Bad News on Prices Coming

For months, amidst all the real estate doom and gloom, I've been surprised that Sullivan County has held so steady, with no marked year over year price declines. That's about to change. Almost every broker I know here has been commenting about how slow business has been since sometime in August (when the mortgage crisis news peaked). Because of the time lag between buying activity and closing, that August slippage will just start showing up in the October closed sales numbers.
Every month I take a preliminary peek at the closed sales data about 10 days before the end of the month, to see where it looks like we're heading. As many of you know who read my monthly Current Market Conditions report, I do 3 month running statistics due to the small sample size here rather than single month snapshots. Unless some big spenders close on a lot of higher priced properties between now and Halloween, the median sales price for the 3 months ending Oct. 31 may drop below $170,000 for the first time since April 2006. (Right now, for the almost 3 months from 8/1 to 10/20, its at $169,000). That's a 10% drop from last month's $188,950 median. In looking at single month data for September and October, the median will likely trend lower, into the upper $150's, a price we last saw in June 2005.
You can't extrapolate these price moves to individual properties, because there seems to be a shift in what people are buying. People who are contacting me about houses are definitely looking at more moderate price points. In the last month, for example, most inquiries for lakefront houses I've gotten have had a price cap of $300,000 — which at current pricing levels is not that realistic. Likewise 6 to 12 months ago, the most common price range for a second home buyer was around $300,000. Now I'm getting a lot of requests around $200,000.

Comments

[Tyler Durden]

As a recent 2nd home resident of Sullivan County, who is very pleased with the peace, serenity and landscape of the area, I can say, with confidence, that real estate values in this area will NEVER reach true potential until the support services and infrastructure improve dramatically. There is only so much time a weekend/holiday resident can spend trying to get a reliable (non-alcoholic) person to care for their lawn, paint their house, clean their house, etc. before they say "Fuck it, let's move to the Hamptons!" Even if the average 2nd home resident of the Hamptons are everything you are trying to get away from in the first place!)

I am tired on seeing the local merchants/contractors/brokers on this blog talking about historical market conditions, real estate cycles, and going off on diatribes about the economy. Clean up your own backyard and the property values will rise!

[Tony Ritter]

"Tyler Durden" writes:

"There is only so much time a weekend/holiday resident can spend trying to get a reliable (non-alcoholic) person to care for their lawn, paint their house, clean their house, etc. before they say "Fuck it, let's move to the Hamptons!"

{and more}

"I am tired on seeing the local merchants/contractors/brokers on this blog talking about historical market conditions, real estate cycles, and going off on diatribes about the economy. ***Clean up your own backyard and the property values will rise!***"

{end quote}
==================

Tyler and others,
Please take a look at the following site:

http://www.sullivanrenaissance.org/

Have a great weekend,
Tony Ritter
in Narrowsburg, NY

Oooh, I can see a good blog fight brewing on this one, Tyler. I think you summed it up quite well. We're not the Hamptons. If people want Hamptons service and responsiveness, well, then go to the Hamptons. I've sold dozens of houses over the years to New York second home owners, and for the most part they settle in quite well with their various contractors and helpers. And if they're good customers, they tend to get referred to other reliable service providers. What we don't have here is one-stop shopping for all those little services. You make friends, talk with your neighbors and get names of people to use.

Probably one of the biggest differences between us and the Hamptons is that in places like the Hamptons, service providers are paid to put up with attitude. I'm amazed, for example, at the demandingness and rudeness that real estate agents put up with from clients in wealthy communities. Sure, they may take home a half million a year in commissions, but how much have they paid for that in their self respect.

One thing I've noticed here is that, for the most part, locals won't put up with attitude. I've known more than one contractor who's essentially told a particularly irritating customer to go screw themselves.

By the way, its just plain wrong to say that property values are tied simply to the level of services demanded by second home owners. And maybe we like our backyard just the way it is.

[Tyler Durden]

I said level of services demanded are tied to property values, but I did not say that they were "simply," or solely, responsible. Doesn't it sound a bit silly to say "if people want service and responsiveness, well, then go to the Hamptons"? Also, how do you make the leap from people expecting a modicum of professionalism and competence to rudeness and attitude? When the guy who owns a "business" does not have a fax machine (Heaven forbid he has e-mail!) or shows up for work hungover, the sense of smalltown quaintness is lost on me. So, while I intend on enjoying my home in Sullivan County for years to come, your posture does not serve the greater good.

[DSS]

When I bought a place up here two years ago, I was a bit astonished at how difficult it was to engage contractors. The first half dozen times that folks didn't show up for appointments, or else did show up but then disappeared rather than supply the estimates they said they would, left me frustrated and perplexed. Why bother to pay for the advertisement on the diner placemat or in the Yellow Pages if you don't want the work, I wondered. I also considered junking my career in Manhattan and taking a crash course in carpentry or electrical work, because these guys seemed to have it made -- so much demand they could pick and choose. In any event, from talking to friends with second homes in tonier venues, including the Hamptons and the Berkshires, I learned that they experienced the very same kinds of problems. So I don't really think it is peculiar to Sullivan County. And in time I learned to REALLY value those trades people with whom I eventually developed connections. Bottom line: I need them more than they need me. And if that lesson instills some humility on my side of the equation, I'm probably receiving a benefit I never bargained for.

