And our competition is ... Florida?

I have a few Realtor friends in Florida that I chat with regularly. They've all commented that the market there has picked up big time over the past few months, primarily with snow bound northern bargain hunters trolling for super deals amidst the foreclosure rubble of the Sunshine State.

Then last week I read this article from CNN Money, Duck! Watch Out for Falling Home Prices. The article is a lot of the same old same old, about the upcoming pull back in government support and the number of properties in foreclosure, or coming into foreclosure. But the shocker (from Moody's) is in the 4th to last paragraph:

"The worst performing market will be Miami, Fla. Moody's projects prices there to drop a heart-stopping 29.2% by Sept. 30. That follows a 47.7% decline the metro area recorded in the past three years. Grand total: 64% drop."

I knew there were deals in Florida, driven by foreclosures and investor pull outs, but that 64% top to trough drop number for Miami blew me away.  (I'm already anticipating comments to this post like "Wait, Sullivan, your turn is next." But Florida has a different set of circumstances, namely speculative overbuilding, and a huge inventory of properties that investors picked up in hopes of flipping and are now walking away from.)

So how does this relate to Sullivan County? The second home market here has two components. One is died-in-the-wool country-ites from the city with dreams of having an organic garden, or fly fishing, or whatever within a couple of hours of NYC. Florida has no attraction to them whatsoever, regardless of the bargains. They want a two hour drive away retreat to pursue their country passions.

But there is another part of our second home market that is less country-committed. Their second home interests are more free ranging. A place in the country a couple of hours from NYC would be nice, but so would a place in the sun in Florida, a couple of flight hours away. Add in the prospect of picking up a super deal with the cherry on top of potential appreciation, and the scales can tip to Florida.

I've spoken with a number of potential buyers who've been kicking around in the Catskills, but also making hunting trips to Florida. (Given the winter we've had, it doesn't take a lot to come up with an excuse to head south!) And in the past month, when I've been with friends in the city and the topic has turned to real estate (which, inevitably, in New York City, it does), there's been a lot of chatter about Florida. I don't have any way to measure this, but at the moment, I think that Florida is formidable competitor for the second home dollars of some New Yorkers.

Comments

[Jeanne]

Hello David, Thanks for some food for thought. My initial reaction after reading your latest blog is that I can't imagine anyone in their right mind who would want to battle the airports with all the security, delays, high ticket prices and not to mention traveling with children many times over in order to make weekend or at least regular pilgrimages to a second home in Florida. If someone had that kind of money and perseverance, I would assume the Hamptons might be looking good right about now. In any event, I just don't see any of my Catskill weekender neighbors, like me, in the sort of demographic you describe. We are truly middle class and young enough not to be thinking about a retirement home in the sunny south. There are people house hunting in Florida and places like Mexico for sure, but I believe, for the most part, they are not the same ones who are shopping for a weekend home in the Catskills. I think that most of us are still smart enough to think about the cost/benefits of the Catskills or Florida scenario. Thanks again.

[Bix]

I tend to agree with Jeanne, David. Yes, it's a "couple of flight hours away" but the cost of transporting the family regularly to Florida would be prohibitive for most people. The people who can afford such expensive jaunts would be looking in Ulster County and the Berkshires, not Sullivan.

[kri]

With demographic trends pointing to baby-boomers staying "closer to home" and delaying retirement many have opted to sell they CITY home and trade it for a home in Sullivan and another in a more affordable place like the Catskills. This way they have a place to escape the winters in Sullivan and the Summers in Florida while staying connected to their business and families in the Metro NYC area.

[David Knudsen]

The folks I'm thinking about here are more 'on the margins' --- gay couples without kids who have been drawn to Sullivan County, but are now also eying Ft. Lauderdale and Miami, and near empty-nesters, those upper 40's and 50-somethings that have been a strong market for lakefront properties here. I don't think the 30-somethings with young children are for the most part looking at Florida. They're still coming up here to kick the tires.

[Jeanne]

Hey. Me again.I'm one of those on-the-margin types: gay couple, no children and in the upper 40 range. The gay population seems to be ever increasing in the Catskills, I think because it offers everything the city doesn't: quiet, land, farms, and some square footage that we can truly call home. True, I have gay friends who could not live anywhere without amenities. They have looked at properties in Florida but realized it was just not worth the trip. Jeanne

[jeff]

How can anyone compare Florida to the Hamptons. Airfare isn't that expensive to Fla(what $250 rd trip,not terribly expensive) I was looking in sullivan county for the last year for a 2nd home. But when I visited South Florida, I saw brand new 2 bedroom apartments at ridiculously low prices. My wife and I have decided to change our search and invest down there. Because, although we will not visit as much as if we owned 2 hrs away from us, we believe it is a much better long term investment. Plus the condo has a pool for our 3 year old and lets face it, it's close to the beach and many amenities. So David, your post really resonated with us. So instead of buying in Sullivan we will more likely now rent when we want to visit.

