Current Market Conditions Posted with September Data

I just posted my monthly Current Market Conditions Report, with Sullivan County real estate sales data through September. If you look at sales data through September, the modest pickup in sales we saw through the sales was continuing (even though prices have been trending lower). However, I don't know how relevant it is, given that closed sales data is a backward looking indicator, reflecting buyer behavior over the summer. As I've been writing this today, CNBC has been on in the background, and its another rout in the markets, with the DOW down 800 points at one point. New activity here has come close to a screeching halt in the last couple of weeks, as a lot of folks have shifted into 'economic crisis' mode.

Comments

[ajx]

Rome is burning.

[JM]

Rome is not burnable (granite, stone and concrete)
Sullivan county is burning (farmhouses, barns, no buyers)

[Reg]

Not to make more work for you, David, but it would be really interesting to see the results if you took the month and split it.

[David Schneer]

Reg is great.

He's like Jim Kilpatrick on 60 minutes back in the 1970's.

David Schneer

[David Knudsen]

Reg, unfortunately there's two problems with splitting the data. First, in any given month there isn't a large enough sample to draw conclusions (which is why I use a 3 month sample), and second, its the drop off in activity that's the main change that happened in mid-September, and that won't be reflected in closed sales numbers for a couple of months.

[Pete]

David,
Do you notice any sellers who are drastically reducing their prices accordingly to the new reality?
I think a 30% drop in all asking prices across the map are immediately needed to just get NYC buyers even slightly interested in anything.

Pete

[David Knudsen]

Pete, there have been a few noticeable price cuts in the last month, particularly on some upper end properties. (They may have been more noticeable to me because the amounts were large, like a cut from $599K to $500K.) But those price cuts seem more in response to the slower market we've seen in the last few months, and not necessaily to the economic mayhem we've seen in the last few weeks. I don't think that a 30% drop in asking prices will get NYC buyers interested right now, because I think people are hoarding their acorns waiting to see what happens --- whether all of this economic lever pulling by the gov't will have any impact. But when things stabilize, and some confidence returns, I think we may see a pretty sharp drop in prices.

[Great Deflation]

I'd have to agree with David. At this point even 40% asking price reductions will not work to entice NYC buyers. We are entering the Great Deflation. Asset price deflation as a result of this financial debt unwind will be too great of a force for coming years. For those who want to sell or need to sell, Now is better than later. Waiting for the market to 'come back up' is not realistic as this deflation will last much longer than the 90's deflation of 8-10 years. This recession is unlike any other in history (other than the 30's GD) as deflation eliminates a credit market (deleveraging of institutions). Who wants to lend when asset prices are falling like stones? Sellers need to wake up Now.