sq. ft., 2 bedroom, 1 bath cottage on 8 acres with a barn, nice quiet setting. Traditional small farmhouse style, with relatively low ceiling heights. If they put the house on the market today, I'd venture it would probably fetch in the range of $150,000 to $165,000, not a bad return on the $105,000 they have into it.

Unfortunately, there aren't a lot of these 'diamonds in the rough' available. But they to occasionally pop up, and when they do, buyers have to jump on them. There was an adorable little classic cape that came on the market near Callicoon Center recently for $129K. My colleague, Kathy Rieser, was on it like a fly on a cow pie when as soon as it was listed, and both of us showed it to a number of potential buyers. A few of them liked it, but none believed us when we said we thought it would go very quickly. Lo and behold, just like that house in Sparrowbush, there was an accepted offer within a couple of weeks.

One important lesson is that if you want to nab a deal, you've got to devote time and energy to the process. The buyers of the Sparrowbush home said in the article they saw 30 houses over a 4 month period. They likely did drive bys on a lot more. They probably spent a few hours a week scouring internet listing sites and Craigslist, and also had one or more Realtors set up auto-notification MLS searches for them. And that perseverence paid off.

The Rudest Behavior Ever

Both of my colleagues and I were out showing property this weekend. We usually touch base on Sunday evening to see how things went, to share experiences and make suggestions on other properties the buyers we went out with might be interested in.

This evening I was talking with my colleague, Kathy Rieser, and asked her how her day went. Her response? "Well, I hope your day was better than mine. I had the worst experience." Now, we've all had experiences of being stood up (with no call), owners answering the door saying that 'Sorry, it's just not convenient to show the house today' (when we've confirmed an appointment), walking in on a sleeping (or otherwise inconvenienced) resident, or spending the better part of the day getting a client pulled out of a ditch or snow drift. But Kathy's experience today takes the cake.

A couple from Virginia had contacted Kathy in February, looking for an inexpensive Catskills getaway a few hours from NYC. Kathy had emailed them back various options and didn't hear anything back until last week, when they said they'd be in the area and wanted to look at some houses.

What fit their budget was mostly in Smallwood, so Kathy set up a variety of showings in that area. It was clear, after seeing a few of the houses, that it probably wasn't quite what they were looking for. The buyers were in their own car, following Kathy. She was leading the way to another house, and after one turn noticed that the buyers weren't behind her. She doubled back to try to find them, thinking they were lost. She saw the agent who had just shown them a house, who said she thought she saw them over on another street. Kathy rushed over there, saw them coming down the street, stopped and blinked her lights, thinking they had gotten lost. Looking straight ahead, they sped by her, not meeting her gaze and disappeared. Kathy called their cell phones. They didn't answer. And they never called Kathy.

Maybe the houses weren't what they had in mind, which happens. A simple "Thanks, Kathy, for taking the time to show these to us. But there really isn't a fit" would suffice. But gunning the car, ditching your agent and not answering your cell phone? That's the absolute height of rudeness.

Bridgewater Opens Guest House

Jamie and Paul, the owners of Bridgewater Mercantile in Jeffersonville, have opened their beautiful home on Tempel Road in Shandelee as a bed and breakfast this summer. The Bridgewater Guest House has 3 rooms available, a stunning master suite with private bath and 2 'standard' bedrooms with a shared bath. (Although with Jamie and Paul's elaborate decorating sense, it's hard to call them 'standard'.) The master suite would be a very special and remantic getaway.

And if you want to take home a souvenir from your stay, you can go one better. The house (which includes lake rights access to Lake Shandelee across the road) is available for purchase, with an asking price of $449,000. I'd be more than happy to work with you to purchase it!

Listening for Intent

Buyers from the city or suburbs often come "up here" with a vague belief that the 'country' is this vast, kind of wild west expanse of unregulated freedom, and sometimes don't think that there might be limits on what they can do with what they're looking to buy. A great part of that stems from the fact that country property is a very different animal in many ways than city or suburban property. If you've never had experience with a septic system (and most city people haven't), it wouldn't even dawn on you that you couldn't put an addition on a little lakefront cottage on a quarter acre lot because the septic might not be expandable. Likewise, if you're looking at a house on 20 acres, there's plenty of room to build a second home for your mother, right?

Not necessarily. There are myriad situations and restrictions in the country that may limit what you can do, or think you can do. And just because you can do something in one situation doesn't mean you can do it in another situation that appears, on the surface at least, similar. The range of situational specifics here in the country makes the patchwork of coop rules in the city (where you can have a 20 pound dog, but not a 30 pound dog, and not if you also have goldfish or a turtle) seem almost sane.

Which is why I spend considerable time listening for intent when I'm out with buyers. Buyers often make comments very casually in passing that indicate intent, based on assumptions they're making that may not be true. One half of a couple may comment, for example, "Yes, the house is small. But if we added a guest house, it would work." Now, in some situations, building a guest house would be possible, but in others it wouldn't. When a statement like that is made in the presence of a real estate agent and goes unchallenged or unqualified, buyers may make the tacit assumption that it's true and that truism gets transferred to other properties and situations.

To stay with the guesthouse example, some lake developments permit guesthouses and some don't. It probably wouldn't even dawn on most potential buyers when looking at a house on 5 acres in lake development (with all that extra land) that they wouldn't be permitted to erect a second living structure, particularly if they'd visited another lake development where it is allowed. If they were being shown the house by a Realtor who didn't have much experience with lake developments, that agent might not think to point out that there might be a restriction.

Here are some of the more common "mistaken assumptions" I hear.