[Ken]

Prices are amazing in Florida. But before you buy you might want to call your insurance company and see if you can even get hurricane and flood insurance. Point being, there can be many reasons prices are so low. Maybe over-building the coastal areas in a hurricane prone area wasn't such a good idea.

And while it's a 2 hour flight, end to end can easily be an all day event. But then again, everyone in Sullivan seems to lie about that one, too. It's not 2 hours. For most it's about 3 hours (well, unless you're driving at 3 am Sunday morning and you live on the GWB).

[Nick Baily]

There's a really big difference between a weekend place you can drive to and somewhere you fly to. I've rented in the Hamptons, bought in Sullivan, and have friends with places in FL and a handful with something further south (islands, etc).

Some lifestyles are suited to the latter. Writers, professional investors, artists, etc. People who can set their own schedules.

But it's not just the cost of flying, it's the planning. Airfare to Florida is often $250 if you buy over 21 days out, sure. But it sure as hell isn't practical if you're able to get your work done a little early on a Friday afternoon, or your Saturday plans get cancelled. That makes a huge difference. And the travel isn't comparable. Summer hours are a tradition in many NYC fields. You simply can't leave work in midtown at 2:30pm and make dinner in Boca Raton without your own jet. That's a piece of cake on the LIRR.

And then your friends are out there too (depending on who your friends are). I always thought the heavy concentration of NYCers was one of the least appealing things about the Hamptons.... but I have to admit, it's nice to go over to a friend's place for a BBQ on a Saturday or invite a couple house guests, let them confirm late depending on their schedules, and finalize a few days out.

And don't discount the updated version of a longstanding tradition, where wife/kids are out from Memorial day to Labor day full time, and dad hops on the train at Penn and mom picks him up at the East Hampton station in the Lexus SUV every Friday.

There are pros/cons to both for sure (Hamptons being about 1.5 seasons vs. year round is a BIG one too). But you have to understand it's the flexibility that's very, very different. Plus the social aspects. That's why I'm in Bethel, that kind of thing is grating when you want to get away. But for the finance types (whoever that is now) it's a whole game. Pay $5k per table for bottle service at age 25, pay $5k per couple for the charity auction when you're 35. Etc.

And PS, on price the Hamptons are still a world unto themselves. I lucked into a very reasonable share pretty early on and held on for a couple years until the couples we shared with started spitting out babies. I would have happily bought in the Hamptons but the price I paid in SC for a 4-br on acreage with a barn was WAY LESS than the prices I saw for 1 bedroom condos in 2 story crappy motel looking places. Guy down the street from us bought a 2 bedroom A-frame, we were in one of the least desirable areas (200 feet from the ocean though in fairness), as far from NYC as you can get without being in Montauk, on about 1/5 of an acre flanked by other run down houses on all sides. I think it was about 700 square feet of total space. He paid was $1.3 million. In Bethel it would go for $35k. Hell if it went on sale for 70% off that peak I still would think it's crazy. It's like comparing apples to nuclear weapons.

Whoops sorry I wrote another long post. OK here's one succinct idea that runs through all the comparisions of second home areas. A simple question:

** Is it a weekend house? Specifically, can you realistically enjoy *both* Friday and Saturday night dinners at the house, or do you lose Friday night to travel?

That question is absolutely crucial, ignore it if you will but for busy people it's a big deal. Losing half your weekend nights matters a LOT. And yes, that alone almost explains why I remain bullish on SC, and consider the 90-100 mile radius so, so important.

Florida ain't got it.

[Bix]

Another thing you have to keep in mind is pets. I've never traveled with an animal on an airplane but I doubt very much that it's quite the same as having the pooch snooze in the back seat of the car.

[John]

I agree with all the downsides of Fla. vs. SC, but I was out with an investor, considering some land here, and his other option was condos in Florida going for $35,000, which you can turn around and rent.

From a pure investment standpoint, Florida is a better option.

[ar]

John -- You are underestimating Sullivan County's competitive spirit. The way prices are trending, it won't be long before $35,000 buys you a house on a couple acres up here.