Sullivan County Real Estate

NAR's Existing Home Sales Data Shows 16.7% Drop in Dec.

"Plunge", "Plummet" and "Nosedive" are terms that are peppering the headlines of online reports of the latest release of existing home sales data by the National Association of Realtors this morning. NAR reported that the annualized sales rate for single family homes in December fell 16.7% from November. But the important point to take away isn't that December was so bad, but that October and November's sales data was so pumped up largely due to the anticipated expiration of the first time home buyer tax credit on Oct. 31st. (The tax credit, which has since been extended to April 2010, was scheduled to expire on Oct. 31st. That had a significant impact on October and November sales figures, because a property had to only be in contract by the deadline date, but could close after that date.)

In fact, December's annualized sales rate of 5,450,000 homes was up 15% from December, 2008 and only off about 4% from the hot market year of 2007! Was anybody seriously thinking that the November sales rate could actually be sustained? To tell the truth, I was actually heartened by today's numbers, that the sales rate remained as high as it did without the huge impact of the tax credit. Sure, the tax credit was extended and is probably having some ongoing stimulating affect, but the big rush of first time home buyers to get in under the old deadline has dissipated.

On the price front, the picture is lackluster at best. Nationally, the median sales price was up only 1.5% from a year earlier, although did rise 4.8% from November. Price bulls, though, shouldn't read too much into the November to December rise in prices. If November's sales numbers were skewed up by first time home buyers, it's important to keep in mind that those first time buyers tend to purchase lower priced houses.

The Realtor - Buyer Age Gap

Yesterday I was reading an article in one of the Realtor mags (yes, on paper ... I know, sooooo 20th century.) The article was talking about social networking, and the age gap between Realtors and buyers. The median age of Realtors turns out to be about 52, while the median age of buyers is about 39, and even younger — 33 — for first time home buyers. On a related note, one of our clients last week was chiding us for not being able to do property searches easily on their iPhone. They commented that "Nobody uses a computer anymore." Now, the MLS Search on my website (http://www.catskill4sale.com/listings_idx.asp ) does work in the Safari browser on an iPhone, but isn't optimized for mobile, so there's a lot of side to side and up and down scrolling, and there isn't an iPhone app for this particular search application.

My initial response was "hrrrmmmmphhhh, use a computer!" If you're around iPhone users much (and in this day and age, who isn't), their Apple-centric xenophobia can get tiresome. If you gave me the choice of being locked in a room with an iPhone proselytizer or a born again Christian intent on conversion, it would be a tough call.

Putting aside my thoughts about iPhone users, and their irritating habit of pulling out their devices in the middle of dinner to find out who starred in a particular movie, there is an important lesson here. I'm not in the same technological generation, with the same expectations for immediacy, as most of my clients. While I would venture that I'm better than most of my generation at adopting technology, I'm a generation behind those finger flying texters. I still don't understand, for example, the role of Twitter in business, and my Facebook page is a seldom updated footnote in my online presence.

It's this age gap between brokers and buyers that is at the crux of the slow and creaking adaptation of real estate brokerage to the 21st century that I wrote about below, and that generated such a passionate response. The shape of real estate brokerage may not change until the torch passes to the next generation. The generational gap is often apparent in meetings of Realtors. The old guard, who largely hold the reigns of power, tend to be more traditional and conservative. But there's a younger vanguard moving up that are more open and progressive. It may take some time, but the balance of power will shift.

As an aside, over the past few days I've been downloading and trying out iPhone real estate search apps. (No, I don't have an iPhone, but I do have an iPod Touch.) Most of them are pretty lousy. "Rudimentary" might be a more charitable term. Their capabilities to search and save are very truncated compared to their web-based equivalents. The novelty of it is certainly enticing, and they can come in handy when you're on the road and want to look up a property. But for the heavy lifting of property searching, I think that buyers will find that bigger is better.

To STAR or Not To STAR?

