NAR Data Points to Price as Upturn Key

The National Association of Realtors released the Existing Home Sales data for December, showing an unexpected 6.5% rise nationally in the annual rate of sales over November. The most interesting aspect of the data is the regional breakdown, particularly as it relates to price. The biggest sales uptick occurred in the western region, where sales gained 13.6% over November and were up a whopping 31.6% over December, 2007. (In comparison, the northeast lagged with a 1.4% drop from November to December, with sales off 14.3% from a year earlier.) The western region, however, also recorded the largest drop in prices, with the median sales price down 31.5% from a year earlier, and 38% from the peak year of 2006. What bthe data seems to be implying is that the large price drops in the western region have had the effect of restimulating buyer demand. Or to put it another way, prices have started to reach a level to "clear the market."

In the northeast, by comparison, the median price is down only 7.8% from a year earlier, and off only 12% from the peak in March, 2008. The housing downturn started earlier and has run further in the west, and the west had one major price factor — a huge amount of development and speculative overbuilding — that isn't as applicable in the northeast. But none-the-less, it appears from the data that a significant price drop is the secret sauce needed to whet buyer appetites.

Comments

[b.]

Interesting article in today's Sullivan County Democrat...

At:
http://www.sc-democrat.com/news/001January/26/news.htm

Wall Street woes visited on Manor?

By Ted Waddell
LIVINGSTON MANOR — The ongoing financial crisis may be coming home to roost in this little town located on the famed Willowemoc Creek.

In recent years, Livingston Manor has been rocked by a series of floods, but residents battled back, and backed by financier Andrew Krieger (under the umbrella of the Livingston Manor Development Corporation, or LMDC) have undertaken efforts to revitalize Main Street, transforming it into a showplace in rural Sullivan County.

Krieger, echoing his profitable successes on Wall Street, quickly rose to prominence in the Manor, and though he got into trouble with officials in New Jersey (pleading guilty to criminal mischief and paying a $2.75 million fine in 2005 to settle allegations he illegally cleared Palisades Interstate Park land abutting his NJ home), many credit his efforts with initiating the current downtown viewscape.

But recent developments have cast a shadow over the town, causing local folks to wonder if the spectre of the Wall Street investment meltdown is going to affect one of the hamlet’s main developers – and their community.

On December 4, 2008, Wachovia Bank, National Association (NA) filed a verified complaint before Sullivan County Court Judge Mark M. Meddaugh, citing LMDC and the Kriegers (Andrew and his wife Valerie) as defendants in an “Order Appointing Receiver in Mortgage Foreclosure Action” in two actions (Index Numbers 4277-08 and 4278-08), affecting four anchor buildings along Main Street, plus a vacant lot.

Index No. 4277-08 states the foreclosure action was started by Wachovia (acting as the plaintiff) on the property known as 43 Main Street (Medicap Pharmacy, plus two upstairs apartments). Wachovia claims the mortgages are in default for non-payment of $199,597.54 in principal, due August 1, 2008 and that while the rents are being paid, those rentals “are not being applied to the reduction of the charges against the mortgaged premises; and that the appointment of a receiver of the rents and profits of said premises is necessary for the protection of the plaintiff.”

Index No, 4278-08 refers to three buildings: #34 Main Street (Hamish & Henry Booksellers, including four apartments), #38 Main Street (Dr. Livingston’s Wines & Spirits) and #66 Main Street (adcStudio, which includes an apartment), plus a vacant lot on Old Route 17.

According to the order filed before the court requesting the appointment of a receiver, “mortgages are in default for the non-payment of the principal sum of $599,957.17,” again overdue since August 1, 2008.

In essence the foreclosure actions were initiated because Wachovia alleges that LMDC and the Kriegers have not made two balloon payments totaling $799,554.71...[article contiues - click link above]

=========

[rod]

This is very alarming - since some of those business affected are among Sullivan County's best.

[m]

The check is in the mail.

[ar]

Sad but not surprising, this is further confirmation that Sullivan County's "moment" was just that, and has passed. Krieger's brief infusion, together with a marketing buzz fed by real estate interests (brokers, builders, lenders), created a tantalizing belief that Sullivan was "arriving" -- achieving parity with the Hudson Valley and the Berkshires as a second-home venue. The "renewed" Livingston Manor was a jewel in that vision. Now the process servers are prowling Main Street's "authentic" store fronts, and Krieger isn't answering his phone. Sullivan slides back toward Appalachia. But some people made some good money while the party lasted.

[yousef]

ar - clever but incomplete analysis - considering for those of us lucky enough to own a few acres of peace and quiet, the party is every weekend we can make it up. You could use the same analysis for Vegas, Sarasota, Cleveland, Miami, most of Southern California -and maybe the rest of the country.

[MS]

yousef-excellent point. What is lost with all the doomsayers is why people have bought in Sullivan County in the first place. When spring arrives, and we have that first nice warm day, the sun will not feel 30% less satisfying this year than last. Many people invested in a lifestyle, and that will sustain. Fear mongering would lead you to belive that this county will be a wasteland, but the natural beauty of it will remain...

[bix]

Absolutely.

