Sullivan County Real Estate

Foreclosures and Sullivan County

I'm laid up with a nasty cold today (boo hoo!), and was choosing between Turner Classic Movies, the Food Network or surfing real estate sites. I chose the latter because I don't need anything to make me sniffle more, and food isn't, well, all that appealing at the moment.

So I just spent an hour browsing condo listings in Miami, Miami Beach and Fort Lauderdale, a market area that always seem near the top of lists of real estate basket cases. They're markets that were overbuilt, overhyped, with lots of investor speculation and have suffered preciptious price and sales declines.

What struck me, in looking through listings, was how many were flagged as foreclosures or short sales. In some zip codes, it seemed as though a third or more of the properties were foreclosure or short sales, with asking prices quite a bit below the asking prices of the regular 'non-foreclosed' listings. I felt bad for those regular sellers, because they have to compete with lenders who are willing to take a big hit to move a property off of their books. (And that's what this bailout is all about, to cushion their loss-eating.)

This Week

Its been a little more than a week since I posted "Stop Dead" — which elicited a LOT of comments (32). In the intervening week, the economic picture certainly hasn't brightened much. The news clips and soundbites about the economy have been downright scary, with "crisis" and "meltdown" peppering every third sentence, and the occasional reference to another Great Depression. The behavior of our politicians, particularly the Republicans, is anything but reassuring.

I find myself changing my "economic" behavior in lots of little ways. I was shopping for a new computer, but decided that my old computer is working fine and a new purchase can wait. I went to the bank and took out a stack of cash to have on hand 'just in case'. Last week, when I went to the theater with friends in the city, we did appetizers and drinks beforehand, rather than our usual full blown (and more expensive) dinner. (One thing very noticeable last week in NYC was how quiet the restaurants were.) On. Wed. evening, after a class at NYU, I took the subway back to my city apartment rather than treating myself to a car service, saving $30. I've cut back on my fall ritual of a stack of new shirts and sweaters for the winter.

I don't think my behavior is unique at all, and similar scenarios are playing out in different ways in millions of families across the country. My decision to do appetizers rather than dinner at a restaurant in Chelsea may be different than a suburban family deciding to cook at home rather than going to Olive Garden, but the mindset is the same. Now is not the time to splurge.

Of course, courageous contrarians would say that now is the time to buy. Warren Buffett did buy $5 billion of Goldman this week. But I think even real estate bargain hunters, who are trolling for deals, are taking a pause until this plays out. Every week, even during the slowest periods over the past year, I usually get 4 or 5 calls or emails from bargain shoppers asking about dirt cheap foreclosures or handyman properties. Some of these shoppers are owner-occupiers looking for an inexpensive house, others are investors. But in the last week, I haven't even gotten those inquiries.

One of the wild cards in the coming month is where people decide to park their money. No asset class right now seems particularly attractive. Equities are fluctuating wildly. Treasuries, particularly short term, offer dismal returns. Commodities have tanked over the past few months, and many investors who moved to commodities have taken it in the shorts. Real estate is still a wild card. If price fall and credit opens up again, real estate could become a very attractive asset class.

I think its very difficult to draw any conclusions from recent activity, or rather, inactivity. It seems like we're in shock mode, kind of like a city is after a hurricane or other disaster. Henry Paulson and Ben Bernancke have succeeded in scaring the bejesus out of everybody. Now I just hope an effective rescue plan comes through that can reinstill some sense of confidence and stability.

Catskills Gas Rush Article in NY Mag

This week's New York Magazine has a lengthy article on the "Catskills Gas Rush." The author, David France, who has a second home near Margaretville in Delaware County, has penned a good introductory overview on gas drilling. But as someone who follows gas drilling, I found that it was more of a broad brush stroke and doesn't delve into the nuances and issues specific to this area. There are still huge issues to be worked out, particularly regarding water use and spent water storage and disposal. I expect there is going to be a fairly long period of study, negotiation, political maneauvering and rule making before the first gas well gets drilled in Sullivan.

The gas companies themselves may not be in any big rush to invest the millions per well right now. Cheapeake Energy, one of the two big players in the Marcellus Shale (along with Cabot Oil and Gas) announced that they are cutting back on their drilling operations in the wake of a 50% drop in natural gas prices since earlier this summer. (See article.) There have been reports on both the PA and NY sides of the river that leasing companies have retracted a number of unsigned lease offers. While this cutback in leasing and drilling is likely only temporary, until natural gas prices improve, it provides a welcome breather for regulatory agencies to catch up.

Catskill Mountainkeeper Fundraiser Tonight

Catskill Mountain Keeper, an organization working to implement regulations to mitigate the damage from the gas drilling process (among other things) is holding its 2nd Annual Beerfest Fundraiser tonight, Saturday, Sept. 20th at Hills Country Center from 5 to 9 PM. There will be fgine craft beer, food, prixes and music. Admission is $20.

Stopped Dead

I'm sure that, like me, any reader of this blog is following the Wall Street (debacle? meltdown? chaos? --- or to use George Bush's term "adjustment"?) all week. I keep turning on CNBC like I watch the Weather Channel when there's a major hurricane. (Probably the only folks happy this week are advertisers on CNBC.)