• We can add on to the house. Not always true, particularly in areas close to water (lakes and rivers) or or small parcels with wells and septics, where there may not be sufficient setbacks and separation for a septic expansion.
• We can build a second house for mom. Two full houses (with a kitchen and bath) are often not permitted on a single tax parcel, even if there are 20 or 50 acres. Building a second full home (rather than a small guesthouse, which wouldn't have a kitchen) generally requires subdivision of the parcel.
• We can subdivide off a piece for my brother to build a house. There are various rules that vary by township regarding subdivisions. Not all property can be subdivided, due to limited road frontage, right of way access, insufficient acreage, wetlands considerations, or deed restrictions or covenants prohibiting further subdivision.
• No pond? We can just build one. Good ponds require hearty springs, not just stream run off. (Run off ponds often go dry in August.)
• We can clear out all those trees to open the view. This isn't a slam dunk. Covenants, particularly in more recent subdivisions and lake developments, may limit tree cutting to maintain privacy or the feeling of a setting. And there are areas where tree cutting is limited for scenic protection, or the protection of wildlife and eagle nesting habitats.

The 3 of us at Catskills Buyer Agency feel pretty strongly about working exclusively with our clients. Some buyers do want to hop from agent to agent, seeing some houses with this agent, some with that agent, and some with us. But that doesn't fit with how we work in representing out clients. It's not just about making the sale and getting a commission. It's largely about maintaining continuity, and having all the information — from feedback on houses and settings, to the multitude of intent indicators — that enables us to fine tune the shopping process. That shared body of knowledge between us becomes more valuable over time, as criteria evolve and priorities realign. A key part of that is building an inventory of intent and assumptions.

Quiet Weekend

This is the first weekend in a couple of months when I haven't had any appointments. The weather is a likely contributor. Days and days of heavy rain don't lead to thoughts of taking a drive in the country to look at property.The end of June also tends to be fairly quiet, with the end of the school year in New York and graduation weekends. I'm not very concerned, because a number of folks are already staking out July visits. But if I blog on here when I'm busy-busy, it's only fair to put up a post when I'm slow-slow.

What's Moving

Believe it or not, parts of the market are pretty hot. Moderately priced smaller farmhouses or charmers on a few acres on quiet (not main) country roads are moving pretty well. I've been surprised in the last month, when I call to check on availability of houses in this category, at how many have deals on them. (Here are 5 that are in deals or contract.) The deal prices range from the upper $100's to the upper $200's. There are also a couple of non-MLS properties in this range that also have deals on them. There are also a scattering of deals in the mid $300's for larger houses with more acreage or with some special feature like a killer views. But overall, the hot spot seems to be the $200K range.

I've been getting a lot of calls for little cabins in the woods in the $150,000 range. That's a category, though, where there just isn't much available here in Sullivan. Requests are also picking up for lakefront houses, but at very moderate prices. I'm not seeing much actually moving in lakefront because of the pretty wide price disparity between buyers and sellers. One reason I think the moderate priced country charmer segment is doing well is that there has been enough activity to instill some pricing confidence. We just don't have that yet in lakefront, making it difficult for both buyers and sellers (much less lenders and appraisers) to determine value.

A Fond Goodbye to Bill Pammer

Dr. Bill Pammer, who has served as the Director of Sullivan County's Division of Planning and Environmental Management for the past 5 years, is leaving to take a tenured position with the Dept. of Public Management at John Jay College of Criminal Justice in Manhattan. (As part of that job, he'll also be running the master's program in public administration at West Point.)

Personally, I'm going to miss Bill. He's brought a level of professionalism to planning here in the county. He's been at the forefront of a number of key issues like gas drilling, and been instrumental in a number of green initiatives in Sullivan. Over the years, I've been to a number of forums and meetings where Bill has spoken, and been impressed by his understanding of complex issues and the often competing interests of different constituencies here.

I wish him all the best in the next chapter of his life.

Mortgage Rates Continue Climb

Last week, mortgage rates rose about another 1/4%, with the 30 year fixed rate conforming loan with no points being quoted in the 5.75% to 6% range. That's up about 3/4% to 1% from the rate bottom we saw just two months ago. Mortgage interest rates closely follow U.S. Treasury bond yields, and they've been rising sharply over the past month as well.

The question, of course, is what impact the sharp uptick in mortgage rates will have on real estate sales. Every rise in mortgage rates reduces affordability, and at the margin pushes some people out of the market and forces others to downshift to lower priced properties. My experience is primarily with second home buyers, and they tend not to be at the affordability margin. Moderate rate increases don't seem to have that much of an impact — as long as they stay within a range that's perceived as "historically low" (a phrase Realtors love to use.)  That "historically low" perception seems to apply up to about 6.25%. In the past 5 years, there have been 3 spikes into the 6.5% range, but they've been short lived and tend to settle back around 6%.

But if rates continue to climb, pushing well into the 6's and close in on 7%, that perception may change.

The $4 Million Sale

Or $3,975,000, to be exact, from calculating the price from the $55,650 in transfer and mansion taxes paid on the sale of Howard Schoor's house at the Chapin Estate that closed a few weeks ago. The reported sale has been buzzing around real estate circles here for weeks, but I've waited to post it until it came through in the Credit Bulletin.

The total sale amount in the buzz circles is reportedly much higher than the $3,975,000 recorded for the real property, as the house was sold totally furnished, and the house is quite beautifully and lavishly furnished.

Property records show the house as having 7,680 sq. ft., with current property taxes of $54,953, based on an assessment of $1,187,700. (With Bethel's 2008 equalization rate of 46%, that translates into an assessor market value for the property of $2,581,956.) It wlll be interesting to see what happens to the assessment next year.

