Sullivan County Real Estate

What I Wake Up To

I'm pleased to see some readers of this blog pushing back against the chronic nay sayers in the post below, "Three Year Supply, What Does It Mean?". A number of folks have stepped up to the plate to trumpet that they bought places here for reasons other than money, that they like being here and have no regrets.

This is the view I wake to every morning off of my back deck. This is my coffee view. Sometimes there's a flock of wild turkeys or literally a herd of deer in the field below my house. I don't hear any traffic, and can drive twenty or thirty miles before I hit the first traffic light. My dog and I go swimming in my neighbor's pond. I have homegrown tomatoes and make mojitos with mint from a patch just off my front porch.

No, life here isn't perfect. I don't think life is really anywhere, except maybe St. Barts, if you have the bucks for it. (And even they have traffic jams and hoardes of tourists.) But it is pretty damn good here.

Time Running Out on $8,000 First Time Home Buyer Credit

Much ado has been this year about the Federal government's $8,000 tax credit available to first time home buyers (defined as someone who has not owned a home in the past 3 years.) It's a great program. Meet certain income limits ($75,000 single, $150,000 married) and close on a home that will be used as a primary residence before November 30, 2009 and you'll receive an $8,000 tax credit on your Federal income tax. (Note: if you buy a house for less than $80,000, the tax credit will be 10% of the purchase price, not the full $8,000.)

But the law enabling the tax credit is clear that the sale has to be closed by Nov. 30, 2009. Because it can take 8 to 10 weeks or more to close on a sale here for purchasers using mortgage financing, if you plan to take advantage of the tax credit you should find your house and have an accepted offer on it by mid-September at the latest. One thing buyers cannot rely on is quick mortgage approval. The mortgage financing system this year has devolved into a broken mess this year and a quick mortgage approval from one of the big lenders in particular is about as likely as a Papal child. I expect as we roll into November, and there's a rush of mortgage applications for houses looking to close by the Nov. 30th deadline that the big bank mortgage system will melt down even further. Frankly, anyone starting the process after Labor Day who wants to reliably close by Nov. 30th should seriously consider using one of the smaller, local banks — Ulster Savings, Catskill Hudson, Walden or First Jeff and avoid the big banks like the plague.

While the $8000 Federal tax credit is getting all the attention, first time home buyers may be unaware that New York state has sweetened the pot with the New York State Mortgage Credit Certificate Program. The law creating the credit certificate program was just signed into law on August 10th, and most Realtors I've talked with don't know about it yet. The implementation details, along with the applications and list of participating lenders, are still being worked out.

Basically, the Mortgage Credit Certificate programs works like this. If you're a first time home buyer who meets income eligibility limits, get your mortgage through a participating lender and file some type of application, New York State will issue you a Mortgage Credit Certificate giving you the ability to take 20% of your mortgage interest as a dollar for dollar tax credit (not a tax deduction) on your Federal income tax return. And that tax credit is over the course of the life of the loan, not just one time.

So, say you pay $10,000 in mortgage interest in 2010. The mortgage certificate will enable you to take 20% of that, or $2,000, as tax credit on your 2010 Federal income tax. (Say you owed $6,000 in Federal income tax. After applying the tax credit, you'd only owe $4,000.) The other 80% of that $10,000 can be taken as an itemized deduction, just like most homeowners deduct mortgage interest today. (A lot of folks get confused between a tax credit and a tax deduction, so you may want to do a little reading on it. But a tax credit is more 'valuable' than a tax deduction.)

Note that the income requirements for the credit certficate program are slightly different than for the Federal first time home buyer credit, and there are purchase price limits ($258,690 for a single family home in Sullivan County.) But the credit certificate program can be combined with the $8,000 Federal home buyer credit, and both can be used in conjunction with lower down payment FHA loans. So if you qualify, this is an incredible opportunity. It's one of those 'perfect storms' for a first time homebuyer, kind of like when you shop online and realize that the 20% off coupon code and the $50 off certificate and the free shipping offer all work on the same purchase.

Lake Joseph Mired in More Mishigas

Philip Barry, the Bay Ridge, Brooklyn real estate investor and investment advisor who owns Lake Joseph (through investment subsidiaries he controls), wound up in bankruptcy court this month. The bankruptcy proceeding apparently followed a series of lawsuits filed by his investors and judgements in their favor. Some of his investors have accused Barry of running a Ponzi scheme (although no criminal charges have been filed.) Google "Philip Barry" + Ponzi and you'll come up with a lot of hits. Or just check out this article in the Brooklyn Eagle.

