Inventory Dropping - Buyer Strike Meets Seller Lockout

Markets are defined by 2 sides, supply and demand. A key component of a buyers market is increasing supply. In some parts of the country, the supply of available homes for sale is 2 or 3 times what is was a year or two ago. Here in Sullivan County, that's not the case. The inventory low came in 2005, when we bottomed out at about 700 single family homes on the market. Earlier this year the number peaked at 1,292 home for sale in the Sullivan MLS, but that number has been slowly declining ever since. Right now there are 1,157 single family homes for sale in the MLS, down slightly from the 1,179 at the beginning of September.

What's happening? Of course, some houses are being sold and drop out of the inventory. But many sellers, it seems, are seeing the same news reports about the real estate market that buyers are seeing, and either deciding to pull their houses off the market for the time being, or wait to list their property until they think conditions improve. The impact is that inventory is shrinking. It may be ever so slight, but its happening.

Its almost like there's a lockout by sellers in the face of a buyers strike. Somebody, though, is going to blink.

Comments

[John M]

For Sale Signs are about 4-5 per block on Long Island and NYC. That is unprecedented. Inventory is way up. In Sullivan, I have noticed land and large acreage for sale is way up as well. Developers are dumping their own properties, let alone buying. Unfortunately this trend is going to continue for many years to come, same way as was after 1986-1990 boom. Sellers' wait and see will only flood the market later on when the recession comes and passes. Discretionary spending is hanging on by the last claw. Once people have to liquidate in order to maintain the current standard of living, the first things to go will be the 69 camaro and the house upstate.

[David Knudsen]

Wow, John, you're so upbeat! Makes me wanna run right out and plunk money down on a new Mercedes.

I agree with you that land inventory is up more than houses, but still not doubling and tripling. The inventory of really nice land is still tight. Call me and ask about a fabulous 100 acre parcel with views and a large pond and there's very little to show you. Land may be abundant, but quality is in short supply. What we may see flooding the market are all those feature-less wooded parcels that amateur developers bought in the past few years hoping they'd subdivide and make a killing.

Homes are a different animal. I don't think second home demand itself among city folks is markedly declining, just the motivation to do something about it now. The motivation for personal use is very different than motivation for pure investment.

[Tony Ritter]

{DK writes}
"What we may see flooding the market are all those feature-less wooded parcels that amateur developers bought in the past few years hoping they'd subdivide and make a killing."

----------------------

And also, don't forget, those many 'investors' that had bought five to ten acre lots within subdivisions created during the late 1980's through 2000 either with the hope of building a second home - or if that idea didn't pan out - to flip it after five or so years.

D. - if what you mean by 'featureless' land is: wooded and flat - with no pond or water on it - then there are plenty of these lots now on the market in Western Sullivan County.

These were sold at the time - pre 9/11 - for $18,000 to $29,000 for 5 to 7 acre lots.

Many of these subdivisions of 30 to 100 lots are still only 20% to 30% occupied with houses.

Many of these vacant lots are now for sale for offering prices triple to quadruple the sold price - say at $45,000 to $80,000 depending on lot size.

Because of this glut of vacant land, there will be a shakeout during the next six to nine months for those sellers who are motivated to sell - i.e.; they're tired of paying annual town and school taxes and possibly debt service and would rather cash in their profits and move on.

Kindest regards from Narrowsburg,
Tony Ritter

[jg]

John M-
I have no idea about LI real estate, but clearly you have not been in Manhattan in a while. Inventory is low, prices at essentially an all time high and we are on pace for more sales this year than any other in history. Clearly you must mean boroughs other than Manhattan when you say 'NYC.' In addition, WS bonuses will probably be close to last year extending this robust market through next year. Who knows if this will dip like the rest of the country, but you have absolutely no idea what you are speaking of when it comes to NYC real estate. Good 2nd home properties in SC will always be looked at by Manhattanites and will probably continue to fare better than average. As Dave has mentioned, I think that the 'average' SC home is of no interest to someone from the city at any price.