The sale raised my eyebrows when I first heard about it, and I expect this post will lead to a trail of comments about the buyer being out of his mind. But I'm not so sure. Howard Schoor, the seller, is one of the developers of Chapin and had his pick of the litter of lots, and his pick is one of the most stunning — an entire south facing point on Toronto Reservoir. The house is beautifully designed and impeccably built. It's one of the few houses here in Sullivan County that truly qualifies as a trophy property.

Property falls into two categories — those that are on the market and those that aren't. Often, truly special trophy properties aren't on the market. Owners have no intent on selling them. But if someone offers them enough money, it's very tempting. That's often how the top properties transfer. As buyer agents, my colleagues and I periodically  represent upper end clients looking for very special properties, and owners of potential options to determine their willingness to sell. Some owners of special properties have no interest whatsoever in selling (often because there is a long family connection to the property.) But many respond with, "We haven't considered selling, but make me an offer I can't refuse."

It seems like the buyer of this Chapin home made Howard Schoor an offer he couldn't refuse.

Don't Miss The Tractor and Trout Parades and More ... this weekend

The "official" start of summer up here really isn't Memorial Day Weekend. It's the sound of dozens of antique (and not-so-antique) tractors chugging down Main Street in Callicoon for the Annual Callicoon Tractor Parade. It starts at noon this Sunday, June 14th and runs until about 3PM, followed by a chicken barbeque and entetainment at the Delaware Community Center in Callicoon. If you haven't gone before, go. Kids love it.

Not be outdone, Livingston Manor hosts it's annual Trout Parade this Saturday, June 13th, kicking off at 1PM, with festivities in the Manor from 11AM to 3PM. www.troutparade.com If the Tractor Parade is a slice of Americana, the Trout Parade is a slice of, well, hard to explain ... but it's a hoot, and a heck of a lot of fun.

This weekend also marks the opening of the Bethel Woods summer season, with a concert on Sunday, June 14th with Earth, Wind and Fire and Chicago.

Finally, you may want to take note of a new restaurant on the northern end of Kauneonga Lake. Luzon Station is a reincarnation of the popular restaurant and bar that was previously located in Hurleyville. Jonathan Sunshine and Patti Greco-Sunshine are your hosts. Serving dinner Wed. through Sat., 5 pm to 10 pm, Sunday 5pm to 8 pm. Lunch Sat. and Sun. noon to 3 pm. The bar is open Wed. to Fri. from 5 pm, Saturday and Sunday from 12 noon. Karaoke every Friday night at 10:30 pm. Luzon Station Trio plays every Fri. and Sat. 6:30 pm to 9:30 pm. 3 Horseshoe Lake Road, Kauneonga Lake, NY.

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Pet Peeves

We all have pet peeves — drivers who make turns without signaling, people in the 10 item check out line with 18 items who wait until the end to start writing a check, customer support phone systems that never have an option to speak to a human or arbitrarily disconnect.

I've been selling real estate here for 8 years, and in that time have accumulated a list of real estate pet peeves. Here are my tops:

• Toilet Bowl Photos. What is it with listing agents taking bathroom photos with the toilet bowl front and center, with the lid up? If you just have to include a photo of the throne, at least put the lid down.
  
• Misspelled Addresses. Misspelled street names are more common than you can imagine. It's "Bethlehem Road", not "Bethelhem". Searching by street name is one of the most common searches I do, particularly when a client calls and says "We were driving down Pretty Maple Road and saw a for sale sign. Can you tell me about the house?" It's tough to find it when the listing agent has entered the address as "Prety Marple." Mistyping something is human (heaven knows, I've done it enough on this blog), but once you've input a listing, how about pulling it back up and checking it for accuracy?
  
• Owners Who Make It Impossible to Show Their Houses. Believe it or not, more than once, when I call to show a house, the listing agent tells me that the owner (who lives a hundred miles away in Jersey) won't give them a key. I'm told to drive my clients by the house, and then if they're interested, have them come back and the owner will come up to open the house. There are also owners who won't permit their house to be shown on weekends (which is when most folks want to come and look at houses) — because that's when they have friends and family up.
  
• Buyers Who Are Really Late (and don't call until the last minute). Stuff happens, and we all get delayed from time to time. But most of us have early warning signs we're going to be late, like still being in the shower in your apartment on the upper west side an hour before you're supposed to meet me in Livingston Manor! At least a few times a year, I get this call. "David, we're running a little bit late." (The call may come 30 minutes before I'm supposed to meet them here in Sullivan.) "OK,", I reply, "Where are you now?" "Well," comes the sheepish answer, "We're just about getting to the Lincoln Tunnel." Which means you're still in Manhattan and will be about 2 hours late!
  
• No Property Addresses in Public MLS Displays. I've written about this before. Our Multiple Listing Service prohibits displaying property addresses for listings on public MLS search sites, like the MLS Search on my website. Some listings agents fear that potential buyers will drive by the property on their own, knock on the door, bother the owners and encourage them to scuttle their agent, do a deal directly with them and save the commission. (But that overblown fear doesn't prevent them from putting a 'For Sale' sign in the front yard.) Consumers today want more information, and to be in more control. Not displaying property addresses is a paternalistic throwback to an earlier era. You wouldn't believe how much time I spend every week telling potential buyers that the cute little farmhouse they fell in love with on the web is about 25 feet off of Route 17B, something they'd immediately see if the property address was available.
  
• Men Who Won't Listen and Get Stuck. OK, ladies, you know this one well in various iterations, the most common "Refusing to stop and ask directions." But there's a unique twist that happens here in the country. Mr. Man has an SUV and has seen way too many of those commercials with a Jeep perched perilously on top of a mountain in New Mexico. Driving conditions here at times can be pretty challenging during the winter (with snow and ice) and spring (with mud). The public roads are usually pretty OK, but I'm often taking clients on private roads or down long drives that may not have been plowed or maintained well, and hold the potential for getting stuck.
  
