$200,000 Range is Hot - and Fun Again

I often talk about the 'sweet spot' of the second home market. It had quietly edged up over the last couple of years, from about $250,000 to around $325,000, but has remained pretty consistent in what folks in the second home mid range were looking for — a house with 3 bedrooms and some privacy in a nice setting on 5 acres or so. It could be a smaller renovated farmhouse, a vacation chalet 'contemporary' or a house with lake rights at a lake like York or Devenoge. Even though I tend to be known for working with higher end buyers, my bread and butter has been the $300,000 sweet spot.

In the last month or two, the demand curve has shifted decidedly downward. Most second home buyers I'm talking with are looking closer to $200,000 than $300,000. The most common thing I hear from potential buyers (who are typically younger than what I've seen in the last couple of years) is, "Our budget is $200,000, but if we saw something we really loved we'd consider going a little higher." I"m just not seeing $300,000 mid range, non waterfront buyers right now.

Now, I haven't worked a lot in the $200,000 range in a while. But I've been very pleasantly surprised with the inventory in that range I've been showing lately. (A year ago, a lot of houses that should have been priced around $200,000 were priced closer to $300,000, and at $300K I thought they were overpriced dogs.) Some houses have come down in price, and some other new listings have been put on the market at very attractive prices. The $200,000 range is actually starting to be fun again!

But that's also a function of the buyers in this range. Most seem to understand that there are trade-offs when they have a budget around $200,000. They're willing to consider ranch houses if they have nice, quiet settings. They're not looking for total seclusion, but something in a quiet location. If they want a classic old house with a lot of space, they may have to give some on location or setting. A number of folks I've been out with in the last few weeks have been delighted with what they saw that they can get for $200,000 here, even though they can't get everything on their wish list.

And I've been delighted with some of the houses I've seen, too. (Click here to see  6  houses in the $200K range that I think are just great for the money. Note: link will expire on Nov. 30.)  There's a ranch house in Hankins (MLS 21110) that has been renovated in a really cool style, with this great modern open kitchen, for $229,000. A small vacation chalet style house with a fireplace on White Roe Lake Road, in a private wooded setting (MLS 21834)  just came on the market at $229,000.  And there's this really  cute farmhouse on Midway Road in White Sulphur Springs (MLS 17978) just reduced to $185,000. (You can see all of these in the link above.)

While these haven't sold — yet — a lot of other houses in this range are in deals. I've called on half a dozen listings in the last couple of weeks in this price range, only to find out they have accepted offers on them or are going into contract.

There are a lot of houses right now lagging between $250,000 and $300,000 and not getting any action. But the action may be at a price point just below them. Its going to be interesting to see if some of them drop into the 'buy zone'.

Comments

[DSS]

Strikes me as a little scary that 17978 has been on the market for more than a year.

[Tony Ritter]

"Strikes me as a little scary that 17978 has been on the market for more than a year."

Posted by: DSS | November 01, 2007 at 09:28 PM
=============

Could be the taxes in Liberty.

Looking at townsoft.com - they're paying over $5,300 a year.

$1965+ - Town and $ 3,420+ for school.

Also, please be advised that second homeowners are not entitled to NYS STAR rebates off their annual school taxes - only primary home owners can get an annual reduction.

In addition, the house was probably listed at 214k for over eight months without offers and was recently reduced in the upper 100's which is certainly more palatable for possible offers.

We have two similar four squares in our area that started in the low 200's - have been on the market for over a year - and have been reduced now twice.

Currently, they're offerd in the mid to upper 100's. (175k and 179k)

Structurally sound houses with original features. Plenty of space (4 BR's and high ceilings too).

However, to use the phrase that I picked up on this board - I guess you could call them - "locationally challenged" - though, that sounds like these houses need to stay back a year in schoool.

In other woids - not so great curb appeal.