[Tony Ritter]

{jg writes}
"Clearly you must mean boroughs other than Manhattan when you say 'NYC.'

[and]

"As Dave has mentioned, I think that the 'average' SC home is of no interest to someone from the city **at any price.**"
-------------

Not to defend John - but, in fact, the other four boroughs are still are part of "The City". If you look at the tax rolls for Sullivan County, you'll find that the majority of taxable parcels - land and houses - are not purchased from people who have addresses in Manhattan - but in Queens, Brooklyn the Bronx and Staten Island.

And your last part of the post about about - **'that the 'average' SC home is of no interest to someone from the city at any price'** smacks of such urbane pseudo-cool bs.

Listening to that stuff reminds me that that was the reason that many of us from the city purchased a hoome up here - far away from that hip citified nonsense (at least for the weekend - before returning to the babble on Monday for work at 9:30am) ten to twenty years ago.

In addition, there will always be a place for waterfront properties - robust market or soft for people from "The City" - whereever that may be - in fact, that is the only market niche that is holding its' own right now up here.

Chances are that if a waterfront house gets listed in the Sullivan MLS - and its' priced accordingly - it will sell within 100 days - even in this soft market. So what? That a very narrow segment of the overall market that our host has, for the most part, and productively chosen to target.

Kindest regards from Narrowsburg,
Tony Ritter
www.delawareriverfishing.com

I don't think the Manhattan real estate market is as robust and downturn-proof as all the NYC real estate pros would like us to believe. The tightening of terms for jumbo mortgages has to have an impact. A year ago, a well paid young professional with a sub-700 FICO score could put just 5% or 10% down and get a mortgage to buy a $1,000,000 coop (that is, in coops that permit low down payments.) Today, they're looking at 20% down and better have a FICO somewhat above 700. Those credit standards alone will shrink the pool of available buyers, and fewer buyers mean less competition for properties.

[David Knudsen]

Tony, a few weeks ago I would agree with your statement that waterfront properties will always do well and if priced appropriately will sell within 100 days. Today, I'm not so sure. There are a few pretty good lakefronts on the market that have been on the market for more than a few months and haven't sold. 3 on Swinging Bridge and 1 on Yankee come to mind. I've shown all 4 of those a number of times. Folks like them, but nobody is buying them.

[John M]

Manhattan is Not recession proof. Recessions are healthy and necessary in order to narrow the gap b/w rich and poor. In 1982, Regean actually induced a recession to curb the out of control spending. We have a high discrepency between salaries in this country. A gambler on wallstreet who takes home triple of what a surgeon at NYU makes. Watching the stock market? What justifies a bull market when there is bad news coming out daily on housing recession, auto recession, tanking dollar, China loaning us our balls, a liquidity cruch, US gov't approaching insolvency and inflation? It has become gambling much like 1929. 1929 had a bull market right before the crash. Keep in mind, the 1929 crash did NOT trigger the great depression. The depression was coming anyway b/c of similar elements in place as today and that was what triggered the crash.
If you think Bush is telling you the truth, think again. And I am pro-Bush. Alan Greenspan's face and actions spell it all. Look out for inflation, like in the 1970's. It will cure the weak dollar and basically give a black eye to whoever we borrowed from. Sucks for them!

Getting back to Manhattan. What you have is a very popular island to the elite much as you did during Great Gatsby days. High end developments in manhattan are being purchased by international buyers at an alarming rate (dead dollar). Saudi's, dubai, europeans, Soros, CHAVEZ! They all own something in Manhattan. Manhattan has become the hip new place to own for foreigners. Middle class folks in manhattan rent and most renters from manhattan cannot afford SC with those high rents anyway.

If sullivan county has to depend on Manhattan buyers alone, well then you can just close your realestate offices. Most avg buyers come from LI, Queens and the other boros. Your high-end buyer might come from Manhattan. This is not going to be painfull just for SC but for everyone. Inflation with deflation economy.

I hope I didn't bore anyone.

[jg]

your arrogance is quite astonishing. As you may (or clearly may not) know, and as David has alluded to numerous times, people looking for second homes look for different features than do owners who are looking for a primary home. As you may have lost touch with this sector of your clientele, what I am stating in not so nearly as eloquent a fashion as David does, is just that.