  Now, I drive a truck-based SUV, have lots of experience driving in poor conditions, and am equipped for the worst (with heavy duty snow and mud tires, sand, salt, shovels and tow ropes.) But sometimes that SUV owner insists on driving himself against my counsel, and lo and behold, gets stuck. The looks from the wife or girlfriend, who is now glaring at her husband/boyfriend with arms crossed, could kill a deer.

Gov't Consolidation Streamlining Bill Passes in NY

One of my pet peeves here in New York is the layers of government that inevitably result in this state's ranking as having the highest local tax burden in the country. Of course, there are myriad other contributors, from broad mandates and entitlements to what seems to be a totally dysfunctional government in Albany, more interested in power, special interests and intrigue than actually fixing anything.

OK, rant over. There is a bit of light. Both the Assembly and Senate (before the Dems turned out the lights and locked the Senate doors to try to stymie the Republican palace coup) have passed the "New N.Y. Government Reorganization and Citizen Empowerment Act", designed to make it easier for government entitites to consolidate. In New York state, there are over 10,000 governing entities, including townships, villages, counties and a patchwork of special districts for everything from garbage collection to street lights. And that 10,000 number doesn't include school districts.

Here in Sullivan County, we have 15 townships, 4 villages and 8 school districts for a county with a full time population around 76,000. The six river townships — Lumberland, Highland, Tusten, Cochecton, Delaware and Fremont — have a combined population of only about 12,000. Those 6 townships have 6 town halls, 6 supervisors, 6 town clerks, 6 tax assessors and 5 or 6 road departments. Each township has council, planning board and zoning board meetings that often require the paid presence of a town attorney.

I'm not at all questioning the hard work and dedication of the many folks who serve on our town boards. Overall, they're very focussed on spending taxpayer money wisely — within their governing entity. The problem is we have just to many governing entities.

This bill, which was championed by Andrew Cuomo (and is expected to be signed shortly by Gov. Patterson) does not mandate government consolidation. It is primarily focussed on streamlining the process to enable government entities to dissolve or merge. It is only part of the solution. At this point, the state has not put in place incentive-driven policies to encourage consolidation like the ones being considered in N.J.

Prior to the enactment of this law, the argument against consolidation was that it couldn't be easily done, or the process was too onerous. This law wipes away a big part of that objection. Now, if there is a will, there is a way.

Current Market Conditions Posted with May Data

Hey, everybody, the monthly data report peppered with my opinionated commentary, otherwise known as the Current Market Conditions Report, is up. There hasn't been much movement in either sales or prices. They're almost equal to last month. Yes, buyer activity is up, but that won't show in closed sales figures for a month or two. But while activity is up, it's still tough putting deals together and bringing them to a close without hitches, particularly with appraisals and financing, so while I'm anticipating an upticket, I'm not expecting some miraculous surge.

There are some interesting things this month, besides just the monthly reporting of sales and prices. For the latest 3 month period ending May 31st, 36% of the single family closings reported in the Sullivan MLS were foreclosure sales. That's up sharply from prior months. I've broken out the sales prices for foreclosure and non-foreclosure sales.

Also interesting is the almost total lack of lakefront sales. That one's very curious to me, because there is a steady stream of lakefront inquiries and interest, but I've been doing very little in lakefront showings. There's an interesting intersection of shifting demographics and price that may be a factor in the lakefront drop off that I've gone into some detail about this month.

So please check out the latest Current Market Conditions report and drop on back here and leave any comments.

Pending Home Sales Index Jumps

Sometimes on this blog I feel like a deranged psych patient. When I say I'm sensing something approaching a pick up in the market, I get hit with "No, what you're sensing isn't real, David. You're living in a fantasy world of ghosts and phantoms. Now take your medication and go lie down."

Today's release of NAR's Pending Home Sales data may show I'm not nuts after all. Nationally, pending homes sales for April are up 6.7% over March (and 3.2% from a year earlier.) The northeast region blew out of the gates, with April's pending home sales up 32.6% over March on a seasonally adjusted basis, and 25.7% on a non-seasonally adjusted basis. The Pending Home Sales number is an index, and April's northeast reading — 78.9% — is well below the 98.6% during the peak year of 2006, but is the highest it's been for the past 12 months.

Pending Home Sales reflects just numbers of houses in contract, and does not reflect prices. I expect that when the closed sales data comes out over the next few months, we're still going to see soft pricing, as it seems to be that it's a combination of lower prices, increased consumer confidence, relatively low mortgage rates and first time buyer incentives that are resulting in a pick up in demand.

Mortgage Rates Shoot Up

Last week, mortgage rates surged, climbing in about a day from 5.03%(Source: HSH) for a 30 year conforming fixed to around 5.5%. (By Monday, the rate had dropped back slightly to 5.36%.) The rise is largely attributed to a surge in the yields on 10 year Treasury notes, which are seem as a benchmark indicator for mortgage rates.

The impact on home sales is likely to be mixed. On the negative side, higher mortgage rates (with higher monthly payments) reduce affordability, which could slow sales somewhat, but at 5.25% to 5.5%, they're still pretty low historically. We've had these half point surges before, and while they make headlines, I don't know that they have that much impact on most buyers who are in the process of buying a home.

There actually could be a positive impact, as well. Over the last six months there has been a lot of talk of the 30 year fixed dropping to 4.5%, or even as low as 4.2%. 4.5% has gathered almost magical status. I know some folks have been waiting for a 4.5% rate as a signal that bargain-time is here. The quick climb to 5.5% probably puts to bed the hope that they'll drop soon to 4.5%, so some of those folks waiting for lower rates may jump back in the market.