Please see:
http://www.ilovethecatskills.com/example_110207.htm

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

[DSS]

Tony -- Thanks for the insight. Your examples don't provide much comfort. A word that gets used an awful lot on this blog is "value." It is an inherently vague and ambiguous word. But it would not be unreasonable, I think, to define value in part (and note I said in part) by the degree of ease or difficulty you will have in reselling if your circumstances or tastes change. For second home buyers, in particular, I would think this could be an important component of value. My anecdotal observations of Sullivan County suggest that by this measure, value can be problematic here. So many houses seem to sit forever, including the example I cited from David's post and the examples referred to by Tony. I have to wonder whether that phenomenon is a function of Sullivan County's lesser popularity in relation to other second-home locales, most notably east of the Hudson. There are simply many fewer buyers when you go to resell. I have no data to support my hunch that this is not as great a problem in the more well established second home markets, and I'd love to be made aware of any. But if buying in Sullivan County is the equivalent of checking into the Hotel California -- you can check out any time you like, but you can never leave -- that's something to factor in to the elusive "value" equation.

[martin abend]

DSS: "But if buying in Sullivan County is the equivalent of checking into the Hotel California -- you can check out any time you like, but you can never leave -- that's something to factor in to the elusive "value" equation."

That's a rather cogent point that few are willing to address. Scarcity of course is at the center of the issue.

New Yorkers in general do not blink. They hold. When a seller actually told me: "over his dead body" I was tempted to ask him for the names of his heirs. (He simply refused to budge on his price.)

[David Knudsen]

There's more to whether a property moves than just its price. How its listed, how easy it is to show, whether it always requires a pre-appointment with the listing agent or whether another agent can show it at short notice, how the property is marketed, the photos in the listing and on and on. Frankly, I didn't start showing 17978 until recently. Don't ask me why, I'm not quite sure. But in the time its been on the market, I haven't gotten any "outbound marketing" to clue me in that there is this sleeper on the market. The house was listed at a higher price, but not all that much higher. It may also be suffering from "listing fatigue." Sometimes when a house is attractive and seems well priced, and sits on the market, a lot of agents scanning the listings start to think "There's got to be something wrong with it." That's why its so important for listing agents to keep up chatter about a house that should be moving. Agents from different offices talk to each other all the time. As a listing agent, one of the best things you want to have happen is an agent from another office saying to me (or anyone else for that matter), "Hey, have you seen so and so's listing over in White Sulphur? I showed it last week and was really surprised. Its really cute."

[Tyler Durden]

Does anyone have an opinion on the pricing/value of the homes being built and sold by Catskill Farms? Do you sense they are priced appropriately? Is there a greater demand for these homes than the average Sullivan County home?

[Tony Ritter]

In my opinion, Catskill Farms has filled a niche for the past seven years up here.

His locations - quiet roads with views - where these homes are sited - are thought out and, in my opinion, are just as important as the structures he builds.

Most of the structures have been farmhouse - style exteriors - with wrap porches, dormers, clapboard, etc. with a contemporary open floor plan interior.

Simply put:

You get the "farmhouse look of yesteryear" - but you also get HIGH CEILINGS and contemporary features - not the original six foot since inch ceilings that DK so eloquently writes about in his previous posts.

I believe they now have another line. Smaller (in square feet) rustic Adirondack style cabin / cottages too at 300k that he has been advertising.

But back to the original thread of houses at $200,000 in Sullivan County writes DK...

===================
"There are a lot of houses right now lagging between $250,000 and $300,000 and not getting any action. But the action may be at a price point just below them. Its going to be interesting to see if some of them drop into the 'buy zone"
===================

These homes have been priced at slightly under 300k and I'm not certain whether CF will be cutting prices due to the current market - or creating a product for the $200,000 dollar buyer that David writes about.

Chuck?

Sincerely,
Tony Ritter
in Narrowsburg, NY

[Tyler Durden]

Do you think the other/older homes (not the "Cottage Series") are priced appropriately at the $350K to $500K (even higher?) range?

