Sullivan County Real Estate

Not Armageddon

I've taken some flak from my real estate colleagues here in Sullivan County for the, well, downer tone of my October Current Market Conditions report. I wrote that monthly column during the 1st week of October which was not the brightest week in the economic calendar, and used phrases like "screeching halt" and "economic Armageddon." The Armageddon reference might have been a bit, well, dramatic — although pretty apt descriptors for the first couple of weeks of October.

Yes, business is slow, but its not dead. The Sullivan MLS shows 99 single family homes "pending" or "in contract", and from calls I've made in the last week about the status of various listings for potential clients, there are another couple of dozen in active negotiation. A preliminary peek at October's closed sales figures indicate that they'll be up slightly from September. Buyers are going through with every deal I have underway, and other agents I talk to are indicating that most buyers are sticking.

What they're sticking with, though, is somewhat different than a year ago. Caution, moderation and good value are the watch words. Of the 99 single family homes listed as "pending" or "in contract" in the MLS, only 4 have asking prices above $400,000. The upper end continues to be pretty soft, but that's where savvy buyers looking for something really special may find some great values. For example, 2 large renovated farmhouses on substantial acreage (one with 85 and one with 172 acres) and ponds have recently come back on the market at $699,000 and $799,000. We haven't seen prices like that for this quality and acreage in a number of years. (Click here to see the 2 listings.) A 107 acre property with stunning waterfalls, listed at $699,000, just went into contract. A dramatic custom contemporary on 14 acres with a spectacular view of the Delaware River valley just dropped in price from $895,000 to $695,000. True, none of these houses are in the $200K range where we're seeing the most action, but they're very interesting opportunities. (I also wish I had a dozen cute little houses on a couple of acres to sell around $200K!)

View from the Blog in Today's NY Times

I was thrilled when someone emailed me an article, "View from the Blog" in the Escapes section of today's New York Times. This blog pretty much made it front and enter in the article. This morning, when I opened my email, there were a dozen "Congratulations" emails from friends and clients, almost like having a baby or getting married. (I suppose when you're gay, single and 52, neither of those is going to happen, so I'll settle for my excitement where I can get it!) Many thanks to my client Nick for being so complimentary.

I just checked the blog visit statistics, and they're going through the roof. For first time visitors here, I'd like to mention that this blog is only one aspect of the online information I have available about buying Sullivan County real estate. This blog links to my main website, www.catskill4sale.com, where there's quite a bit of information about the county, property here, a monthly Current Market Conditions report, and a property search engine to search listings in the Sullivan County Multiple Listing Service.

I'd also like to thank all the readers who come here regularly to post comments and responses.There have been over 1,500 reader comments posted on here, with some threads generating 40+ back-and-forth comments. If this is your first time here, I hope you enjoy yourself, and I'd love to hear your comments.

Rat Race Break

A really unexpected response to the economic "crisis" (or whatever you want to call the turmoil of the past 5 weeks) have been a number of calls from folks in high pressure jobs in the city thinking about taking a break from it all and moving to the country with their families for a year or two. I've talked with 4 or 5 different people who've outlined very similar scenarios. None have lost their jobs, but they're thinking that in the next year they might. Instead of being a downer to dread, they're looking at it almost as a release and a chance to realign their lives and priorities. All of them have young children, and a common refrain is wanting to watch their children grow.

Now, these are all people who are fairly well off, and have a financial cushion that's large enough to allow them to consider a year or two without much income. None want to be too far from New York City, because in their professions, NYC is still the mothership — even if that ship may have lost some of its get up and go. They just don't see their long term future in Charlotte.

Another big difference from previous waves of 'organic farming, back-to-the-landers' and artists who have moved here full-time is that these folks seem to share a short-to-mid term time frame for living here full time. They plan to move back to the city when the kids are older (and the job and economic situation may have improved).

What they're looking for are houses with more second home features, indicating that they're thinking about this long term as a second home. But they're asking primary home questions as well about the communities, shopping and schools. 