So how does the bankruptcy of a Brooklyn real estate investor affect Sullivan County, and Lake Joseph in particular. Well, the bankruptcy judge has scheduled an auction on Oct. 20th of Barry's upstate lakefront property, which I assume is essentially Lake Joseph. There is an existing small residential community on the western side of the lake, developed about 20 years ago. Most of the lake, which is one of the prettiest lakes in the county, remained undeveloped. There were plans to continue development around the lake, but those plans were never realized by the previous owner of the lake. In 2000, Phil Barry purchased the lake and the undeveloped property, with, I'm assuming, plans to develop it and make money.

Those plans were never realized, either, and most of the land surrounding the lake remains undeveloped — one of the last large undeveloped lake holdings here in Sullivan County.

A new owner of the lake and undeveloped acreage could be good news for the existing homeowners on Lake Joseph. In 2007, teh DEC ordered repairs on the Lake Joseph dam or threatened to breach the dam (and drain the lake) if repairs weren't made and the DEC believed there was a downstream safety issue. That led to lots of meetings, and promises and plans by Phil Barry to repair the dam. But to my understanding, to date those repairs haven't been made.

The uncertainty over the dam and lake has made the sale of lakefront houses at Lake Joseph very challenging. (Real estate brokers in New York are required to disclose known material facts about the property, and the dam situation at Lake Joseph is a material fact.) Hopefully a new owner will have the resources to make the necessary repairs to the dam and remove the uncertainty from the lake.

In my mind, the best scenario would be to have the county or state purchase the lake and turn it into a park. It's surprising, given the number of lakes we have here in Sullivan County, how few public lakes and lake parks we have. A park at Lake Joseph would be a very welcome public asset.

Casinos Back on Front Burner

In the past couple of weeks, the possibilities of casinos for Sullivan County have roared back front and center. The big news is the visit here tomorrow by Larry Echohawk, the head of the Bureau of Indian Affairs, to tour potential casino sites and meet with proponents and opponents of casinos here. (Times Herald Record article about visit.) Then there was the announcement that a Malaysian conglomerate that was an initial investor in Foxwoods Casino in Connecticut, and owns the world's largest hotel near Kuala Lumpur, has struck a deal to purchase nearly 50% of Empire Resorts, the operator of the Racino at the Monticello Raceway. (Times Herald Record Article about Kien Huat Realty investment.) And then it seems Louis Cappelli has indicated an interest in partnering with the Senecas to bring a casino to the Concord project. (Another Times Herald Record article on that.) The Sullivan County Democrat pulled it all together in a huge front page spread in today's edition.

This is like a trifecta of casinos news. But I don't know that it will have much short term impact, beyond developers and politicians having their photos taken with each other. Folks here have become pretty jaded about casino news. The muckety-mucks have cried wolf an awful lot of times over the years. Four or five years ago, the kind of news that hit the papers this week would have led to a mini land rush, with speculators placing bets on land or workforce housing or commercial space in Monticello. But a lot of those spectulators are probably more gun shy today, not to mention cash poor with less access to free flowing credit.

A Three Year Supply — What It Means

For months now I've been turning over every rock looking for signs of recovery. There have been some. The median sales price for single family homes in the Sullivan MLS has crept up from $132,000 in March to about $150,000 today. Monthly sales have risen from steadily from the low of 17 in April to 41 in July. (With 3 weeks of August under our belts, it looks like this month will come in weaker.)

Since the beginning of the year, we've averaged about 32 single family sales per month reported in the Sullivan MLS. For the sake of argument (and taking into account some seasonal variation), let's round that to 400 per year.

At present, there are 1,168 single family homes listed for sale in the Sullivan MLS. With just 400 (or maybe 450) annual sales, that translates into 2 1/2 to 3 years of inventory on the market. Some of the inventory here falls into the category of 'perpetually on market and virtually unsellable' because of condition or location. Unlike Manhattan, where every apartment on the market could likely find a buyer at the right price, that's not the case here. But even if we lop off a third of the houses as virtually unsellable, that still leaves about 2 years of inventory. In contrast, during the peak we had a similar number of houses on the market, but sales were about twice the annual rate.