[DSS]

David's "200,000 range" post prompts me to ask another question. This particular "range" is obviously pretty broad -- at least from $185K to $229K, by David's own definition in the post. So if a house listed at $214K doesn't sell, what is the point of reducing the price to $185K? If somebody had been willing to buy 17978 at $185K, they would have offered that price during the time the house was listed at $214, since that's within range, right? I mean, a $185K bid would not have been ridiculous given a $214K asking price. So, presumably, there were no $185K buyers, or the seller wasn't willing to accept $185K. What, then, is the goal of a $185K asking price now? Since the seller is now willing to accept $185K, why not leave it listed at $214K and wait for the $185K offer? If there are no $185K offerors, is the goal of the reduced price to solicit offers circa $170K that would not have been forthcoming when the house was listed at $214K? I'm not trying to be a wiseass and please forgive my naivete, but I remain befuddled by the role of asking price in the sales process up here, and this example of a reduction to a price well within the same "range" as the original asking price seems to me to exemplify what to me is a mystery. Maybe the simple way to put my question is this: Is there a formula to calculate what a buyer "hears" at various asking prices; for example, when the seller says X, the buyer generally hears X minus 20K? I'm trying to discern the rationale underlying the listing and resetting of asking prices.

[Chuck]

Geez, I don't check in for a few days and missed all the action.

Tyler - I own Catskill Farms, and we have sold 22 original, early-american inspired homes to Manhattanites over the past 4 years. We have 44 adults, 11 children, 8 dogs, and an unknown number of cats in our homes.

As for our 'value', I would venture it's pretty high, because we have no homes left, and our latest 4 lot project sold out without any homes on it. We presently have a 4 house waiting list, and I am afraid to pull the trigger on a eblast I am planning because I am sort of scared of the reaction.

There's more to it than 'value' though. As demonstrated by the large volume of entries in this year's Real Estate Showcase Awards, 2005/2006 were heady times for speculation, and a lot of nice homes were built. When we saw the high-end spec-build activity, and understood the extremely lean amount of buyers at those price points, we rolled out a Cottage - 2 bedrooms, 1400 sf, 5 acres, and a lot of attention to simple elegance.

The Cottages have been a huge hit, even more than our 9 farmhouses, because we are selling them at $300k, or less than a NYC parking space. And as DK has said over and over, $300k is a magic number (and remains very vibrant). The $300k Cottage buyer is as discriminate and discerning as the $550k buyer, they are just buying something smaller. Sullivan County has never had a new, stylish house at $300k, and we are attracting a lot buyers who would have just postponed or cancelled their plans to buy because they couldn't find anything for that price.

We are now rolling out a Mini-Cottage series. It will be 1 bedroom, 1 bath, couple of acres, cathedral ceilings, porches, wood stove, very open (and will have a full walkout basement so the sq ftge can be increased when the wallet allows.) These mini-Cottages will sell for less than $200k.

My market niche and business strategy at the moment is to continue to drive down the prices without sacrificing detail, and the only way to do that is to shrink the house. And we are finding reasonable, cost-effective, intimate spaces are very sought after and there is very little supply. I know our last 5 buyers would not be customers if the houses were priced above $325k.

Thankfully, the McMansion/Hummer era is coming to a close. We presently have a modern dwell cottage just finishing up at $325k, and our first mini-cottage at $195k is just starting. DK can give you the rest of the details.

[robert vreeland]

DSS

If you keep your price ABOVE, BUT CLOSE to, a cardinal number it conveys to the buyer you want the cardinal number. If you price it slightly below the cardinal number it conveys to the buyer you are on a fishing expedition.

Take a look at asking prices and selling prices and you will see this discernable pattern. If it is priced correctly sellers WILL give up 3% of the asking price.