Keep in mind I haven't had a hundred conversations like this; I've had less than half a dozen. But there's been a noticeable similarity. I'm not putting myself out here as the Faith Popcorn of Sullivan real estate. But I always find it interesting when there seems to be a new sprout, to see if it actually evolves into a trend.

Halloween in Sullivan

This Saturday, there are two fun Halloween dances here for grown up folks. The Day to Be Gay Foundation is holding a "Drag Ball" (though you don't have to come in drag, or even in costume, and heck, you don't even have to be gay to  have a great time) on Saturday, Nov. 1 starting at 8PM at Mullally's Pub, 4919 Rt. 52 in Jeffersonville. Door is $10 per person.

At 9PM, there's a benefit Salsa Dance for WJFF (Community Radio 90.5fm) at the Nutshell on Route 52 in Lake Huntington. Caribe Sol, a high energy 7 member conjunto band, will be playing live music. Admission is $15. Caribe Sol played here last year, and the word from everyone who went was 'fabulous!'

If you're here on Halloween itself (like, you know, Friday Oct. 31st) and want to trick-or-treat with your kids, here's the tip. Locals who live in the country head into the villages and hamlets like Callicoon, Hortonville and Jeffersonville to trick or treat. Hortonville, in particular, really decks itself out for the little ones. Generally 5-ish to 7-ish are the bewitching hours.

Marshall's versus Macy's

Over the past couple of months, I've talked with (and shown property to) a number of potential buyers who have "great deal" as their primary factor. They're not necessarily looking for the cheapest house, but rather that house where you can make a really great deal.

You've heard me write (complain?) on this blog about the vast majority of sellers that are unrealistic and unmotivated, and that asking prices have hardly moved down at all. While that may be the "vast majority", there is a smaller subset of properties where the sellers are motivated and a great deal can be struck. But that subset of houses is quite small relative to the overall inventory, so the selection within the "distressed or very motivated" category is quite small as well.

A lot of buyers, though, don't make the distinction between regular market rate inventory — where you probably won't strike a great deal — and that subset of properties being sold by motivated or distressed sellers. They want the full selection, but at distressed "end of season" prices.

A good analogy is Marshall's versus Macy's. When you go to Macy's (or Barney's or Lord and Taylor or any other 'full price retailer') you expect to have a full selection of brands, with every color available in every size. If you're paying retail or close to retail, you expect that they'll have the dress from the designer you want in size 8 in purple, and they'll even alter it to fit perfectly. If you're paying the full $600 retail for the dress, you don't want to settle for yellow or a size 6 that you can squeeze into but isn't comfortable.

When you go to Marshall's or any other overstock discounter, your expectations are very different. You don't expect that every style will be in stock in every size and color. When you find a great bargain you figure out if you can make it work for you. Your mindset is more "It wasn't exactly what I was looking for. In fact, it isn't even close to what I came in to find, but its such a great deal that I can't turn it down."

That's the attitude that buyers should have if they're looking for a deal — like they're shyopping at Marshall's rather than Macy's. There aren't a lot of houses here in a distress seller situation, but there are some, and there are some good deals to be made. They may not be exactly what you dreamed about, but for the right price, can you make them work? I realize there's a big difference between a hundred dollar jacket and a two hundred thousand dollar house. But the Marshall's versus Macy's comparison is apt. At Macy's, you may have a wide selection of similar jackets for $300, but the jacket at Marshall's at $100 that isn't quite what you had your heart set on is too good a deal to pass up. Likewise, the house of your dreams may be $350,000 to $400,000 — charming, set off the road, good condition with privacy — and isn't necessarily a deal.  But there may be a deal house you could pick up for $200,000 that isn't near as perfect and save a chunk of money.

PS: Someone is sure to ask if I can post a list of the houses I consider "potential deal" opportunities. I'm not going to post a list, because some sellers would probably be aghast that I considered their house to be in that category. Also, a house may present a better deal opportunity for any number of reasons, not only because a seller is in financial distress. The owners may have moved out of the area and no longer use the house; a small group of investors got together to do a flip renovation and want to move the property off their books; or the house is owned by an estate that would prefer to close out its affairs sooner rather than later. In fact, very few of the better opportunities I see are actual foreclosures or subject to short sales.

