Sullivan County Real Estate

Gov't Consolidation Streamlining Bill Passes in NY

One of my pet peeves here in New York is the layers of government that inevitably result in this state's ranking as having the highest local tax burden in the country. Of course, there are myriad other contributors, from broad mandates and entitlements to what seems to be a totally dysfunctional government in Albany, more interested in power, special interests and intrigue than actually fixing anything.

OK, rant over. There is a bit of light. Both the Assembly and Senate (before the Dems turned out the lights and locked the Senate doors to try to stymie the Republican palace coup) have passed the "New N.Y. Government Reorganization and Citizen Empowerment Act", designed to make it easier for government entitites to consolidate. In New York state, there are over 10,000 governing entities, including townships, villages, counties and a patchwork of special districts for everything from garbage collection to street lights. And that 10,000 number doesn't include school districts.

Here in Sullivan County, we have 15 townships, 4 villages and 8 school districts for a county with a full time population around 76,000. The six river townships — Lumberland, Highland, Tusten, Cochecton, Delaware and Fremont — have a combined population of only about 12,000. Those 6 townships have 6 town halls, 6 supervisors, 6 town clerks, 6 tax assessors and 5 or 6 road departments. Each township has council, planning board and zoning board meetings that often require the paid presence of a town attorney.

I'm not at all questioning the hard work and dedication of the many folks who serve on our town boards. Overall, they're very focussed on spending taxpayer money wisely — within their governing entity. The problem is we have just to many governing entities.

This bill, which was championed by Andrew Cuomo (and is expected to be signed shortly by Gov. Patterson) does not mandate government consolidation. It is primarily focussed on streamlining the process to enable government entities to dissolve or merge. It is only part of the solution. At this point, the state has not put in place incentive-driven policies to encourage consolidation like the ones being considered in N.J.

Prior to the enactment of this law, the argument against consolidation was that it couldn't be easily done, or the process was too onerous. This law wipes away a big part of that objection. Now, if there is a will, there is a way.

Current Market Conditions Posted with May Data

Hey, everybody, the monthly data report peppered with my opinionated commentary, otherwise known as the Current Market Conditions Report, is up. There hasn't been much movement in either sales or prices. They're almost equal to last month. Yes, buyer activity is up, but that won't show in closed sales figures for a month or two. But while activity is up, it's still tough putting deals together and bringing them to a close without hitches, particularly with appraisals and financing, so while I'm anticipating an upticket, I'm not expecting some miraculous surge.

There are some interesting things this month, besides just the monthly reporting of sales and prices. For the latest 3 month period ending May 31st, 36% of the single family closings reported in the Sullivan MLS were foreclosure sales. That's up sharply from prior months. I've broken out the sales prices for foreclosure and non-foreclosure sales.

Also interesting is the almost total lack of lakefront sales. That one's very curious to me, because there is a steady stream of lakefront inquiries and interest, but I've been doing very little in lakefront showings. There's an interesting intersection of shifting demographics and price that may be a factor in the lakefront drop off that I've gone into some detail about this month.

So please check out the latest Current Market Conditions report and drop on back here and leave any comments.

Pending Home Sales Index Jumps

Sometimes on this blog I feel like a deranged psych patient. When I say I'm sensing something approaching a pick up in the market, I get hit with "No, what you're sensing isn't real, David. You're living in a fantasy world of ghosts and phantoms. Now take your medication and go lie down."

Today's release of NAR's Pending Home Sales data may show I'm not nuts after all. Nationally, pending homes sales for April are up 6.7% over March (and 3.2% from a year earlier.) The northeast region blew out of the gates, with April's pending home sales up 32.6% over March on a seasonally adjusted basis, and 25.7% on a non-seasonally adjusted basis. The Pending Home Sales number is an index, and April's northeast reading — 78.9% — is well below the 98.6% during the peak year of 2006, but is the highest it's been for the past 12 months.

Pending Home Sales reflects just numbers of houses in contract, and does not reflect prices. I expect that when the closed sales data comes out over the next few months, we're still going to see soft pricing, as it seems to be that it's a combination of lower prices, increased consumer confidence, relatively low mortgage rates and first time buyer incentives that are resulting in a pick up in demand.

Mortgage Rates Shoot Up

Last week, mortgage rates surged, climbing in about a day from 5.03%(Source: HSH) for a 30 year conforming fixed to around 5.5%. (By Monday, the rate had dropped back slightly to 5.36%.) The rise is largely attributed to a surge in the yields on 10 year Treasury notes, which are seem as a benchmark indicator for mortgage rates.

The impact on home sales is likely to be mixed. On the negative side, higher mortgage rates (with higher monthly payments) reduce affordability, which could slow sales somewhat, but at 5.25% to 5.5%, they're still pretty low historically. We've had these half point surges before, and while they make headlines, I don't know that they have that much impact on most buyers who are in the process of buying a home.

There actually could be a positive impact, as well. Over the last six months there has been a lot of talk of the 30 year fixed dropping to 4.5%, or even as low as 4.2%. 4.5% has gathered almost magical status. I know some folks have been waiting for a 4.5% rate as a signal that bargain-time is here. The quick climb to 5.5% probably puts to bed the hope that they'll drop soon to 4.5%, so some of those folks waiting for lower rates may jump back in the market.

The bigger impact is likely on the refinancing side. There has been a surge of refinancing applications in the last two months, with rates hovering around 5%. At 5.5%, refinancing becomes less attractive to homeowners looking to refinance, so that business may slow a bit for the time being.