The bottom line is that we have an awful lot of houses chasing a small universe of buyers. More supply than demand is pretty much the definition of a buyers market. I don't see much happening on the seller side to reduce supply. On the buyer side, the only way I see to stimulate demand is through price. There are buyers in the market, and in my experience they are willing to buy — if they perceive they're getting a very, very good deal. But so far, sellers aren't singing out of the same hymn book. The average asking price has dropped only 7% since January, while the median asking price has actually risen 2%. Buyers seem to be waiting on the sidelines for bigger moves and much better deals.

Open House - First LEEDS Silver Certified House in SC

The owner and design team of the first new LEEDS Silver certified home in Sullivan County are inviting interested folks to stop by for an open house on Saturday, September 19th from 4 to 6PM. (NOT this Saturday --- note it's September 19th.)  The home is located at 194 Mapes Road in Barryville. RSVP's are required, so they know know many folks to expect. RSVP to openhouse@huisworkshop.com Note: this house is NOT on the market for sale. This open house is for the design team to show off what they've accomplished with this house.

LEEDS Certification is tiered certification of the 'greenness' of a building, administered by the U.S. Green Building Council. LEEDS certification is very tough to achieve and is a pretty big deal.

Woodstock Weekend is Here

 You've had to have been living under a rock to not know that this year is the 40th anniversary of Woodstock. And if you've spent any time in Sullivan County, you know that Woodstock happened here, in Bethel, not over in Woodstock. (I've always thought that would make a great Final Jeopardy answer --- "The location of the 3 Days of Peace and Music Festival in 1969".)

To mark the 40th anniversary, the Bethel Woods Center for the Arts (which is on the site of the original Woodstock festival) is hosting the "Bethel Woods Music Festival — Heroes of Woodstock" this Saturday, August 15th. (They can't call the concert "Woodstock 40" or whatever, because of licensing issues over the name 'Woodstock'.) The multi-act concert, which has been sold out for weeks, starts at 5PM. (Gates open at 3, parking opens at 2.)

If you don't have a ticket, but are thinking about heading over there on Saturday to see if you can buy one, you need to be aware that for this event Bethel Woods will only let you into the parking lots if you already have a ticket to the concert or the museum. (Museum tickets are sold out for Saturday as well.) If you want to pay homage to Woodstock, you may want to swing by the site on Sunday or pay a visit to the museum. I expect there will be lots of pilgrims visiting the "memorial" (at the corner of Hurd and Westshore Roads).

Expect everything around Bethel to be jammed on Saturday, from restaurants to roads. If you're running around the county, plan accordingly.

On a side note, it's been kinda fun this week watching all the Woodstock hype. All the networks have run pieces, and most have sent reporters up from the city to do a piece. (Duke Devlin, the official 'docent' of Woodstock, gave a great interview on ABC with the Yasgur farm fields behind.)

If you're not making a pilgrimage to Woodstock, pull on an old tie dyed t-shirt, throw some tofu on the grill, and regale your kids and grandkids with your memories of the Summer of Love

Concord Project Restart Slated

You gotta give Louis Cappelli credit. In the midst of one of the worst commercial real estate financing environments in memory, he's forging ahead with the redevelopment of the Concord Resort. Like most large projects, the Concord has had trouble getting financing this year. So Cappelli approached the state to rework the financing and revenue deal he struck last year. On August 13th, Governor Patterson signed the revamped terms, and Cappelli has vowed to resume work on the project before Labor Day.

Lots of folks here have come to take Cappelli's promised start dates with a grain of salt. Cappelli first unveiled plans for the new Concord in 2000. Frankly, most of us expected to be able to have a drink at the bar at the new Concord well before now. And it may seem to many, driving along Route 42 past the Concord site, that nothing has been happening. But it has. The old towers have been demolished, and there's been a lot of infrastructure work at the site. There has also been a lot of behind the scenes activity with environmental approvals, site designs and financing. The Concord seems well ahead of the other two major Catskills resort projects on the boards — the proposed Belleayre Resort at the Catskill Park and the Aman Resort at Broadlands near Bovina — and my bet is that it will be the first of those three to welcome guests.