As someone who loves SC and what it has to offer, and as someone who is currently "from the city purchased a hoome up here - far away from that hip citified nonsense (at least for the weekend - before returning to the babble on Monday for work at 9:30am)," I will certainly steer fiends away from an agent that has the type of view of 'city folk' as you do. Although I did not buy through David, I have referred many friends to him and will continue to do so as he fortunately does not have a similar obnoxious, self righteous view.

Lastly, it would be great if you could define 'urbane pseudo-cool bs' as I have no idea what it means. If these are in fact the kindest regards from Narrowsburg I would advise us 'urbane pseudo cool bs' city clients to stay far away.

[Tony Ritter]

{jg writes}
"I think that the 'average' SC home is of no interest to someone from the city at *any price*."
-------------------------

jg,
The statement that you wrote above in this post is factually incorrect - and, IMO, the resonance of it was pretty nasty. You wrote it - I did not.

I only responded to your words.

The majority of folks who purchase second homes in Sullivan County (excluding those from Long Island and New Jersey) are, in fact, from Queens, Staten Island, Brooklyn and the Bronx.

The City.

You might want to take a look at the tax rolls - I have to. However, it's all in the public record.

And, jg, those same people from "The City" who - yes! - purchased what you call "average Sullivan County homes" -whether they be in town farmhouses on a quarter acre lot - or out of town ranches or splits - have made up the bulk of the sales in this county in the past - and most probably will continue to do so for the future.

These buyers drive the second home market up here and they are the bread and butter of most sales.

Kindest regards,
Tony Ritter
Narrowsburg, NY
www.gonefishingguideservice.com

[jg]

Tony-
I assume that is why most 'city' folk are now looking at lake front properties which, of course, is an 'average' home in the area. I guess average can be defined in several ways. I think of an average home as an in city house, little to no land or privacy, older features, not updated, needs some work, close neighbors, no water feature etc. Ie. similar to an average house in Queens, an average apartment in Manhattan, an average house in Parsippany. No one I know from any of the boroughs has tremendous interest in owning something that is identical to what they have in their primary house.

It is probably worth your while to spend a little time reading David's view of what a typical second home buyer, regardless of where they are from, is looking for. This is remarkably different from what the average local resident would need. They are different populations of people, neither better or worse, but I am quite sure that the average home sales price of a second home buyer will be statistically greater than the average home price of a full time resident of the area. The things that second home buyers look for aren't things that ANY of us need for our primary homes.

My words were certainly not meant to be nasty. Regardless, as a steward of the area and someone who I assume makes his living selling properties, at least in part, to us nasty, pseudo cool residents of the ENTIRE city as well as LI and NJ, try to hold it together. I will be happy to pass along your sentiments to other city people looking for properties in the area. Maybe it is time to reexamine the tax roll. Times change, and what people were looking for 10 years ago is different today.

Apologies to all else who were offended by my 'nasty' words.

[Dan]

To the poster who said that Wall St. bonuses will be close to last year, I do not believe that will be the case at all. Almost all of the large banks have taken huge write-downs on their sub-prime affected holdings. USB, Citigroup, Deutsche Bank have all anounced hits in the billions for this and lots of layoffs. Chances are that comes right out of the bonus pool.

[John M]

Monday Morning October 2007

Dow climbs above 14k despite bad news out the wazoo
Citi says 60% drop in profits
Manufacturing for Sept. slow slow slow

Looks to me like the Dow is now dependent on bad news so that benny keeps cutting rates to bail out financials....here comes 1987 again!

[marie]

I'm often not quite sure what tone Tony Ritter is looking to strike on this blog, but yikes, his comments here definitely struck me too as harsh and very off-putting....and I don't think jg meant anything derogatory when he used the word "average."

[Steve P]

Dan
'Lehman’s results seemed to bode well for thousands of employees who are trying to calibrate year-end bonuses. Those bonuses, which provide the bulk of a trader or banker’s compensation, strongly influence everything from Manhattan real estate prices to global art values.

