What's Happened to the Upper End?

I'm haven't seen many upper end buyers in the past few months, and looking at the sales data, not many other Realtors here have either. In 2009, there were 17 closed single family sales above $400,000 reported in the Sullivan MLS Compare that to 29 sales above $400,000 in 2008 and 51 in 2007. For the latest 3 month period (11/09 through 01/10), there were just 4 closed sales in the MLS above $400,000 — 3 of those were lakefront and 1 was a 6500 sq. ft. executive home in Monticello. (That one, selling for $570,000, came in at about $87 a square foot!) Keep in mind that I'm not talking about the top upper end here, those trophy properties in the million and up range, but rather houses above $400,000, a pretty low threshold for 'upper end'.

Then look at the inventory of houses with asking prices above $400,000. There are currently 140 single family listings in that range in the Sullivan MLS (128 of those actually in Sullivan County.) That translates into about 8 years of inventory at the current 17/year sales rate! That is a mind boggling number. The total inventory of single family homes in the Sullivan MLS at all price ranges is 958, or about a 2 year supply given that there were 439 sales in 2009.

It's almost if buyers in this upper end have evaporated. Which makes it all the more surprising when sellers in this thin market range hold stubbornly to their prices. We've tried to put together a few deals in the past month in the $400,000 to $500,000 range where the sellers have just said 'no, we'll wait.' The question is, "Wait for what?" I'm just not seeing a lot of buyers in this range coming down the pike.

Comments

[Bix]

Re mark to market (and at the risk of duplicating what's already been said): I assume that Nick is not a regulated financial institution or a publicly traded company. If so, if he were asking investors to put their money in Nick Inc., then yes, he would have to mark to market. But as a private citizen there is just no point to constantly monitor the value of our summer houses. Doing so is *extremely* counterproductive and can result in poor decision making.

If indeed one obsesses over being "under water" (which may indeed be the case for me, as I bought in 08 at what was then a reasonable price), one may be tempted to do something dumb, such as walk away from the property when one can afford to make the payments.

I think what some of the people posting here are missing is that buying a house to occupy and buying a house/land as an investment involve totally different decision making processes.

If you buy a house for investment purposes your sole interest is in turning it over, the quicker the better, at a profit. Often the best values are obtained by buying schlocky houses with crack dens in the basements in bad parts of Liberty, Fallsburg or Monticello.

But buying a house to occupy seasonally is a totally different thing. It is an emotional decision. One doesn't want to be ripped off, but there is no reliable way of predicting any market. If the market goes in your favor, fine. If not, well that's just too bad. It's still the house you wanted.

Now what you *don't* want in the latter scenario is a gas well popping up next door. That, I admit, could turn a dream house into a nightmare. But a falling market just isn't something a home buyer or seller can factor into the equation.

[Tom]

In much the same way that real estate in SC hit a frenzy a several years back, there is a similar hysteria in the opposite direction which can be seen by posters like ar and pa.

With US population expected to grow by 140 million in the next 40 years, land will continually become more valuable. Where are these 140 million people going? Do you think they're going to pile up further in cities? not likely.

As technology improves and telecommuting further changes the workplace, combined with population growing out of control, land and privacy will become more valuable. Urban sprawl will widen its reach and suburbs will become overcrowded. It may not be next month, but the market will rebound in the other direction and those sitting on land in the country will be glad they decided to make the move when they did.