On a related note, it looks like casinos for Sullivan County may be back in the picture, and may be giving Louis Cappelli some motivation to get the Concord off the ground. As most casino watchers know, Dick Kempthorne, the Secretary of the Interior under Bush, was a foe of off reservation Indian casinos, and denied the tribal applications for off reservation casinos in Sullivan County in the waning months of the Bush Administration.

The Obama administration is a new game. The new Secretary of the Interior hasn't stated a position one way or another yet on off-reservation casinos. But in a move that may signal a shift in the political winds, Larry EchoHawk, the Department of the Interior's Assistant Secretary — Indian Affairs, plans to visit Sullivan County later this month at the invitation of our U.S. Congressperson, Maurice Hinchey, to visit proposed casino sites and discuss the impacts of casinos with local leaders. One tribe already has an application before the Dept. of the Interior, and two other tribes are expected to follow suit. While none of the proposals are for a casino at the Concord, if the applications move ahead and Cappelli has a shovel in the ground, I expect that one of the casinos will end up at the Concord.

It's Been 6 Years Since "Catskills — the New Hamptons"

Remember, not so long ago, when the Catskills were the 'new hot place' for second homes and weekend getaways from the city? The resurgent popularity of having a place in Sullivan County started in the mid to late 1990's, when country wannabees from the city could pick up run down farmhouses for a song, and many did. But it was all kind of below the radar, the weekend getaway equivalent of knowing about a really great band playing in an obscure club in an outer borough.

Then came 9/11, after which a lot of folks in the city took a close look at their lives. The Catskills became an appealing draw as a place that was kinder, simpler, gentler and more authentic. The Norman Rockwell-ness of it all, updated in a popular shabby chic style, was like a warm glass of lifestyle milk. Why go to the Union Square green market to buy heirloom tomatoes when you can buy everything you need to grow them yourself, including the house and land?

The growing popularity of the Catskills was a real word of mouth guerilla thing. People passed along the names of hamlets and villages like Jeffresonville, Livingston Manor, Roxbury, Bovina and Margaretville like the locations of off the beaten track beaches in Mexico. The farmers selling at the green markets, with their signs showing where they were from, were like missionaries. And the windows of the Rural Connection real estate company on Perry Street in the village were a shrine for those with rural yearnings.

There were occasional small articles and mentions in the New York press about the popularity of the Catskills. Then the dam broke. The August 6th, 2003 issue of New York Magazine featured the Catskills, with a lengthy article (and cover) devoted to the Call of the Catskills. The gist of the article was how trendy New Yorkers, including some celebrities, were abandoning the hipper getaway locales like the Hamptons for the kinder, simpler, gentler Catskills. (The article is still in the NY Mag archves. You can read it here.)

The impact of the article was huge. It gave the Good Housekeeping Seal of Approval, trendsetter version, to the Catskills. The New York magazine article was followed by other articles and news reports in the city that fueled the fire that the Catskills was hot again. The timing of this publicity also coincided with the availability of cheap and easy mortgage money during the lending boom, and the deep pockets of many New Yorkers, flush with cash from either bonuses or pulling cash out of their rapidly appreciating apartments and homes.

I found it very interesting to go back and read the article six years later. It helps to put the popularity of this area in perspective. Lots of attention has been focused on the 'big' projects, from those that have gotten off the ground like Bethel Woods and Chapin Estate to those that haven't like casinos and the pie-in-the-sky renderings of new luxury hotels. But the "Catskills as the New Hamptons" epitomized in the New York Magazine article wasn't based on those big projects at all. It was rooted in the same values and dreams that brings second home shoppers to Sullivan and the other Catskills counties today. A kinder, simpler, gentler — and affordable — place where you can run with your dog, grow tomatoes and herbs, see cows up close and kayak on a river or lake. We still have plenty of the kinder, simpler and gentler. Now we have to work on getting back to being the most affordable.

Current Market Conditions with July Data

I just posted my latest Current Market Conditions report, with the July sales data. Kind of a mixed bag. Single family sales are up slightly, as is the median sales price for the 3 months ending July 31st, but the average sales price is just treading water. July's single month prices were down a bit (both median and average), and if that trend continues through August, we could see a price pullback in the 3 month numbers next month. Click here to read this month's Current Market Conditions Report and then drop on back here to leave your comments.