[Chuck]

Tyler - sorry I missed your 2nd post - all of our 'farms' have been under $500k, with the exception of an old farm with big acrerage, and a bigger house with unparalled views. Most of our 3 bedroom houses sold for right around $400k. I would venture we underprice our houses, because we are making a living hitting singles, unlike our competition and imitators waiting for the homerun.

Typically, we sell our houses for under $165/sq ft, and, for the most part, give the land away with the house at cost. I can't say whether our 'houses are worth it', but I do know they out-value the competition at their respective price points (hence, no houses left)- we study the local market daily in order to examine comps, recent sales, recent activity - and try to build houses that fit into a certain price-point, as opposed to forcing the market into what we think they should buy. Similarly, we can't do it any cheaper, because if we could, we would, because then we would have more buyers. We skirted the edge of bankruptcy for years until we rolled out the Cottage Series - not enough buyers to go around, even for great houses.

We have stopped building houses above $400k unless someone specifically requests one, because there are not enough buyers and there are more than enough spec homes sitting on the market at those prices. If the mortgage mess did not affect our $300k and less buyer, it definitely affected the $400k+ buyer.

But, in the end, you never know the worth of a house until you go to sell it. My bet is all of the houses are worth more than people paid for them, and now that most speculators are stuck in the mud with unsold inventory, the supply of good homes will dwindle, creating even more value for the homeowners of one-of-a-kind houses on nice land. Many of our buyers causally looked for a house for years before finding one of ours - so value, in the end, is measured much more dynamically than short-term Return on Investment. What is the value of piece of mind, and a house that works? Definitely more than an experience where the area's plumbers and heat guys know you by first name.

[Tony Ritter]

Chuck,
Good luck with the mini-cottage series.

Your example below resembles the many cottage / bungalows in Smallwood off of NYS Route 17B in Bethel - or for that matter a cabin on the river that I had sold this past March of 2007:

================

Comparison photos at:

http://www.ilovethecatskills.com/cabins.htm

=================

The 750 square foot cabin on the river in Narrowsburg was on the market earlier this year and offered for 199k. It sold within 50 days at $195,000.

1 BR / 1 Bath / Cathedral ceilings / wood floors and large deck overlooking the Delaware River.

The location of the cabin - 150 feet of riverfront - was the best thing about the property though.

Additional photos at:
http://www.ilovethecatskills.com/db.htm

and if people from the city have been purchasing a 1950's /1960's Smallwood cottages / cabins in the area of 145k to 190k - albeit usually with a minimum of two bedrooms / one bath on a quarter acre with neighbors to the left, right and across the road - you should have no difficulty with a 'sweet' newly built cottage on two secluded acres as described in your ad copy.

Best of luck to you,
Tony Ritter
in Narrowsburg, NY
==============

CF Ad Copy:
Cottage 5
Our first Mini-Cottage on 2 acres, with a fabulous Brook running property - $195,000

We want everyone to be able to afford a country getaway – 1 bedroom, 750 sq ft, 2 big porches, fireplace, and wide plank floors make our first mini-house impossible to resist. We are starting construction in late September and the house will be ready in February or so.
========================

[Chuck]

Thanks for the plug TR - appreciate it. Lord knows every little bit helps.

[TR]

My pleasure Chuck - and not a moment too soon I might add for your series of down-sized homes to hit the market.

Great call.

Oil possibly going to $100 this week - and, IMO, not many big Wall Street bonuses in the cards this year with banks, homebuilders and finance companies like MER, CFC, WM, C, BSC, HOV, BZH (among others) losing about 35% to 70% of their shareholder's value this past year along with talk of continued layoffs in those sectors.

TR

[Chuck]

TD - value analysis, by the numbers -

Catskill Farms 1350 sq ft cottage on 6 acres all-inclusive package -with 2 bedrooms, 2 baths, walkout basement, front and rear porches, fireplaces, whole house audio and security, wide plank floors, lots of windows, salvaged wood ceilings - cost $315k. Time - 4 months.