Asking Prices Out of Line? How Far?

I'm going to start a new thread here, picking up on the extensive comments from the thread below (Sullivan Remix - About Changes in the Buyer Mix for Sullivan County real estate). A number of commenters are rightly questioning the mindset behind many seller's asking prices and whether they're out of line with market realities. The real estate market has been slow since the beginning of the year, and I've said for months that most sellers seem to be inhabiting an alternate universe — where time stands still, everyone is happy, and prices never drop.

Let's take a quick look at the "market basket" of the average and median asking prices for single family homes listed in the Sullivan MLS. Asking prices peaked in June 2007, with the average at $310,328 and the median at $249,000. Today, the average asking price is $283,857, a decline from the peak of just 8.5%, and the median is $219,000, a drop of 12%. More striking is the fact that from January 2008 until now, the average (which stood at $292,363 in January) has only dropped 2.5% in the last 10 months, and the median ($229,900 in January) has only fallen 4.7%.

Hello???? Any of these sellers look at the stock market? Equities are off 35% to 40% from their peaks. Might there be some relationship between how people value equities and how they might value real estate, which is essentially another asset class? Of course, equity markets can make huge moves in a day, while real estate markets are much slower to turn. While there isn't a direct correlation between movement in stocks and price movement in real estate, given the abrupt resetting of value in everything from stocks to oil to the Euro, it is not unreasonable to expect that there will be a parallel resetting of value expectations in real estate.

One of the big problems right now in real estate in Sullivan County is I don't think anyone has much of a clue on where that value will reset. Take a house that's on the market for $600,000 that might have sold during a robust market for $550,000 or $575,000. Is the 'reset price' $500,000? Or $400,000? I don't think its $300,000 (and you really negative bears out there will probably say 'hey, in a year it'll only be $200,000), but then I didn't think we'd see the DOW dip below 8,000 or oil trading at $64 a barrel.

ADDENDUM to the orginal post: The CNBC talking heads are saying that stock indices are at about 2003 levels. In 2003, the average sales price for a single family home in Sullivan County was $138,000, about 75% of today's $185,000. The real estate market was on an upswing that year, and the average was inn the upper $140's at the end of the year. The housing stock has arguably improved here since 2003, with renovations and larger new builds. So, if you want to argue that the drop in real estate prices might parallel the drop in stock prices (and you believe we may have hit or be close to the bottom on stocks), then real estate here may have 20% to go (from this point) to catch up with the DOW.

Sullivan Remix

About the middle of the month, I take a peek at the closed and pending sales data to see where we might be heading at month-end. This month was a bit of an eye-raiser. The number of sales seems to be holding, but the average and median sales prices are heading south. We could end up with a 3 month median sales price in the $150K range, and an average around $175K, both well down from the past few months. Anytime I see a big change in data, it always raises questions. So I took a look at the most recent closed sales, as well as the 106 single family homes categorized as "Pending" or "In Contract", which are indicative of what will be closing over the next 60 days or so.

The trend is very interesting. Among those pending and in contract listings, I didn't see a lot of houses that would generally be considered "second homes", but there were a lot of homes that would be traditionally considered "primary" — bi-levels, ranches on small parcels, new construction raised ranches and builders colonials. A quarter of the pending sales have asking prices under $100,000, and a number of these seem to be 'budget' primaries (smaller in-village houses, attached townhouses) along with some foreclosure fixers. There's a smattering of "second home style" properties, but nowhere near what I'm used to seeing in the mix, and most of those seem to be small, affordably priced properties.

Its going to be interesting to see how the month plays out. But it seems that a change in the mix may be having a significant impact on the perception of where prices are moving.

NYT: Home Prices Far From Bottom

Yesterday's New York Times featured a thoughtful front-page article: Home Prices Seem Far From Bottom. I liked the article because the author provided a good overview on factors pushing prices down some metrics on where real estate prices may go. For example, historically sales prices hover around 15 times annual rent, but in many markets in recent years that multiple has been much higher.