That is the question this time of year. STAR (School Tax Relief) is the New York state program that provides a partial exemption on the school portion of property taxes for owner occupied primary homes. If a property owner qualifies for the STAR exemption, and files a STAR application with their township assessor prior to March 1, $30,000 of the full valuation of their home for assessment purposes will be exempt from school taxes. The actual dollar value of that $30,000 exemption varies by school district due to varying levies, but is generally less than $600. (Note that the March 1 deadline doesn't apply to every municipality in the state. You should confirm the taxable status date for your municipality directly with the tax assessor.)

Some folks who are par time Sullivan County residents consider shifting their primary residence to their home here to take advantage of the STAR — particularly those who have flexible work schedules or work freelance where they don't have to be at a 9 to 5 in the city every day, and they rent in the city so don't qualify for a STAR exemption there.

Anyone contemplating a change in their primary residence for tax purposes should research what constitutes a primary home for tax purposes, voting purposes, etc. I admit that I find it confusing, particularly in New York state where you have the added complication of the New York City income tax for those who reside in the city more than a certain number of days a year. If you work in the city, or maintain a residence there, you should discuss moving your primary residence for tax purposes with your tax advisor.

But there are a few other issues, beyond the direct tax consequences, that those considering a shift in their primary residence also need to consider.

Rent stabilized apartment in the city? If your apartment in the city is rent stabilized, the protections afforded by rent stabilization only apply if that is your primary residence. Will your landlord find out if you quietly shift your primary residence to the home you own in Sullivan County? Good chance. There are companies that specialize in scouring public records and credit reports for address mismatches for leasees of rent stabilized apartments that could indicate their NYC apartment is no longer their primary residence.

Automobile insurance. When people move their primary residence upstate, they usually move their car registration as well, to take advantage of typically lower insurance rates for automobiles domiciled outside of the city. Somewhere on your insurance application, you affirm that the car you're insurance primarily overnights at the address stated on your application. No problem if that's actually the case. But if your car is really parked 4 or 5 nights in the city, and only 2 or 3 up here, and the insurance company can prove it, they may have grounds to deny a claim.

Health insurance.  Particularly if you have freelance or sole proprietor health insurance coverage, don't assume that the health insurance you have in New York City can 'transfer' upstate. Insurers that underwrite in NYC and the adjacent suburbs may not offer policies upstate. If your policy can transfer, you need to check out the "in network" provider list for Sullivan County.

These issues may not apply to you. But they are things you need to think about when considering the decision to move your primary residence. And if you do decide to file for the STAR exemption on your residence here, remember the deadline for filing in Sullivan County is March 1st. Contact your local assessor to get the form.

One of the Best Ideas I've Heard in Years

A thought provoking commentary was posted by Scott Einbinder over on Inman News today, "The Real Estate Listing, Redefined." Scott talks about the "listing" as the holy grail of real estate agents, and how many agents take them whether or not they really believe they can sell them, because the more listings you collect, the more bait you have out there to attract potential buyers. Then he goes on to posit a very interesting idea — "Imagine a world where a seller said, 'If you are so confident that I will be happy with your results, you can purchase my listing for $1,500. I will then credit you the $1,500 against your total commission due. However, should you not satisfy me and achieve the goal of selling my house, I will keep the $1,500.'

That sure would cut down on the number of overpriced listings cluttering the market. Agents might also offer different upfront amounts based on where the seller was willing to price the property, e.g. "Ms. Seller, if you want to price your property at $249,000, I'll only pay you an upfront fee of $250, but if you take my professional advice and price it at $199,000, I'd be willing to fork over an upfront of $1,000." And with some skin in the game, agents might be more motivated to get that property sold rather than just put it in the MLS and hope somebody stumbles across it and buys it.

Realtors Need to Get With the 21st Century

Buyers get understandably frustrated with the Realtor-centric property sales system, or more specifically, with the tools we provide to enable buyers to search for properties and make decisions. Younger, tech savvy buyers, in particular, want to be more in control of the process, and less at the mercy of Realtors to dole out information. Realtor multiple listing systems, for the most part, are still stuck back in the 20th century, largely designed to enable the sharing of listings between Realtors. The systems, along with Realtor attitudes, need to be reengineered for the 21st century to be buyer-centric.