By the way, something new seems to have come in on gas drilling. Since I don't want to go off topic (and I DO want to spam the Sullivan County BBS), you can read about it here: http://sullivancountybbs.proboards.com/index.cgi?board=talk&action=display&thread=18

[henry]

MS - I don't think that any of the "doomsayers" are suggesting that SC is not a wonderful place to live and/or vacation. Only talking about the market value of the beautiful acres (noting that the median price increased 80% from 2002 to the peak in 2006 -- much more than the growth in "sun satisfaction"-- according to Dave's report this month) and the economic issues facing the region/nation. With respect to ar's comment, it seems that this person is pushing back against some of claims made by the bulls in the recent go-go years of cheap and easy credit.

[Floyd Norris]

A July 2005 article will give the reader some background regarding the above article published this past Tuesday in the SC Democrat.

At:

http://www.sc-democrat.com/archives/2005/news/07July/12/krieger.htm

Manor Resident
Has Big Plans

By Dan Hust

LIVINGSTON MANOR — July 12, 2005 – If you think Livingston Manor has changed in the last few years, says resident Andrew Krieger, just wait ...

That was phase one.

Here comes phase two.

Krieger, a Wall Street businessman and philanthropist who’s called Shandelee and Manor home for the past two decades, announced yesterday a trio of projects designed to catapult his hometown to the forefront of economic development efforts in Sullivan County.

One project will create senior housing in downtown Livingston Manor.

Another will build housing for the working middle-class just outside Manor.

And the third – by far the most ambitious – will erect a hotel, spa and sports complex surrounded by luxury townhouses on a mountain overlooking the Willowemoc valley...[article continues - click above link]

[David Knudsen]

I don't think the Krieger situation is a question of Sullivan County versus the Hudson Valley or the Berkshires. It's a question of commercial investors not being able to make their 5 year commercial mortgage balloon payments. My bet is that you can also find similar examples in this economic environment in the Berkshires and the Hudson Valley as well. Heck, you can find it in Manhattan.

[David Knudsen]

I'm struck, reading many of these comments, about how many folks on here seem to be chomping at the bit to sound the death knell for Sullivan County. But I would be surprised, on a percentage value decline basis, if Sullivan is faring particularly worse than Ulster, Columbia or Orange in this market. Columbia's star may have risen higher, but that just gives it room to fall further. It would be interesting if anyone has any information of how the commercial and retail investment in, say, Hudson, is faring. My bet is that there will likely be a few investors up there taking a tumble like Andy Krieger.

Sullivan may not be as cute as Woodstock, or as artsy-hip as Beacon is trying to become, or have the celebrity draw that Columbia has cultivated. But we have two factors in our favor. We're two hours from NYC. And we're less expensive — then and now — than the Hudson Valley.

[henry]

My post was not aimed at knocking SC RELATIVE to other real estate markets. Huge runup in most markets. Now unwinding.

Few other markets:

* Hamptons down 14% in q4. http://www.bloomberg.com/apps/news?pid=20601213&sid=a8PWXxTZCdIU&refer=home

* Dutchess down 27% and Ulster down 19% in dec. http://www.poughkeepsiejournal.com/article/20090109/BUSINESS/901090330

* NYC 20% down in new contracts signed on average since august. source: http://www.prudentialelliman.com/NYCPhotos/retail_reports/mmo4q08.pdf Actually, I believe NYC numbers are much, much worse... from my experience, looking at streeteasy data and from notes from an internal prudential douglas elliman sales meeting given to me by a friend (which i am not comfortable sharing publicly).

[m]

The naivete on this site is shocking. We are in the beginnings of a decade long Depression and you are arguing which part of the carcass is best.

[m]

The naivete on this site is shocking. We are in the beginnings of a decade long Depression and you are arguing which part of the carcass is best.

[Nick]

Actually I have a plan. I'm building a major helmet supply store in Monticello. I figure if all the commenters on this blog are correct everyone will need one. It's a can't lose proposition.

[Thinking Ahead]

M's comment is the shocking one. Isn't this blog about real estate? Were no properties bought and sold in the Great Depression? Is not the real estate industry, like anything in life, subject to cycles?

The "carcass" that is real estate -- and the larger carcass that is the economy -- is still very much alive. It may not be functioning well, but there are areas of great activity and little activity. Though it's changed in a rather distressing, sometimes even drastic manner, it has not died.

Rather than climbing into our holes, putting on our helmets and cowering in abject terror at the chaos and destruction around us, I am extremely gratified to be able to refer to this blog for opinions from people working hard to figure out what to do and where to go next, even if those opinions are sometimes contradictory. There's much to be learned when one is willing to listen instead of scream.

[B.]

The Sullivan County closed sales for the time period:

January 1 - January 31 2009

will be posted tomorrow.

And those numbers will be a whole lot different than Dave's three month running avergages.

Unfortunately, the month of January 2009 will be in the low 100's.

Q: Can anyone guess where the majority of second home buyers that either own homes - or are looking for second homes - come from?

And going forward, take a look at the following from Bloomberg's announced NYC budget today...

At:
http://wcbstv.com/breakingnewsalerts/nyc.budget.mayor.2.921808.html

"New York City is expected to lose approximately 294,000 jobs from mid-2008 into 2010 and New York City wage earnings are expected to decline by $39 billion...[article continues]

[rod]

B. - you need a job.

[l]

I spend most of the week working on a small-town main street in a building I bought, immediately after 9/11, and improved with sweat equity. Sure, I've seen a few businesses come and go. But mostly I see proprietors, both commercial renters and owners, and residents who, with great ingenuity, commitment and drive, are here for the long haul. So sorry if you don't see this more clearly. It's what will help us stay afloat as the economic waves hit. We're learning new strokes. How about you?