[Chuck]

The learning curve for getting stuff done up here is definitely steep, and isn't helped by the monopoly positions of the local bank, grocery chain, hospital, etc... and lack of skilled house mechanics. One thing you can count on with a lack of competition is lackluster customer service - my corner convenience store gives me a friendlier and more customized welcome than the tellers at a bank I have intensely worked with for 4 years.

Like the 8 phase grief process, newcomers to SC start with extreme agitation at our process, work through the intermediate phases of euphoria at tiny steps of progress, hope and disappointment, and, if they stay, usually wind up with an understanding and grudging acceptance of a slower and definitely imperfect process.

DK - any chance of getting a spell check on this thing?

I think 2 years ago New York published an article spotlighting people who fled the country after a year or two. On the other side are all the people I meet that bought a weekend house 20 years ago and now live up here fulltime, more or less completely assimilated.

[Mary Ellen]

When you finally find a reliable contractor, you guard them like a gold mine. Owning a large farm in Sullivan county and living in Texas means I live on the phone trying to get things done. When I stumble upon a very competent and responsive tradesperson, I make sure I let them know that they are terrific, and I treat them like Reverend Mother. I can sympathize with the problem; I had a big remodeling job last spring that I just gave up on after no one called me back with an estimate-even people I knew well!

Most contractors have nobody to do their 'office work' or answer the phone for them. I always thought that someone should start a business dispatching calls and quotes for tradespoeple up there. It would triple their business. I think this problem common in all areas;just the nature of individuals who work for themselves, and are dog tired all the time.

[Chuck]

Mary Ellen - are you still looking for a builder?

[JM]

Build it yourself

[Lance]

You people don't even know the half of what is going to happen in this market. I am writing from california, and let me tell you ... in the words of greenspan ... it's going to be a firesale.

The buyer truly has awesome power now. thank goodness! I am tired of these sellers who are mentally insane and think they should get mentally insane overvalued prices. I hope all of you lose your shirts and learn something in finance called ... value.

The lesson I want to teach is this: I buy for value ... and only value. I don't care about your ... comps ... or your appraisals ... or upgrades ...

I am a professor in mathematics ... not some idiot ... and let me tell you... i am not paying more than 160K for a house ... I don't care what anybody says. And I WILL get a nice house in a nice area. You wait and see. you wait and see.

[DSS]

So assume a median of $170,000. My question: What can you buy for $170,000 in Sullivan County? (I assume, based on what I've read on this blog, that the listings don't answer this question because asking prices bear little relation to the price where sales get done.)

[David Knudsen]

I think the contractor responsiveness situation will change a LOT with a real estate slowdown. Likely there will also be a lot less renovation, and if folks feel insecure they may put off adding that porch, deck or extra room. One of the problems the past few years for contractors is that there have been so many people wanting their services, and the ranks of contractors didn't increase substantially. People stayed busy; they didn't have to return calls. I'm sure that's going to change.

DSS, most houses that sell here are quite modest, and not necessarily what a 30-something Manhattanite envisions when they think about think 'second home in the country'. Little seasonal bungalows in the eastern sections of the county, ranch houses on main roads, cottages on very small parcels in Smallwood, Mohican Lake and Hunter Lake areas, and in-town houses in Liberty and Monticello — all of these would typically be under, often WAY under, the $170,000 median. Of the 1143 houses currently on the market here, 43% or 490 are listed under $200,000 (and encompasses the universe of houses that would likely sell under $170K.)

[David Knudsen]

Lance, you may not care about comps or appraisals, but the financing industry does. And most people still need financing.

[Steve]

As a New Yorker, I can sympathize with the first poster. It's impossible to get decent help and decent food without travelling many miles. As for contractors, I've had some horror stories. One guy was using a 200 year old velvet chair to stand on while he was ripping out paneling and sheet rock. I've had a highly recommended contractor refuse to give me his estimate on paper and then when I didn't give him the work he bad mouthed me at the local shops stating things that were completely untrue. We've had great service from our plumber but he's more expensive than my plumber in the City. We've had no shows on law maintenance and then the town likes to issue us fines for not mowing of $175. The agent I purchased my house from had NO cell phone, no Blackberry, no fax machine and no e-mail. Often times, her sole car was in the shop. One guy I called lived 10 minutes away. He wasn't interested in the job because he doesn't work on that side of the mountain! Yet, I've always heard people complain about not having any work. It's also interesting that nearly everything I have done costs more than in the City.

I used to be in the contracting business. I do most of the work on the house myself. I also know how to run a business and I have a successful practice in the City. I've worked across the country and I have never experienced an area where there the quality of service is so low, it seems pandemic.

My electrician is great by the way, but he's from Long Island.

In any event, I bought in the Catskills because it's not the Hamptons. I can go to dinner in my dirty shorts and a t-shirt. People don't care what I look like. However, there are some rudimentary business and social basics that is completely lacking in the Catskills and this is widely discussed among ALL of the second home owners I know whether they have owned their 2nd home for 3 years or 30 years.