What do I mean by that? During my time on the board of the Sullivan County MLS, we almost never discussed how the MLS system can facilitate property searches by buyers, only how the system works for brokers and agents. The consumer MLS searches found on agent websites like mine aren't even provided by the MLS. Each of us individually contracts with a vendor who receives raw data from the MLS, converts it, and offers the consumer search capability. Unfortunately, as a small MLS, Sullivan County only has a few vendors who offer this service and the choices, from a technology standpoint, are less than stellar. I wish I was a large company with a hundred thousand dollars to invest in rolling my own, but I'm not.

Even then, a consumer search would still be hobbled by MLS policies that are anything by buyer-centric. The Sullivan MLS, for example, doesn't permit the property address to be displayed on a member's consumer MLS search. So unless you contact a Realtor, you can't get the property address to do a drive by, or pull up an aerial view in Bing. The lack of adequate property identifiers also limits the ability of a buyer to research tax and property records without the intervention of a Realtor. A buyer-centric MLS would also include a detailed pricing and listing history on a property available to buyers, not just to agents, as well as links to tax or survey maps.

Some features are beyond what the MLS and Board of Realtors can facilitate. For example, until the county provides tax maps in GIS format, a robust tax mapping system as part of a consumer property search isn't possible. But in the meantime, a .pdf of the paper map could be a required inclusion as a link.

And I've long been an advocate of developing some type of publicly available feedback, comment and rating system on listings. While we're at it, why not let potential buyers search "sold" property listings, so they can independently form their own opinions of value. I criticize the "Zestimates" on Zillow as painting an inaccurate picture of value, but we Realtors don't provide a more robust or accurate system.

One move that could facilitate better buyer-centric technology is the merger of MLS's into larger regional MLS's or even a statewide MLS. An MLS with 4,000 or 6,000 agent members as potential buyers of add-on services is much more attractive to technology vendors than one with 200 or 400. Our MLS neighbor to the south, the Greater Hudson MLS, has 4,000 members, who have a much wider choice of consumer MLS search options their members can choose to buy and implement, including iPhone apps.

Many members of smaller MLSs like Sullivan resist merging with a larger MLS because of a fear we'll lose our independence and sense of identity. But never do I hear anyone say we'll lose our relevance. I've been part of MLS strategy discussions both locally and on a statewide level, and almost never is the buyer brought into the mix, in terms of "What does the consumer want?" Just once, I'd like to be part of a Realtor brainstorming session that starts from "What does the buyer want from us, and what steps do we have to take to give it to them?" That may mean giving up some control and forming into larger constellations that can develop and deliver the bells and whistles that buyers want.

In the end, we'll only survive if we stop focusing on how we, as Realtors, want to sell, but shift to focusing on how buyers want to buy.

Missing the Mark Selling The Arugula Lifestyle

I've been selling real estate here in Sullivan County for almost 10 years now, and over that time there has been a steady trend to shape and position this area as a pastoral, even genteel, escape from the city with just enough grit around the edges to appeal to younger trendsters who are drawn to the 'real' and 'authentic'.

The icon at the center of this reshaping is the classic renovated farmhouse, or newer knockoffs that evoke evenings around the fire, or chopping fresh herbs from your own garden while looking out a window ringed with flower boxes. Farmers markets, organic vegetables and local fairs round out this picture framed with wainscotting. It's all quite lovely, and has been quite a successful narrative to attract second home buyers to Sullivan.

The success of the pastoral farmhouse narrative, and its close cousin, the "On Golden Pond" Adirondack lake getaway, during the go-go years led a number of investors and developers looking to roll out new projects in similar styles. Some of those builder/developers have been very successful, like Catskill Farms; others have been less so, sitting on subdivided but largely unsold developments targeted to the arugula and organic tomato crowd.