The bigger impact is likely on the refinancing side. There has been a surge of refinancing applications in the last two months, with rates hovering around 5%. At 5.5%, refinancing becomes less attractive to homeowners looking to refinance, so that business may slow a bit for the time being.

The Two Sullivans

With May coming to a close, I started purusing the sale data this morning for the next Market Conditions Report. As I was scrolling through the individual sales over the past few months, I was struck by the number of bank-owned properties in the closed sales list. 23 of the 80 single family sales reported in the Sullivan MLS for the 3 month period from March 1 through May 31 were foreclosure sales. That's 28.75%! That means there were only 57 non-foreclosure sales over that same period. Figure that a few of those were short sales (there's no way of divining that from the MLS sales data), and add in the couple of estate sales, and we probably end up with only about 50 "market rate", or non-distress sales.

In looking through the foreclosure sales, it became apparent there are really two different Sullivans. Only 7 of the foreclosure sales were "west county" (generally thought of as the river townships, plus Callicoon and Bethel). 3 of those 7 were the Parsons/Barriger foreclosures above Callicoon, which are weird outliers because of the convoluted circumstances. Of the other 4, one is in Smallwood, one on Park Rd. in Yulan, one in town in Narrowsburg and the last on Deceker Road in Glen Spey.

All of the other foreclosures were in the central and eastern reaches of the county, east of a line running from Livingston Manor through White Sulpgur and down through Mongaup Valley, including properties in Parksville, Grahamsville, Liberty, Monticello and Woodridge. There doesn't appear to be any single area of concetration — when you're looking at 16 sales (23 minus 7) spread over 7 townships.

The foreclosure sales market is pretty rough and tumble, down and dirty. Most of the properties are lower end, often in "fair or poor" condition, and are sold "as is." Purchasers tend to be savvier investors looking to repair them and rent them out, rather than for their own personal use. Some buyers are looking to fluff them up and flip, but that's riskier because it relies on buyers being able to buy them.

The post title, "The Two Sullivans", isn't just about geography, but rather that there are presently two very separate and distinct real estate markets — the bargain-shopping, investor driven foreclosure side and the "market rate" side. When you pull foreclosures (and short sales) out of the total volume, the meager sales volume on the "market rate" side becomes even more striking.

Another interesting note is that while foreclosures accounted for 28.75% of sales during the most recent 3 month period, they don't comprise anywhere near that share of the inventory. In fact, of the 1,080 single family homes currently listed in the Sullivan MLS, only about 1.5% are bank-owned. Clearly there is a robust appetite for anything "bank owned", because when they come on, they generally sell pretty quickly (which is why, at any given time, there are so few listed.)

Deals are Tough

I had a very pleasant, laid back week after the frenzy of the Memorial Day weekend. When I have a breather, I often travel around the county previewing new listings, which also gives me the opportunity to stop by offices and chat with colleagues. Quite a few agents, particularly in the western parts of Sullivan, confirmed my recent experience that they've been very busy the past few weeks showing property.

But the other piece that I'm picking up is that being busy isn't necessarily translating into making deals. One refrain I heard repeatedly, from more than one agent, is that buyers are making offers but they've been unable to bring the buyers and sellers together to make a deal. Some of the tales I heard were of buyers and sellers being very far apart, with little likelihood of bringing the parties to a meeting of the minds. But I also heard of a number of cases where the gap, after a few rounds of counteroffers, was much narrower — 8%, 5% or even less — and a deal couldn't be struck.

The psychology of those narrow-gap stalemates is very intriguing to me. When the parties are that close, it's seldom really about the money. A $10,000 gap between a buyer at $190,000 and a seller at $200,000 translates into about $54 a month in additional monthly mortgage payment. It's more about buyers and sellers recognizing each other's position. Buyers want acknowledgement that it's a buyers market, and they expect to "win" — which means essentially that the seller accepts their final offer, not them accepting the seller's final offer.

On the other hand, the seller may be taking a loss, and they want some acknowledgement of their financial pain and sacrifice. (Even if they aren't taking a hard dollar loss, in the seller's mind they may be taking a 'virtual' loss over what they could have sold their house for a year or two ago — and may exhibit the same behavior.) The buyer accepting the seller's "final" offer provides that acknowledgement.

Another perception gap is between sellers who think that the buyers are "stealing the house" and getting a great deal with their latest counter, and buyers who believe that they're taking a big risk. In buying a house today, any house, buyers want a deal to compensate them for assuming the risk of any further market downturn. The reality of that may or may not be real, but the perception of it certainly is.

That tried-and-true stalemate breaker, "let's split the difference", isn't necessarily successful. A lot of buyers I've worked with in the last few months have a number, and when they reach that number, they're done. Once they've put that number on the table, whether they're 3% apart or 15% apart, that's their final offer. I'm not sensing a whole lot of "house love" that might motivate them to go above that number. There's a widespread attitude among buyers that if they don't get this house at the price they want to pay, another one they like just as well will come along. That may nor may not be true, but it is a pervasive feeling, and one that sellers need to be attentive to.

Another factor contributing to the difficulty in putting deals together is that right now there isn't a lot of recent sales history to guide pricing. I'm sure that the brokers advising sellers are having as much difficulty with this as I am with many buyers. In some market segments, where there has been some sales traction, notably that mid to low $200's range for second homes, and for some new construction 'primary' style homes. But I'm working with some clients in other market segments where it's much more a shot in the dark, where values are more a function of hunch and emotion than solid sales data.

