Sullivan County Real Estate

Stunningly Beautiful House at Chapin

Over the course of a year, I see a lot of houses — large, small, beautiful and not-so-beautiful, across a wide range of prices. But only once or twice a year do I come across a house that's so stunningly beautiful and finely crafted that it knocks my socks off (and secretly wish I'd taken my mother's advice to go to law school rather than become a dancer in my 20's.)

Last week, a recently constructed timber frame house on Swinging Bridge at the Chapin Estate came on the market. The 4 bedroom, 4 bath lakefront home has the feel of a handmade piece of furniture. While the exterior hews to the architectural guidelines at Chapin, the interior has a very contemporary feel. I had the opportunity to go through the house with the owner, and the attention to detail is remarkable. For example, the curved arches of the timber frame were pressure formed so the grain of the wood follows the curve of the arch. The wood on each stair tread is every so slightly different from top to bottom, to transition from the wood used on the floor on the balcony to the wood used on the main level floor.

With an asking price of $2.15 million, the house is one of the most expensive on the market in Sullivan County. But it's also one of the most beautiful. At the $2.15M asking price, it is priced well below any other lakefront home currently on the market at Chapin. (For comparison, a similar sized, but less detailed lakefront home just sold at Chapin for $1.75M.)

Click here if you'd like to see more of this remarkable house. And of course, if you're looking for a unique "trophy" lakefront property, please give me a call and I can give you more information on this home or arrange a showing.

Current Market Conditions Posted with January Data

The latest monthly Current Market Conditions Report is up, with January sales data culled from the Sullivan MLS. For the 3 month period ending January 31, 2009, there were 106 closed single family sales with a median sales price of $148,500. Taking January alone, as a single month, the picture wasn't quite as bright, with just 31 closed sales for the month and a median sales price of $129,000. There are a lot of factors at play right now — a significant percentage of foreclosure sales at the low end, a lot of bargain hunting, and a somewhat surprising pick-up in interest among discretionary, second home buyers shopping for a deal.

Check out this month's Market Conditions Report and then drop on back and leave your comments on the blog.

Upside Down

Lately, a phenomenon that has been very common in California, Florida and the Sunbelt states has been trickling into Sullivan County. Some owners who are looking to sell their houses are finding they are "upside down", essentially owing more on the house than they can currently sell it for. It's most common among sellers who either bought or refinanced in the last couple of years, and is by no means universal.

Being upside down in a house is the downside of leverage. Few questioned the magical power of leverage when the market was rising. If you bought a $200,000 house with 5% down, you put $10,000 into the deal. If you sold the house, say, two years later for $260,000, you realized a gain of $60,000 on your $10,000 investment. Not bad. (Yes, I understand there are purchase and sales expenses that adjust the basis, as well as carrying costs, but I'm just focusing on gross numbers to make a point.)

But when a market is declining, leverage can be a hard and unforgiving taskmaster. If someone bought that same $200,000 house with 5% down ($10,000) and the price has now dropped to $160,000, the seller could end up writing a check to the bank for $30,000, plus have their sales expenses. Lots of folks are under the misconception that in a situation like this their lender will agree to a "short sale" — accepting less than the remaining balance on the loan to clear the mortgage lien. But it's not that cut and dried at all, particularly for sellers with other assets.

The situation is not unlike the leverage you get in a margin account at a brokerage. And when you're short, you get a margin call and are expected to make up the difference.

Over the last month, I've had the experience more than once while trying to negotiate a deal on behalf of the buyer of hearing from the listing agent, "Look, the seller can't come down any more. He or she has this into the house, and they have to pay off the bank." Essentially, they're upside down. While I can appreciate the situation a seller is in, it isn't that relevant to the buyer. Buyers today are only interested in paying "market value" at best — the price at which a house will appraise and qualify for financing. Asking a buyer to pay above the current appraised value is essentially asking them to subsidize the seller's margin call.

This is a situation that, unbfortunately, I think will be more and more common over the next year. We're in the very early stages of upside-down acceptance. There is quite a bit of magical thinking floating around among some sellers that spring will usher in a sharp rebound that will turn them downside up. While I'm not bullish about the short term prospects for this market, I'm not as bearish as many visitors to this blog. Whether or not we've hit a bottom (and my point here is not to argue that one way or another), I think the best we can hope for in the short term is a flatlining on the price front. It is wildly optimistic to think we'll see the 10% or 20% rise in prices that can right some of these tilting upside-down ships.