Though bonus decisions are made in the fourth quarter, the bank accrues, or sets aside, a portion of revenue every quarter, so each period offers a critical data point. This quarter, Lehman set aside $2.1 billion, compared with $2.7 billion in the second quarter.

For the nine months ended in August, Lehman has set aside $7.3 billion, 14 percent more than the $6.4 billion set aside in the 2006 period. Lehman had 28,783 employees at the end of the third quarter, 16 percent more than one year ago. '

http://www.nytimes.com/2007/09/19/business/19wall.html

[Tony Ritter]

jg:
"Who knows if this will dip like the rest of the country, but you {to John M} have absolutely no idea what you are speaking of when it comes to NYC real estate."

jg:
"As Dave has mentioned, I think that the 'average' SC home is of no interest to someone from the city at any price."
===========================

Marie,
I believe that this all began with the following pull quotes written by jg way back in the beginning of this thread.

Please see jg's remarks above. There's a tone to it - which, personally, rubbed me the wrong way. Please reread his words.

I took offense that - whomever jg happens to be - wrote that most houses (read: "average") 'are of no interest to someone from the city at any price.' In my opinion, I find a remark like that is callous - but more importantly - his (or her) comments are plain wrong.

Most of my sales have been to people from the city and they have been normal - or average - homes. Not trophy properties - but humble ranches or older capes, etc. So, I wanted to speak up - from my own experience.

You will find - if you want to do a bit of research - that most sales in Sullivan County are not waterfront showcase properties or large lots on quiet roads with long range views - but "average" homes - i.e.; older in-town farmhouses on half acre lots or a nondescript ranches and splits on a few acres sold to people both locally - but also from Brooklyn, Queens, the Bronx, Staten Island along with New Jersey and Long Island.

That's about it.

Average homes in Sullivan County do get sold - and many get sold to folks from the city.

I'm really sorry that this thread got as heated as it did since I enjoy David's blog along with his comments and the interaction that we all receive from his comments - but as long as somebody makes a comment which is so inherently wrong - I will voice my opinion.

Thank you.

Sincerely,
Tony Ritter
Narrowsburg, NY

[jg]

David-

thanks for your hard work and effort. I have referred about a dozen people to you and probably about three times that to your website. Although we love the area, and I find keeping up to date on the state of the regions real estate interesting, I find it difficult to read the acrimonious views of some of your colleagues. Not only are these views irritating, closed minded and not indicative of the people that we know in Sullivan County, they are blatantly incorrect. As people use this website for information on properties in SC, they should not be misled by brokers with a clear agenda in mind. For the record, the majority of second homeowners that we know in SC (which I am starting to realize is clearly greater than what some brokers here have sold) do not have trophy homes. My advice to all prospective buyers is to read about the area, talk to friends, and pick a broker that is amenable to working with buyers from outside the immediate area.

Best of luck, David. Unfortunately I have much better ways to spend my time rather than read a stubborn rant from an inappropriate broker. It detracts from the tone and spirit of the blog to let these remarks go without a comment from its moderator, especially when a good portion of your information describes in detail what the typical second homeowner is looking for in a home. I won't be coming back to the site.

Tony, also best of luck, I wish you no ill will. My advice to you: learn your field, and your customers. You have a grasp of neither. Part of being in a profession is just that; being professional.

[marie]

Tony, I saw the quotes. I fully understood the thrust of the conversation, thank you. I still don't see the reason for such a nasty response--actually responses. I don't know jg, am just a casual reader of this blog, but was moved to write because your reaction was just so off. You could have easily written about your own experience with people from NYC buying all different kinds of properties without resorting to name-calling. Oh well. I'll still check in here now and then because I appreciate the info, but now I won't even attempt to decipher your comments!

[Michael]

I check in every few days and just wanted to chime in now--I am not quite sure what all the fuss here is about. I would not consider Tony's comments hurtful; why so sensitive about this topic? Isn't it interesting just to hear everyone's individual perspective? Everybody take a deep breath.