Why Marriage Equality is Good for Real Estate

Unless you've been in a coma for the last month, or getting in touch with your inner spiritual self at a remote monastery, you're likely aware that New York is heating up as the next battleground in the gay marriage fight. In April, the NY State Assembly passed Gov. Patterson's Marriage Equality bill, and it's now working its way through the Senate, where passage is still very touch and go. Democrats have a very slim majority in the Senate, and a handful of Democrats from conservative districts are not supporting it (while some Republicans, on the other hand, are.)

Sullivan County is part of the 42nd Senate District, a seat held by Sen. John Bonacic, a Republican who is not currently a supporter of the marriage equality bill. But it ain't over 'till the fat lady sings, and Sen. Bonacic has been getting a lot of comments from constituents (both pro and con) on this issue.

Sure, for me, marriage equality is personal. But others in the real estate community for whom it isn't necessarily a personal issue should look at it as a business one. Supporting marriage equality is good for real estate.

Why? For gay and lesbian people, marriage equality has become a bedrock issue. We are very aware of which states are in the marriage equality camp, and which aren't. Consciously or not, that awareness will impact spending patterns. If a gay or lesbian couple from NYC have the choice of buying a vacation home in a marriage equality state or a non-equality state, a state's position on marriage equality will be a factor. It's not just a matter of legal ownership of property (which can be handled by contract in a non-equality state), but one of putting your discretionary dollars where you're most welcome.

True, Connecticut is a marriage equality state and there hasn't been an exodus of gay and lesbian people moving their primary homes from Chelsea to Greenwich. But choosing whether to move your primary home location isn't as discretionary as where to buy a second home.

Once New Hampshire approves marriage equality, which is likely to happen very soon, all of New England except Rhode Island will have approved marriage equality.  If New York doesn't follow suit, the states to New York's east will siphon off some second home business. But that will likely have more impact east of the Hudson, in the counties bordering Connecticut, Massachusetts and Vermont, than here in Sullivan.

How it's good for business here is the impact on buyers making a choice between Sullivan, Delaware and Orange Counties in New York and the adjacent counties in lower-tax Pennsylvania.  While I have a preference for the NY side for a number of reasons (which I'm not going to get into here), it is challenging to counter the lower-tax appeal of Pennylvania. (By the way, I'm licensed to sell real estate in both states, so it's not a matter of being able to sell in NY but not in PA.)

If NY approves marriage equality and Pennsylvania doesn't (and it will probably be quite a while before Pennsylvania falls into the marriage equality camp), gay and lesbian buyers from NYC will likely look much more favorably on New York for a second home than Pennsylvania. The emotional pull to be in a marriage equality state will carry substantial weight over the financial pull to be in a lower tax state.

So marriage equality doesn't just make good 'justice' sense, it makes good business sense. There just isn't much economic downside to approving marriage equality — I doubt there will be a major exodus across the river into PA by opponents if we say 'yes'. But there is a very tangible upside. I encourage all of my colleagues to contact Sen. Bonacic to express your support for marriage equality.  Here is the link to his contact information:

http://senatorbonacic.com/42/contact.aspx

Catskill Farms in Today's NY Post

Great article in Today's NY Post about Albert Hammond, Jr., the guitarist for the Strokes, buying a Catskill Farms house near Eldred. The article segues into an interview with Chuck Petersheim, the developer/builder, who's had considerable success with the small, finely detailed reproduction farmhouses that have become his trademark.

There's a nice exterior photo of Albert's house in the article. But if you're a Strokes fan and want to go hunting for the house, you won't be able to find it. It's tucked way up in the woods and not visible from a public road.

Albert's comments in the article also sum up well the appeal of Sullivan to a younger, hipper group of famous folk looking for a quiet escape and not just a second home extension of the city scene. There hasn't been a huge migration here among this group, but it has been steady and noticeable over the last couple of years.

One interesting thing here — and possibly part of Sullivan's appeal — is that there isn't much public fuss over celebrities. (Well, not totally true. When Leo DiCaprio spent the weekend visiting a friend here, it created quite a stir!) There's a tacit understanding about privacy. The local papers don't cover them, or even tuck in a little tidbit about "Look who just moved to the neighborhood." The only time they're generally mentioned in print in conjunction with Sullivan County is in an article in the NYC press about Sullivan County or the Catskills that wants to add a little spice. I never pepper my blog with mentions of who just bought. (Leo didn't buy, by the way. He was just visiting.) I'm just mentioning Albert here because of the article in the Post.

Busy, Busy, Busy

No, I'm just not talking about real estate (although I have been busy-busy-busy the last couple of weeks.) I'm talking about the Memorial Day weekend overall up here. Everywhere you go, there are people and crowds — at the farmer's markets, at the lakes, at the garden stores, in the restaurants. I was visiting with some friends last evening who were all commenting on how busy everything was this weekend (with subcomments about how many new faces there seemed to be.)

The almost-perfect weather we've had for the past few days certainly contributed to folks coming to the country for the weekend, and getting out and about. But I think there's more going on. Most second home owners I know had their houses stuffed to the gills this weekend with houseguests. A couple of friends called to borrow my airbeds for last minute overflow.

Holiday weekend houseguesting is a time honored tradition around NYC, and hinting for an invite is a well honed art. Once you become an owner of a country house, you may well find your country-houseless friends may be just a little bit nicer to you. (A hint to those looking for a repeat invite: hosts smile on those who pitch in and help.)

Because of the recession, this may turn out to be the "Year of the Houseguest." Some country home owning friends have already pencilled in houseguests on their calendars through Labor Day. Houseguesting may be yet another example of recession chic. After all, there is a certain panache to telling coworkers on a Friday afternoon that you're heading out to so-and-so's country house for the weekend.

