Sullivan County Real Estate

You Gotta Appreciate the Hype

I'm often amused by the property descriptions in real estate advertising. Some descriptors are old hat, like "cozy" as a euphemism for "really small and tight" and "waiting for your loving touch" really meaning "its a toral wreck". But in an ad I saw yesterday, I had to give credit to the writer for creativity. For a house comprised of a number of different styles with little integration, the writer described it as "A unique home that defies stylistic pigeonholing." I can't wait to pull that one out when showing a chaotic rabbit warren of a house comprised of multiple additions over the years in different styles.

Attended Gas Drilling Seminar Last Evening

On Friday evening, there was an informational seminar on gas drilling at the Liberty High School about gas drilling, sponsored by Catskillmountainkeeper.org and the Sullivan County Division of Planning and Environmental Management. The meeting was very informative. The tone of the meeting wasn't "Stop the Drilling", because drilling here is almost inevitable as Sullivan County sits on the gas-rich Marcellus Shale. Rather, the presentations focussed on how to ensure that drilling occurs in a way to minimize community and environmental disruption, as well as issues in the gas leasing process. The organizers brought in experts from Colorado, Wyoming and New Mexico who have had years of experience dealing with the oil and gas industry, as well as legislation and regulation in their states. An attorney from Binghamton who works on gas leases in Broome and Delaware counties talked about gas leasing issues. Lastly, the Sullivan County planning director talked about municipal impacts.

My estimate is that there were over 400 attendees, a very large crowd in this county, and included elected officials, landowners considering leasing, concerned citizens, and yes, a handful of us Realtors.

I learned a lot and found a number of things very interesting. I had the impression, prior to the meeting, that the gas wells themselves were big, tall derrick-like things that were lit up and made noise 24/7. It turns out that my impression is correct — but only during the well drilling phase, which typically lasts 4 to 6 weeks per well. Once the well is drilled and is put into production, the well profile is very low with much less equipment and noise. The biggest disrupter during the drilling process seems to be the delivery of the million+ gallons of water (in tank trucks) required for the drilling.

My second misconception is that there could be wells every few hundred yards, sort of like those oil wells you see churning away in Los Angeles when you drive near LAX. The technology likely to be used here is "horizontal drilling" (just approved by the NY legislature) that permits one drill pad to service wells drilled horizontally in different directions — so a relatively small few acre drill site could extract gas under a much larger area.

One of the most interesting presentations was from Bruce Baizel, a staff attorney for the Earthworks Oil and Gas Accountability Project. He was asked to take a look at the current regulations and legislation in New York to identify areas where regulations could be strengthened to provide better community and environmental protections. For example, NY regulations permit lined "holding ponds" for the water produced during the drilling process. He said that in the west, because of ground contamination from ponds, they've been outlawed in favor of more secure steel tanks for storing the water until it can be hauled away.

Its still very early in the process, to know what the impacts of gas drilling will be. The New York experience may be very different than Pennsylvania because of the different roles of the state environmental protection divisions in regulating gas drilling. There are also watershed issues that are unique to this area that need to be addressed.

There are implications, though, on the real estate side that are real and immediate. Delivery of the natural gas to market is key, and it would seem that proximity to the newly expanded Millennium Pipeline increases the appeal of a site to gas drillers. The second is that the gas industry seems to like flatter land for well pads (drilling sites). The real estate community also has to come up with a way to identify parcels that have gas leases, as well as track gas drilling permits. My hope is that the county will fund some sort of  gas drilling office so this information is available from a single source. A question I'm sure I'll be asked by second home buyers is what is the likelihood of gas drilling within a certain proximity of a property they're considering buying. Over time, as we get more experience with this, its a question we should be able to answer.

There's still a lot to learn about all this. I'd like to thank Catskill Mountain Keeper and the Sullivan County Division of Planning for getting the ball rolling, to provide good information without a lot of hysteria and emotion.

Cappelli's 'Entertainment City' at Concord Gets State Nod

This week, the NY State Legislature approved a financing package for Louis Cappelli's redevelopment of the Concord that will pave the way for the Westchester-based developer to green light his ambitious $1 billion "Enertainment City" project for the old Concord Hotel site in Kiamesha Lake. (See article in this week's Sullivan County Democrat.) Without the state funding package, Cappelli had planned a more scaled back project. The Entertainment City project includes a 750 room hotel, 500 townhomes, a second hotel, a new golf course club house and moving the Monticello Raceway / Racino to the Concord site.

Unlike previous Cappelli announcements of plans for the Concord site, this one is actually taking shape. Demolition has already started at the site (including the landmark hotel towers which are coming down), and the Cappelli organization has announced they plan to start construction this year, with the opening planned for 2010.

What Would I Buy?