Those buyers are still in the market, although in smaller numbers than a couple of years ago and definitely at more moderate price points. But in the last 6 months or so, I've been noticing a very different type of second home buyer, with very different desires. And we have almost no product for them.

So who is this new buyer? Age, profession and income-wise, they're not much different than the pastoral farmhouse shoppers. But there is one big difference. They're looking for a getaway where they can "play in the dirt" with ATV's and off road motorcycles. Not to be overly sexist about it, but this buy is being driven by dads who want to spend guy time in the woods with their sons, doing stuff they can't do in the city. And here in New York State, they generally can't do it on state land either.

I get 1 to 2 calls a week from buyers looking for a vacation getaway where they can ATV or ride off road motorcycles. There are only a couple of "developments" in Sullivan County where ATV use is permitted on the shared community land, and building parcels or houses in those 2 areas aren't that readily available. And while both permit off-road use, they aren't really set up for get down and dirty in the mud ATVing. The only other option for these buyers is to buy a larger acreage parcel and cut their own trails — which can be a huge, not to mention expensive, undertaking.

In pursuing the sauvignon blanc and arugula crowd, developers have largely ignored this niche. Part of that may be a function of misplaced stereotypes harbored by the upscale-inclined. Mention ATVing, and you may conjure up a blue collar stereotype of NASCAR and Budweiser. But that's not entirely accurate. There are plenty of "non-blue-collar" guys who want to get down and dirty, too. There are a lot of men who are looking for a counterpoint to civilized gentility. Consider the popularity of "man caves" on home renovation shows. Five years ago, a fabulous bathroom with a soaking tub was de rigeur. Now it's "man caves." Lately, showing houses, I've noticed a revived appreciation for "rec rooms" with pool tables and wet bars. Not so long ago, every client I worked with wanted those ripped out.

I'm sensing an interesting shift, from the "feminine" to the "masculine." It's not the whole second home market, by any means. But there is a sub-segment that wants a little more testosterone with their second home. Simpler, 'rougher' cabins with nary a strip of wainscotting in sight. Outdoor fire pits and outdoor showers. Developments built around shared land contoured for ATVing and off-roading. I think this could be a profitable niche for someone to explore, either developing a new community along these lines or re-purposing one of the existing "late to market" developments here that haven't attracted buyers with their current positioning.

Lots of Space, Little $$$

Three listings caught my attention this week that offer a lot of space for not a lot of money. 2 of the houses are the original buildings on the farm that was subdivided into the Meadows by Bethel Farms off of Lenape Lake Road south of Livingston Manor. The farmhouse on 4.28 acres (MLS 27886) is about 3,500 sq. ft. and was originaly listed in 2008 for $355,000. The new "move it" price is $150,000! Also available is the original barn on 5 acres for $159,900 (MLS 27885). The barn has a small 2 bedroom "apartment" at one end that is perfectly liveable. The rest of the space is unfinished. (The total is listed as 10,000 sq. ft.) The barn was originally listed for $349,900 is early 2009. Both properties have nice views and are well set back from any main road, but neither is really secluded — they have parcels around them that are likely to be built on at some point in the future. And the farmhouse isn't totally classic — it's been added on to and "remuddled" some over the years. But at these prices, it's hard to be too nit picky.

The third listing is a bank owned foreclosure down on Gregory Road near Glen Spey. (MLS 27846). 2,200 above grade square feet, built 1975, surprisingly private given that it's only on 1.3 acres. Asking price is $135,808. Keep in mind, though, that this is a bank-owned property, which means it's sold "As-Is", with less opportunity for due diligence and closing requirements that can make financing difficult if not impossible. But for a cash buyer, this could be a great one.

Click here to check out the three listings.

Current Market Conditions Posted with December Sales

I just posted my latest market conditions report with sales data through December (as well as a full year comparison for 2008 and 2009.) The sales data has been so similar for the past 3 months, in terms of volume and prices, maybe I should just cut and paste and change the dates! One striking thing this month, though. The average asking price rose 4.2% between December 2009 and January 2010, which flies in the face of logic that indicates sellers need to be reducing prices to bring them more in line with buyer expectations. I hope that's just some temporary anomaly that's a function of year end listing expirations, rather than an indication that sellers are firming on their price expectations.