Houseguesting is a far more affordable alternative to a paid vacation, whether flying the family off to Disneyworld or retreating to a lodge in Vermont. A bag of goodies from Citarella or Fairway and a few bottles of good wine are much less expensive than airline tickets to anywhere. (OK, to make that equation work you do have to keep away from the lobster salad at Citarella.)

So I expect we'll have a very busy summer thanks, in part, to our houseguests. While this tsunami of houseguests may take up all the parking spots at the Callicoon farmer's market, today's houseguests are tomorrow's country home buyers. So pump up those airbeds and bring 'em on.

Last Minute Lookers

Over the last couple of months, there has been a sharp decrease in 'advance planning time' among shoppers making trips up to look at property. Generally, I count on a week or two lead time when starting to work with new buyers. I find out what they're looking for, email a range of listings, we talk about them, narrow down the list, I send some other options, etc. Often, they've been doing their own homework for weeks or months, looking at listings on the internet, before contacting me. When we do finally go out, we've collaborated on what to see and it's a pretty well choreographed trip.

Recently, I've had a lot more requests for last minute appointments. Folks getting in touch for the first time on Thursday or Friday to come up on the weekend. Overall, more of an impulsive feeling, with a common call starting, "We've been thinking about buying a vacation home and want to come up this weekend to take a look at what you have."  Often they're brand new shoppers, who haven't been to Sullivan before, and only have a very general idea of what they'd like. They may have done some home surfing through listing websites, but not the serious searching and listing saving I'm more used to.

I don't have a good handle about what this shift is about. I suspect it may have something to do with pent up demand that built up over the winter. Traditionally, a lot of second home buyers start their shopping just after the New Year, but this year almost nobody — apart from the occasional bargain shark — was thinking much about real estate in January and February. Now, folks may be thinking "Maybe now's the time to dip our toe into the water."

This last minute casualness may also stem from not wanting to be "too serious" about buying a house. Planning a week or two ahead to come up may imply a buyer is more "serious" and "committed" to buying a house, while deciding at short notice to take a drive to the country to get a lay of the land is, well, just a nice drive to the country. Less serious. Dipping your toe in the water to check it out.

I'm not complaining. The fact that people are thinking about second homes again, and willing to make a trip out to the country to take a look, is a positive development. And folks need to dip their toe in the water before they jump in for a swim. Unfortunately, at the last minute my weekend appointments are already booked. There's less time for that collaboration to plan a really good trip. And because I'm often pulling together a selection of properties to show with only sketchy guidelines and not a lot of feedback from the buyers, I may not be as on target with what I'm showing.

I'm hearing from other agents that they're seeing a similar shift in lead time. And that does have some implications for sellers and how they've arranged to have their properties shown, as well as how accessible their agents are. If a seller doesn't want a lock box on their house, requires advance notice or asks that their listing agent be present for all showings, those houses generally can't be set up to show at the last minute. And listing agents need to have some method for fast turnaround to confirm a showing.

The Joy of Showing Beautiful Houses

I love beautiful houses and property, as am fortunate that much of my business is in the 'better' end of the market. Since the beginning of the year, though, most of my clients have been scaling back, and the "upper end" I've been seeing has been about $400,000. Over the past few months, almost all of the deals I've put together have been in the moderate to upper moderate range, from $200,000 to $400,000.

This past week I was out with a client exploring options in the next tier up, nicely renovated, larger farmhouses with more acreage in beautiful settings. While I stay on top of the property in this category, it had been a while since I spent a weekend visiting them.

When you start at $600,000 and go up from there, it's a different world. My favorite, of course, was the most expensive, at $1,750,000. (Ain't that always the case?) A 228 acre estate-quality property in Wayne County, PA with a small, private lake, a long winding drive to the house, beautiful rolling fields and orchards. The house is deceivingly large (it looks much smaller in the photos), and has been very tastefully renovated. It's the kind of place you could envision Eleanor Roosevelt sitting at a desk at a window writing her memoirs.

I had two other favorites from this trip. The second was a beautifully renovated farmhouse on 11 acres with a small pond near Obernberg. A classic "Love, Valour, Compassion" house with a large rocking chair porch, set well back from the road down a winding drive. The third house was in PA, on 62 acres, also set well back from the road with stunning views.

Click there to see the three houses.

The common element among all three houses is that they don't involve many compromises. With most houses I show at lower price points, the buyers and I typically are going through the house discussing what it will take to make the house what they want it to be — reconfiguring the floor plan, renovating the kitchen, adding French doors, breaking down walls to combine rooms, replacing vinyl siding with clapboard, ripping out paneling and carpeting, etc. With these houses, I was uncharacteristically quiet — I just didn't have that much to say.  It was just such a pleasure showing such beautiful houses that were "ready for my closeup, Mr. DeMille."

All three houses, by the way, have had substantial price reductions since being listed. The 228 estate, now at $1,750,000, started at $2.5M. The PA farmhouse of 62 acres is down to $650,000 from an original price of $999,000, and the Obernberg farmhouse has come down to $745,000 from $895,000.

By the way, there are two other farmhouse properties that have been on my radar that I had hoped to show this past weekend — one listed at $499K and the other at $799K. When I called on them, I found out that both are in contract. So maybe the upper end has a little more life in it than I've personally been seeing for the past few months.

