Sullivan County Real Estate

The Rental Summer?

For the past few weeks I've gotten a number of calls or emails asking about summer rentals. This time year, when winter has turned to spring (at least down in the city), its not unusual to get a few calls from folks looking for a summer rental. This year, the number of calls seems much greater. (Of course, it could be that against a backdrop of a smaller volume of calls about buying a summer place, the calls about renting could just seem much greater.) No, I really think it is greater.

The increase in rental interest is another sign of the uncertain sales market. Some callers start out saying, "We're thinking about buying a second home, but would like to rent for a season to try the area out before we decide to buy," while others are more direct, "We'd like to rent for this summer because we're just not comfortable buying anything right now." The bottom line is that the interest in having a place for the summer is there, but the interest in making a long term financial commitment isn't. A short term rental is the equivilent, risk wise, of short term lending.

The problem is that we don't have a large inventory of available rentals, and no real organized way to access them. Some brokers here do handle a few rentals, but you have to go from broker to broker to find out about them. There's no clearinghouse, and no large property management companies handling them like you have in the Hamptons or at the Jersey shore. We have only one small property management company to my knowledge that focuses on rentals — Red Cottage  Rentals at  http://web.mac.com/grimesproperties/Grimes_Properties/Home.html, and they only have about a dozen most non-lakefront properties. There's no single source, for example, for someone looking for a lakefront rental.

Rental demand is definitely there, and every summer it outstrips supply. One result we may see this summer is that owners who have been unable to sell their homes, or think the market may be better in a year, may decide to rent for the short term. That could keep sales inventory down at least through the summer. But 3 months of a summer rental typically doesn't come close to covering the annual carrying costs of a house here, and faced with carrying a house over the winter until another summer rental season, many of those reluctant landlords may put their houses on the sales market in the fall.

National, Regional Sales Postg Uptick for Feb.

The National Association of Realtors (NAR) just released its Existing Home Sales data for February (2008). Surprisingly, the sales data showed a modest uptick nationally, with sales of existing single family homes up 2.9% over January. The northeast showed the strongest performance, posting an 11.3% gain over January. Sales are still down compared to the previous year, with sales nationally off 23.8% over Feb. 07, and down 26.4% in the northeast region. Its certainly too early to tell if the one month uptick may indicate some stabilization in the real estate market, but it is the first month to not post a decline over the previous month since last July.

On the price front, the median price nationally was down 8.2% over Feb. 2007, while in the northeast prices were essentially flat year over year, posting a 0.4% increase. But in the northeast, prices didn't peak until last June, and since then the median sales price has posted a 10% decline.

Cappelli in Deal to Buy Kutsher's

It came somewhat as a surprise last week that Westchester developer Louis Cappelli, who already owns the shuttered Concord and Grossinger's resort, entered into a deal to add Kutsher's to his stable to once-glamorous Catskills nameplates. The Times Herald Record reported (click here for article) that Cappelli has agreed to pay $35 million for the 400 room resort and golf course. The deal is more of an option --- he's paid $2.5 million for the right to buy the hotel within a year.

Cappelli's interest in picking up Kutsher's is very interesting, following closely on the heels of his deal to move the Monticello Raceway and Racino from its current site in Monticello to the Concord property. Personally, I think he's placing a big, and very possibly winning, bet on casinos. The biggest stumbling block to the St. Regis Mohawks plans for a casino at the Monticello Raceway was the denial by the current Sec. of the Interior to permit an off-reservation casino so far from the tribe's location. But in less than a year, we're very likely to have a Democratic administration in Washington, with a new secretary of interior. The Democrats have generally not been against off-reservation casinos. A lot of folks here said that casinos were dead after the Secy of Interior denial, but I personally think they're just on hold, waiting for the winds to change in DC. By essentially buying a one year option on Kutsher's, Cappelli doesn't have to make a big commitment and put up the big bucks until he sees if, in fact, the administration changes.

Current Market Conditions Posted with Feb. 08 Data

I just posted the March Current Market Conditions Report (that includes Feb. sales data.) Its a very mixed picture. The volume of sales is down from a year earlier, but has steadied. The average sales price dropped again for the 5th month, but the median sales price remained stable at $164,000. February new activity, though, at least from my perspective, was very slow and a lot of the inquiries I've gotten in the past month have been for very bargain priced properties.

I have lots more data (and as usual, opinions) in the full Current Market Conditions report. Please check it out and then come back and add your thoughts about what you think the market is doing.

No Electricity is a Bad Hair Day

A big ole' storm blew through late Saturday, with winds gusting as high as 60 mph. In the early evening, there was the telltale flickering of the lights — the universal country signal to 'save your work, shut down the computer and fill up the tea kettle with water so you can make coffee in the morning', just in case. Its almost like God runs Windows --- there's always just enough time to save your work before it goes black.

The electricity going out doesn't happen a lot here, but my road tends to get hit more often than nearby friends on other roads. My power goes down about 4, 5, maybe 6 times a year and the outages seldom last more than a few hours. The most exciting part of a power outage is that I get to call the NYSEG Emergency Reporting line --- it is truly a technological marvel, akin, in my mind, to sending telephone calls through the air. You dial up, and it confirms your service address based on your telephone number. Then the voice searches through the records and confirms that "We are aware of a power interruption in your area. There are 48 customers affected. The estimated time to have power restored is 7 AM." I know, its all just computer databases with voice stuff on top, but I still get a kick out of it.