Please check on the Current Market Conditions Report on my website and drop on back here to leave your thoughts on what's happening.

10 Prettiest Roads in Sullivan County

Yesterday I was driving along the Pine Kill Road outside of Westbrookville. It's been a couple of years since I've been on that road, and was struck by how stunningly beautiful it is, with a rushing creek cascading down along the west side of the road, and pine covered hills clad in snow rising to the right. I'm very lucky, in that I have a job where I find myself in places that often take my breath away.

I got to thinking about the most beautiful roads here in Sullivan County, those stretches that reliably elicit "oohs" and "aahs" from my clients when we're driving around the county. Those spots that make New York City seem light years away, as though we've fallen through a rift in Time and Space. (That's my new thing, as I've become addicted to the BBC Series Torchwood available on itunes and Netflix, but I digress.) So I've put together a list of my 10 favorite stretches of road here in Sullivan County.

1. Beaverkill Road (CR151) NE of Livingston Manor, from Edgewood Lakes north through Lew Beach, turning into Turnwood Road as it crosses into Ulster County.
2. Radio Tower Road, north of Beechwoods Road, between Callicoon and Jeffersonville.
3. Pine Kill Road, north of Westbrookville, in Mamakating Township southwest of Wurtsboro.
4. Ulster Heights Road (CR154) in Fallsburg Township east of Route 42 heading into Ulster County.
5. Bethlehem Road running north outside of Callicoon Center. (Note this road does not go all the way through to Tennanah Lake Road in the winter. Only winter access is from the south out of Callicoon Center. Best view is on the way back down into Callicoon Center.)
6. Plank Road south of Forestburgh along the Rio Reservoir.
7. Rio Dam Road (off of Plank Road) that crosses on top of the Rio Dam.
8. SR 55-A that runs along the north side of the Rondout Reservoir east of Grahamsville, and the Sundown Road spur that runs out to Sundown.
9. Hartwood Road (CR48) east of Forestburgh that turns into Oakland Valley Road (CR49).
10. Craigie Claire Road east of Roscoe to the covered bridge across the Beaverkill River.

If you have a favorite road or vista here in Sullivan, please post it as a comment. While I'm pretty familiar with most of Sullivan County, I don't know every nook and crannie.

The Magical Thinking of Sellers

Over the past month or so, I've gotten a similar response from a number of sellers to what they consider "low offers" for their houses. Of course, asking prices and offers are relative to your point of view, and in all of these cases where the sellers viewed the offers as low, I saw the houses as quite overpriced. But that's the nature of the beast.

However, what's notable in the responses is the similar perspective among the sellers. They're not under pressure to sell, and so plan to hold out for a better price "when the market improves." There's tacit agreement that their price expectations are too high for the current market.

What I don't understand is where they're getting their optimism about a market improvement, at least in the foreseeable future. Those who track real estate are pretty divided about whether prices will fall further or whether we've touched bottom and will plateau at these pricing levels for the next year or two. But none that I follow are seeing a surge in demand or pricing in their crystal balls, outside of the high foreclosure markets where super low pricing has led to bargain shoppers bidding up prices.

Even if we were to return to more historical rates of appreciation, say 5% a year, a house that could sell today for $300,000 would only climb to $315,000 in a year, not to the $375,000 or $400,000 a seller is probably hoping for "when the market improves."

Unfortunately there isn't any remedy for this seller malady except time. These sellers will need to sit with their houses unsold for a year, maybe two, fielding and rejecting offers, hearing (and ignoring) the feedback and counsel of their listing agents, and maybe even jumping to a new agent in hopes that they'll have the silver bullet, before they'll surrender to reality. Attempts at intervention (usually in the form of repeated reviews of comp sales) before the patient is willing to surrender are close to useless.