No Surprise, Casino Fever is Back

Article this week in the Record about the latest casino plan to be trotted out in front of the County Legislature. I'm not surprised. With the change in administration in DC and in Interior Secretarys, and a clear pro casino stance by our Sen. Schumer and Rep. Hinchey, casino proponents are likely more optimistic that something may be possible. The tone of the article is what I find most interesting, from both the reporter's and the legislator's standpoint. Out-of-towner comes with big plans and Powerpoint presentation. Been there. Done that. Big yawn. Until there's an approval, financing is arranged and a shovel goes into the ground, I don't think anyone here's going to get all that excited — except all those out-of-towners with big plans to cash in on Catskills Gold.

Latest Current Market Conditions Posted

OK, folks, I just finished my monthly Current Market Conditions report, with sales data through April. While I wouldn't call the current picture "robust", there are some signs of improvement from the mid-winter doldrums. Closed sales in April were up over February and March and the median sales price appears to have reversed its downward slide, although remains well below the 2007 peaks. The weak link of the data trinity (sales volume, median price and average price) continues to be the "average sales price", which continues to trend downward, largely a function of ongoing softness in the upper end of the market. Please check out the latest report and then drop on back here and post your thoughts on what's happening.

Sellers, Fix Problems or Risk Buyers Walking

When the market was hot, sellers were in the driver's seat and buyers would put up with a lot. Buyers were almost grateful to have a seller accept their offer and make a deal on a house that they were willing to overlook problems that would crop up with the house or the closing process. Those days, however, are long gone.

Buyers today don't want any surprises, and don't want to assume any uncertainty or risk. Underground oil tank? Get it tested or get it out. Old mineral rights or rights of way on your title? A seller may be correct that they are unlikely to cause any problems, but buyers want them cleaned up. That inground pool that hasn't been used for a few years? Buyers expect sellers to get it operating, so they don't assume the risk of any pool problems. No road maintenance agreement on the private road you share with four neighbors? A buyer may well want to see something formalized before plunking down the cash. No idea about your septic that's been operating fine for 20 years? Get it pumped out and looked at.

Unless they're buying an "as-is" handyman or foreclosure, buyers want a pretty clean bill of health. They aren't necessarily expecting houses to be perfect, or every repair item identified during the inspection be fixed. But there is an expectation for some assurance that there is little risk with big kahuna items like septic systems, oil tanks, central air conditioners and pools that often can't be thoroughly tested or inspected during a standard home inspection.

Title "clouds" (issues) and survey discrepancies can also crop up in the process of a sale. (They're more common than you may think.) A couple of years ago, if there was a discrepancy in a survey that required the seller to negotiate a lot line adjustment or legal accommodation with a neighbor, a buyer would often be patient and willing to wait the couple of months it could take to work it out. Today, buyers are far less patient. Sellers need to have done their own due diligence, to make sure they have marketable title, or risk losing the deal when the buyer's attorney uncovers a title or survey issue.

It's striking how few sellers have adjusted to this change in buyer attitude. I'm sure part of it is that sellers feel they are "giving their house away", and therefore are even less willing to spend money to get it 'market ready.' Hanging some baskets of petunias on the front porch and painting the front door may increase curb appeal and get buyers to walk into a deal, but they'll walk right out if there are problems in big kahuna items. Providing buyers with some assurance that your property is "low risk / no risk" is central to actually closing the sale. 

What's Up With Lakefront?

For the 8 years I've been reporting sales data, I've broken out "lakefront homes" as a subcategory. There have always been enough lakefront sales during each 3 month data sample to provide a reasonable guage of the lakefront market. But over the last six months, lakefront sales have been so low that I'm probably going to pull that subcategory for a while until it picks up.

How low? Since Jan. 1st, there have been only 3 sales categorized as "lakefront". Two of those, however, are only what I consider 'quasi lakefront' — one is on what could be considered more a large pond (or small lake, if you're charitable). A second is a split lakefront; the house sits down a lane off the lake and has a small lakefront parcel within walking distance for lake access. Only one, at Chapin, is actually direct lakefront. Looking through pending or in contract listings, I'm not seeing many set to close, either.

Over the past couple of months, I've gotten a lot of inquiries about lakefront houses. I gather the listings and send them out, but am not hearing back from a lot of folks to come up and take a look. One reason is certainly price, or at least a wide gap between what lakefront shoppers are looking to pay and what lakefront sellers are looking to get. The most common request I'm getting from lakefront shoppers is for a "small, modest lake cottage under $300,000". But we have very few lakefront properties on the market under $300,000, and they're almost all very small (one is 724 sq. ft.), or currently seasonal and would need some updating and winterization for year round use. If someone's looking for something lakefront with 3 or more bedrooms under $300,000, there's almost nothing.

Lakefront houses comprise a major sector of the second home market here. In 2007, there were 52 lakefront sales and in 2008 there were 32. Four months into 2009, and we've only had 3.

Preliminary Results for April

So is the market getting better? Continuing down? Wallowing somewhere in the middle? It's still a little early to have final sales results for April, but a preliminary look at the picture is "mixed". The good news is that the number of closed single family sales reported in the Sullivan MLS — 31 in April — was up from the 23 sales reported in March. Still well below the April peak of 55 in 2006, and under last year's 39 closed sales, but the closed sales number is showing an upward movement.

In the price front, the median sales price was $138,000, the same as last month, while the average continues to slide, down to a tepid $151,067 for the single month of April. (For the 3 month period ending April 30th, which is the measure I regularly track in my monthly Current Market Conditions Report, the average is showing as $179,388, but that includes a $1M+ sale at Chapin. With that sale excluded, the 3 month average drops for $161,263.) The drop in the average sales price points to continuing softness in the upper end of the market. In April, for example, the highest single family sales price was only $365,000. This seems to jive with that I'm finding with buyers I'm working with. They're more focussed on lower priced, less elaborate properties.

I expect to have the full Current Market Conditions Report out by the end of the week.