At a friend's house for dinner last weekend, the conversation, as often happens, turned to real estate. Someone asked me what I would invest in at the moment. I think they were surprised by my answer. I said 'I thought that, with skyrocketing energy prices, the total 'energy cost profile' of a home will become a key value factor, and that alternatives to heavily energy-dependent suburban houses may be good investments. The car-dependent suburbs surrounding cities like New York may be great places to raise kids, but the total energy load of living their may make them unaffordable. There are 2 parts to that energy load. The first is the cost of heating and cooling the house, and free-standing houses generally guzzle more energy than apartments or attached townhouses with common walls. Houses may also be much larger in the more distant suburbs, reflecting the trend in the last two decades to build bigger and bigger homes. The second part of the energy load is the cost of using cars as a primary mode of transportation, for commuting as well as running errands.

If gasoline and heating oil remain in the $4 to $5 a gallon range (or go even higher), many people may rethink their housing/lifestyle choices to find a combination with a lower total energy load. Smaller houses, as well as family-size (3+ bedroom) apartments (coop, condo or rental), closer in, within walking distance to convenient public transportation, I believe, are going to become more and more attractive to consumers weary of $100+ fill-ups. I think traditional neighborhoods, with services like supermarkets and drug stores within walking distance (or a very short drive) are going to see a resurgence.

If I was going to invest right now, I'd draw a circle from midtown Manhattan that encompasses a maximum 30 to 40 minute public transportation commute to midtown. Then I'd look for areas with family-sized housing stock (3+ bedroom apartments, townhouses or small homes). Some interesting areas might be the Bronxville / Tuckahoe area of southern Westchester, Kingsbridge Heights / Riverdale in the Bronx, areas of Queens beyond the hipster enclave of Long Island City, and Secaucus, NJ.

One of the guests at the dinner asked why I didn't include Hoboken or Brooklyn Heights / Prospect Park. My reply was that they're just too expensive for a budget conscious suburbanite looking to move closer in to cut costs. This person countered that the areas I mentioned just won't be that attractive because they aren't "cool" (like Hoboken). But that's the point. These energy-cost refugees won't be looking for "cool"; they're looking for convenient and cost effective. Hoboken and Brooklyn became cool because they attracted Manhattanites looking for a "Manhattan-like" feel without Manhattan prices. The big difference in the shift I think is coming is that it isn't driven by Manhattanites moving out to reduce housing costs, but rather suburbanites moving further in to reduce energy costs. They may work in Manhattan, but their lifestyle identity isn't Manhattan-centric.

NAR Existing Home Sales Data for May Released

The National Association of Realtors just released the national existing home sales figures for May. Nationally, the seasonally adjusted rate for existing home sales rose 2.0% over April. Regionally, in the northeast the sales pick-up was 4.6% over April. On the price front, the median sales price year over year was off 6.3%, while in the northeast the drop from May 2007 to May 2008 was 2.4%.

Sure, on a year over year basis, the sales drop off is pretty dramatic --- sales were down 15% in the northeast from May 2007 to May 2008. But the fact that there was a sales pick up from April to May, rather than a further decline, is good news — and reflects what I've been seeing locally. I know that commenters here will be quick to say that "one month does not a trend make" and "the worst is yet to come, etc. etc. etc.". But I think it is an interesting turn of events.

NAR's May sales data generally reflects buyer behavior in April, so its not reflecting the $4+ gas price run up in late May/early June. We'll start seeing that in next month's data.

NAR economists attributed the sales pick up to consumers responding positively to lower prices. I'm definitely seeing that in our market — houses that are very attractively priced are getting interest. I even found myself web surfing last week for condos in Miami, thnking, "Hey, if prices are down, maybe its worth a look again." I doubt that the overbuilt Florida market has hit bottom yet — the amount of inventorwas pretty staggering — but there were some things that were kind of enticing, if I wanted to take the Florida plunge again (which I don't).

West County Versus East County Performance

There's been quite a bit of commenting on this blog lately about my assertion that some parts of the market are picking up, notably the moderate range of the second home market. I've also been seeing more weakness in the traditionally "primary" home market. Its always hard to define those terms, though. Also, there has been a lot of anecdotal commenting among Realtors here that brokers in the western part of Sullivan seem to be busier than brokers in the central and eastern parts of the county. GIve me an unanswered question, and its like holding out a piece of raw steak for a dog. Woof!

So I decided to take a swipe at it. Yes, single family sales are down about 30% year over year for the  county as a whole Then I divided the sales into two groups --- eastern and western. In the eastern township group I included Neversink, Fallsburg, Thompson, Liberty, Mamakating and Forestburgh. The western township group included Rockland, Fremont, Callicoon, Delaware, Bethel, Cochecton, Tusten, Highland and Lumberland. Arguably I made some arbitrary calls like putting Rockland in "west" and Forestburgh in "east" (but shifting them into the other group doesn't notably change the data.) The time period I used for comparison was year-to-date sales for 2007 and 2008 from Jan. 1 through June 23.