Power outages are quaint and charming for a few hours. I went over to a neighbor's, we lit candles, shared a bottle of wine and chatted for hours. I went home, pulled out some extra covers (my pellet stove, without electricity, doesn't work, so I didn't have heat) and went to bed. I expected to be awakened sometime in the middle of the night with the house coming back to life after the electric came back on. (Its amazing how much noise all the stuff in a house makes turning itself back on.)

Morning came with no electric. And that nice NYSEG electronic voice now told me that the expected repair time was now 5PM. (This is the first time in a couple of years the power went out overnight.) I climbed back into bed with a book and a cup of hot coffee (tip to city folks --- while all the electronic stuff on your gas range, including the oven, won't work, the top burners usually will - you just have to light them with a match.) The first hour of reading was cozy. But when I pulled on gloves to keep my hands warm when I turned the pages, I knew it was probably time to bail.

The charming interlude was turning into a major inconvenience. I'd set today aside to answer emails and write the Current Market Conditions report. Sure, I had a laptop — and packed it up to go to a friend's house who had coffee, heat and a high speed internet connection. But alas, what I needed to work on was on the desktop and I wasn't about to load that and a monitor into the car, too.

What was lovely about the day was that having no power was kind of like having a major holiday, like Thanksgiving or Christmas. Could I have gerry-rigged things to keep on doing work I'd planned to do? Sure, I guess. That would have been Blackberry of me.  I did stash my laptop in my backpack, and did check my email on my cell phone a couple of times. But mostly I spent the day visiting, drinking coffee and puttering. That was very country of me. And wherever I went, to houses of friends who still had electric, I was welcomed like a refugee from the Valley of the Blackout.

The whole day was actually kind of cool. It can be enlightening to have reality and routine interrupted  The power's back on now, the pellet stove is chugging away, I'm checking my emails and writing this post. Tomorrow I'll get back to work.

Inventory Drops Below 1,000

As of today, March 2nd, the inventory of single family homes in the Sullivan County MLS was 986. This is the first time inventory has dropped below 1,000 homes since April, 2006, and amrks a 24% drops in available homes for sale since the peak of 1,292 reached last August. Inventory does typically drop through the winter, with owners often deciding to take their houses off the market because they don't want to keep them plowed out and heated for the occasional showing. Current inventory is tracking right about even with 2006 levels.

What's curious, though, is that inventory isn't higher than 2006, given that many people believe we've shifted into a buyers' market. A buyers' market is pretty much defined as rising inventory combined with lower demand leading to lower prices. That's certainly what's happening in overbuilt or high-foreclosure markets like Florida and Arizona. (To put the numbers in pespective, in one zip code in Florida, 32169, the beachside area of New Smyrna Beach, there are 1,274 single family properties - condos and homes - on the market. I use New Smyrna as an example, because that's where I had a condo that was on the market for 18 months before finding a buyer.)

But not here. There are a number of sellers who have just pulled their houses off the market, at least for the time being. And this week when I called to ask about the status of a few houses I was interested in showing, I got the response that the owners decided to rent it out and may put it back on the market when things improve.

April and May are going to be very telling. I've been keeping records since 2001, and inventory has bottomed out every year in late March, and then started climbing again in April and May. Its going to be interesting to see if that same inventory trend holds this year, and at what prices sellers put their houses on the market for.

February Sucked

I'd pretty much say that sums it up. Looking at the preliminary data from the Sullivan MLS for the 3 month period ending Feb. 29th, there were 98 single family home sales closed(down 18% from a year earlier). The average sales price of $185,445 was off 14% from a year earlier. The median sales price of $164,400 was off 9% from a year earlier, but does appear to be holding in the mid $160's. The fact that the median is holding while the average continues to slide seems to support what I've been seeing for months, that the buyers who are buying are moving into substantially lower price ranges.

On the activity side, February didn't hold out a bright light for the near term. February is usually a pretty busy month here in the second home market, with folks shopping for houses so they can be in for summer. I didn't see a lot of activity this February. On weekends, I typically had one appointment rather than 2 or even 3 the year before. True, the weather wasn't fabulous on some weekend days last month, but there were plenty of reasonably nice days is someone was really motivated to come up and buy a house. In general, the people I did go out with just didn't find the deals they were looking for (I wrote about that at length in the post below, "Expectation Fatigue""), and I went the whole month without making one deal.

Interestingly, I've gotten a lot of inquiries over the past month for 'super cheap' properties — under $100,000. I've been referring them to other agents, because its just not my market segment. I don't stay on top of inventory in that range, which are typically seasonal cottages, coop bungalows or handyman fixer-uppers. But over the next couple of months if the mid-market doesn't pick-up, I may start focusing on the budget end again. I feel a little bit like a salesman at an Acura dealership who had a great year last year, but the showroom is now empty and the people who are looking for a car are going to the Chevy dealership across the street. The problem, though, is that a lot of those Chevy shoppers still really want an Acura.

The one bright spot in this seems to be upper end lakefront homes. A house on the market at Tennanah Lake for $1.29M went into a deal this past month. A house closed on York Lake for $875,000, and a house listed for $850,000 on one of the secondary lakes at Black Lake Estates is in contract. In the category "private lakefront", demand still seems to be outstripping supply.