Not surprisingly, inquiries about Sullivan County real estate have stopped dead in their tracks. I haven't gotten any new calls or emails asking about property since Monday, compared to the last couple of weeks when there was a steady stream of interest. I'm sure that's also true in any large purchase sector of the economy right now — from cars to televisions to computers. September is typically a busy time for Sullivan County real estate, so this sudden slamming on of the brakes is eerie.

Interestingly, though, visits to this blog have been up about 50% from their usual levels. Not sure what that's about, whether folks are checking in to see if I'm posting about some immediate fallout from the Wall Street meltdown. But real estate markets move much more slowly than equity markets, so it may be a while before there's any measurable impact beyond this short term drop off in interest.

Your Second Home Unplugged

Somebody just turned me on to an article in last Friday's "Escapes" section in the times: Your Second Home Unplugged. It hits the nail on the head, about a second home being about fewer gadgets, television and Blackberry's and more about real connections. Between people. Like the way it used to be. There's a great paragraph about washing dishes --- you remember, one washes, one dries --- without a dishwasher, "It’s when you can casually ask your teenager whether his or her friends are having sex or using drugs. It’s when you can tell your wife that you really hate the denim dress that she’s loved for 10 years. It’s when you can tell your husband that his ab workout simply isn’t working."

Out here in Sullivan County, particularly in the more remote parts, there isn't the universal communications cloud that city dwellers take for granted. Without cell service, you may have to adapt and forward your cell to a landline — yes, a landline. We still have them here! There may not be cable or DSL internet, and if you don't opt for satellite internet, you may have to trek once a day to a cafe with an internet connection to check your email. (And heaven forbid, while you're there, you may strike up a conversation with a neighbor and get a good lead on where to get a load of manure.) And yes, if you don't have a washer and dryer, you may have to schlep your dirty laundry back to the city or go to a laundromat every few weeks.

Brave New World

It would be a huge understatement to say that the weekend's events were just a blip on the financial radar screen. Lehman has effectively died, Merrill is being taken over, and Washington Mutual and AIG are on the critical care list. Poor Lehman. I guess it wasn't politically expedient for the Republicans to extend any more corporate welfare in a tight election year.

Its going to be very interesting to see how all of this plays out, especially in the New York-centric real estate markets. I'm always amused when I read articles in the real estate section of the New York Times, where the brokers quoted always seem amazingly bullish. The worst phrase they tend to use is that prices are "flat" or "modestly lower", or that buyers have more choices and more time to make decisions. A price reduction on a one bedroom coop from $875,000 to $860,000 is seen as a big cut, and a buyer getting it for $855,000 is seen as negotiating a great deal. Give me a break. I think Manhattanites are in for a shock. A huge driver of demand for those $1 million one bedroom condos was young financial sector hotshots, and with huge job losses coming in financial services, that demand — at least at those prices — could dry up.

I think there will be a big shakeout, and yes, it's going to touch Sullivan County. Demand at the upper end of the market has been virtually non-existent for months. In the past six months, I've gotten very few inquiries about Chapin Estate, our most upper end lake development. Similarly, I've had very few clients looking at upper end renovated farmhouses on acreage. Buyers from the financial service sector made up the bulk of my clients looking for these properties over the last few years — and, for the most part, they're just not out looking right now. The bulk of my business this year has been in the moderate and value price ranges, with buyers from outside financial services.

I think there is some good in all of this. This latest round of bad news could finally shock some sellers into realizing it isn't business as usual, and bring prices back into a range where Sullivan County is perceived as a good value again. The sharp drop in oil prices is also a huge relief to those who are struggling to heat their homes this winter. And the government "takover" (or whatever they call it) of Fannie and Freddie has already brought a sharp drop in rates for conventional, conforming mortgage loans.

New FAQ's about Transportation, High Speed Internet and Cell

There are a few common areas of confusion among city dwellers about country property and Sullivan County. No, it isn't wells and septics. Its transportation options, high speed internet and cell service. For city dwellers, these 3 things are universally available — in the city — and they take them for granted like water and electricity. But that's not necessarily the case in the country. So I've written up 2 new pages in the Buyer FAQ section on my website:

Transportation Options to Sullivan County

High Speed Internet and Cell Service Considerations

Port Jervis Makes "10 Coolest Small Towns" List

Budget Travel magazine ranked Port Jervis, NY as one of the "10 Coolest Small Towns in America" in its latest issue. (Read online.) Ok, Port Jervis is in Orange County, but its the town that a lot of folks in southwestern Sullivan County relate to. Congratulations to Port Jervis for making this list.

Current Market Conditions Posted with August Data

I just posted my Current Market Conditions Report, with sales data through August, 2008. The picture shows steady, if slow, improvement in sales. Although we're still well below the sales rate (and prices) of the boom years, we're up from the lows of this past winter and spring. Check out this month's report and drop on back here to post your thoughts on the current market and where we're headed.