The article is sobering, because none of the "influencing" factors the author mentions have bottomed out. With the recession, unemployment is likely to rise and incomes are probably going to fall, at least in real terms. So we may have a way to go before we find the bottom in pricing.

Uncertainty about future pricing is one of the big factors dragging the local Sullivan market down. Demand is certainly much softer, with fewer buyers looking right now. But the uncertainty about pricing and fears of a further drop are keeping the smaller universe of buyers from taking the plunge unless they feel the deal is really, really good. 

Sullivan Second Home Owner Study Released

The Sullivan County Dept. of Planning and Environmental Management undertook a major study of second home owners in Sullivan County this year. They released the results last week. You can get the synopsis or the full study at http://www.scgnet.us/index.asp?orgid=572&storyTypeID=&sid=&

The study is very thorough, well done — and very interesting. They sent out 10,085 surveys, to every second home owner they could identify in the county, and received 1,377 responses — a very good response rate of 13.6%. The survey methodology alone answers a major question I've had — just how much of the housing stock in Sullivan County is second homes. According to Wikipedia, there were 44,730 housing units in Sullivan County in the 2000 census. 10,035 is 22.5% of the total housing units. Of course, that's not a totally accurate number, because new homes have been built since 2000. But overall, its probably safe to say that about a quarter of the houses in Sullivan County are second homes, which is a little less than that I've thought.

There's a lot of data in the study's 41 pages, and even more to pore through if you're a data junkie and want to pore through the raw data in the appendices. There were some surprising statistics and conclusions. First, second home owners (SHO's) turned out to be older than I thought, with 64% 55 or older. Only 9.8% of respondents were between 35 and 44, the group I've seen growing in second home purchases over the last few years. 55% of SHO's were in the "older baby boomer" group between 45 and 64.

One thing I found very surprising is that the median length of second home ownership here is 16 years. I thought it would be less. But my perception is skewed because I deal with new buyers far less than existing home owners, and in some parts of the county, like the older lake developments, many of those houses have been passed down in families for generations. Deep within the study, though, is a very interesting chart that tallies length of ownership by township, and the comments a trend among newer buyers to the western (river) and northern townships. In 3 townships — Rockland, Delaware and Tusten — 50% or more of SHO's reported they have owned their second homes for 10 years or less, compared with 38% in Thompson and 32% in Mamakating. One cross-tab I've be very interested in is the age of the newer second home buyers. The study broke out age by second home owners, but its my feeling that new buyers are younger than current owners, and that particularly the western and northern townships have attracted a younger demographic.

Another interesting section dealt with the factors influencing the decision to purchase a second home in Sullivan County. I've always thought that "affordability" relative to other second home markets would top the list or at least come close. However, affordability came in at eigth place, with only 28% of respondents listing it as a factor. The #1 reason? Scenery and surroundings, followed by geographic location (which largely can be translated as proximity to NYC and the NJ suburbs.)

There's a lot of meat on this plate, more than I can cover in a blog post. Go grab the survey and give it a read. There's a lot of information about SHO's perception of services, property taxes, zoning and code enforcement, as well as some lengthy discussion about the demographic differences (particularly education and income level) between primary and second home owners.

I'd like to offer my congratulations and thanks to Dr. Pammer, the county's Commissioner of Planning and Environmental Management and his staff for putting together this great tool.

PSC to Hold NYRI Hearings

Remember NYRI, the New York Regional Interconnect powerline project slated to run through western Sullivan County? Amidst all the hubbub over the past 6 or 7 months about gas drilling, attention to NYRI has gotten kind of lost. But the project is not dead.

The New York Public Service Commission is holdings its final set of hearings in the affected counties at the end of October. Two hearings are scheduled in Sullivan County, both on Wed. Oct. 29th. The afternoon session will begin at 1PM at the Delaware Community Center in Callicoon. The evening session will begin at 6PM at the Sullivan West High School. There will be a one hour information forum on the status of the project and the approval process, followed by a public statement hearing.

For complete information, as well as thehearing schedule in other counties, click here for a .pdf of the PSC press release.