Build this house without Catskill Farms -
Land - $65000
Construction - $236,000
Hidden upcharges for deep wells, and unconventional septics - $8000
Design and architecture - $24,000
Finance costs while building the house - $15,000
Realtor fee - $22,000
Nickel and dimed by builder for small upgrades - $10,000
Time - 1 year, minimum from design to completion.
Total house cost - $380,000

The way we see it is that we are saving our customers about 20% of fair market value, or looked at another way, the buyers have an immediate 10- 20% gain, from dollars we leave on the table for them. That's the idea anyway, to build a smart house, that fits into the right price point, while making money, and creating some immediate upside for the new homeowners, or protection against a slide in prices.

The reason this price point is much more fun than $450+ is because there is no room for mistakes, in the cost of the land, the speed of construction, the elements of construction, the cost of materials, the cost of labor, etc...

For the last several years the above $450k price has been glutted because a builder could overpay for land, and fumble through the whole process and still have a chance to make some money at the end. That is absolutely impossible for a 2 bedroom $300k home that a city person would be attracted to.

[Julia]

We just bought a small house from Catskill Farms and we love it. It's well built, very unique, and beautifully designed on a beautiful, extremely private lot. Just thought I'd add my two cents in, since I actually live in one of these affordable houses everyone's talking about. Good luck Catskill Farms!

[tom fry's ghost]

Chuck

Congratulations on getting the formula correct for new buyers. You have, however, created an irony in what you are now marketing. Sixty years ago, with little exception, much of the housing was similar to what you are now building: small, comfortable spaces for summer and weekend getaways. The houses that people lived in year-round, HOWEVER, were a bit more substantial. Then from 1960-1990 the county systematically knocked down and removed all of these "old" delapidated houses. Unintentionally, you are selling affordable housing that once again will not withstand the rigors of severe weather or time. There is NOTHING wrong with this except the county will have trouble defining its existence if there isn't enough work to sustain its caretakers year-round. This is evident now among the locals.
The lakes in Sullivan county have also been sorely mismanaged and that will ultimately doom tourism that thrived in earlier years before most of the newbies discovered Route 17.
People still are not addressing the greatest threat to their investment: WATER and ensuing DROUGHT.
It should be interesting to see how it all plays out. (How many readers here are following the Lake Lanier story in Georgia?)

[Karl]

Maybe I'm a newbie but why, with regular maintenance, wouldn't the Catskill Farms house below survive the rigors of severe weather or time?

"Catskill Farms 1350 sq ft cottage on 6 acres all-inclusive package -with 2 bedrooms, 2 baths, walkout basement, front and rear porches, fireplaces, whole house audio and security, wide plank floors, lots of windows, salvaged wood ceilings - cost $315k. Time - 4 months."

[Chuck]

Dear Tom Fry's Ghost - our houses are not seasonal - they are quite able to withstand any weather, probably better than most. Although there is probably a market for seasonal housing, since that would cut the cost in half - although I don't know if code allows that anymore.

[John L.]

As far as water availability in the U.S. is concerned the Catskills is one of the BEST areas to be in.

[Tom Fry's Ghost]

Karl,
Rather than take anyone's word, the information is now readily available on the internet via google searches. You can always start with discussions relating to R-factor ratings for insulation for both the walls and roof in your geographical location. Cathedral ceilings vs. conventional roof trusses should pose a question or two for you? If this isn't your expertise hire an inspector($350) outside of the immediate area to tell you about the shortfalls and pluses of your potential purchase.

People are still becoming a victim because of their own ignorance.

[Tom Fry's Ghost]

"As far as water availability in the U.S. is concerned the Catskills is one of the BEST areas to be in."

There is a difference between "was" and "is." Global warming hasn't yet become a central issue for water access or quality in the Catskills.
The decade isn't over yet. (Read about Sydney, Australia.)
Algal blooms are around the corner. You do NOT have deep lakes. That's the key to any discussion.