What I found is that the sales drop off has been somewhat greater in the eastern townships (-32%) than in the western townships (-28%), but the western townships — in terms of number of sales year over year — isn't dramatically outperforming the east. On the price front, though, the median sales price drop has been larger (-16%) in the east compared to -10% in the west. (If you're a regular reader of my commentaries, you know that I prefer to look at the median rather than the average for price trends, although the larger 19% drop in the average in the western townships is a very interesting statistic worthy of investigation.)

An interesting statistic though, is prices overall east versus west/ The median sales price in the western townships is 21% higher than in the eastern townships, but the average sales price in the west is a substantial 36% higher than in the east. The gap between the median and average sales price in the west is also much wider than in the east. In the western townships, the average sales price is 29% above the median, while in the eastern townships the average is only 11.6% higher.

	Single Family Sales	Avg. Sales Price	Median Sales Price
East  County Townships
2007	134	$     199,664	$        171,000
2008	92	$     166,648	$        144,000
% Change	-32%	-16%	-16%
West County Townships
2007	103	$     278,366	$        195,358
2008	74	$     226,856	$        175,000
% Change	-28%	-19%	-10%
2007 and 2008 Data Jan. 1 through June 23 (YTD)

Interesting Market Shift

Every month I run some preliminary sales numbers in the middle of the month to see how things are shaping up. This month (June) was a real surprise. While sales numbers continue well below 2007 levels, the average and median sales prices are moving up. Looking at preliminary 3 month data (from Apr. 1), the median sales price has climbed to $165,925 (up from $150,000 last month) and the average climbed back over $200,000, to $209,481. If I look just at the 24 single family sales that have closed since June 1, the numbers are even more striking — the median for those 24 sales is $238,750, while the average is $240,139.

I pulled all the sales to see what's selling. Almost all would be categorized more as "second home" sales, with  quite a few "better" properties in the mix. I know most of the houses in the sold list, and the characteristics shared by many of them is that they have 1)  very attractive or unique settings and 2) were overall very good values for what they offered.

This tends to support what I've been seeing in the last month. I haven't been seeing a lot of lower end bargain hunters, but rather quite a few mid range city buyers looking for great properties at a good value price. I've heard from more than one buyer recently that they think this could be a good time to buy, and in many cases they may be right. There have been some very good deals struck on some very attractive properties. The mid range I'm talking about is $250,000 to $400,000 for non-lakefront homes, and under $500,000 for lakefront houses. Above those ranges, interest still seems very thin.

What's notable is what I'm not seeing in the sales mix. There are 3 general segments in the real estate market here — a "local" primary home market that centers around $150,000 ranch houses or $200,000 split levels, a "new" second home market that gravitates to country properties (often above $200,000) and a "traditional" second home market that is more budget focussed, looking at coop bungalows or small getaways at Hunter Lake, Mohican Lake or Smallwood, often in the $100's range. In looking over the sales, I'm not seeing much that would fit the local primary home or more budget getaway categories. Fewer sales in those lower price ranges as part of the overall mix will have the effect of pushing up the median and average.

A week ago I was listening to Barbara Corcoran, the real estate guru on the Today Show, giving some tips about getting your house sold. Her number one tip was to cut your asking price by 15% to move it into a lower price category, where it may be perceived as the best house and best value in that price range, rather than lag as just another also-ran house in a higher category.  While her 15% number is a little generic, and doesn't apply across the board, her advice about making your house the best in a price range is sound. I'm seeing that strategy work here a lot. In the mid range of the second home market, the houses that are selling are those that are priced to stand out as great values in their price segment.

Blog Down Most of Today

Typepad, the company where I host this blog, had problems today. This blog, along with lots of others hosted by Typepad, was down for most of the day. Sorry, folks. If you're reading this, its back up.

Livingston Manor in Today's NY Times

Livingston Manor is the featured location in the Havens feature in today's New York Times. (Havens is in Friday's Escapes section.) Online here. Its a nice article that captures the feel of the hamlet and the real estate examples they cite are pretty realistic.

Bethel Woods Kicks Off 3rd Season this Saturday

The Bethel Woods Center for the Arts opens for its third season this Saturday, June 14th with the True Colors Tour. The True Colors Tour includes performances by Cyndi Lauper, the B52's, Rosie O'Donnell, the Cliks, Debora Cox and host Carson Kressley. Doors open at 3:30 and the performance starts at 6PM. More information and tickets.