Stuff is Moving

I've been kind of dumbfounded in the last week or so by how many places I'm looking to show that either have accepted offers or contracts on them. For one of my appointments last weekend, 2 of the 5 houses I called about to show had accepted offers. For an upcoming appointment this weekend, 3 of the 4 houses I called on had deals on them. One of them has been on the market for 387 days, another for 304 days. Another client is coming back this weekend to re-look at two properties they saw just two weeks ago, and the one they were most interested in is gone. On three other houses I've called this week to get more information about from the listing agent, I've been told that they were in some part of a deal process.

This doesn't mean that the whole market has suddenly taken off. The houses I've been calling about have generally had a few factors in common —  3 bedroom older farmhouse or "charmer" style on a few acres, outside of a village or hamlet, in the western part of Sullivan, with asking prices from $150,000 to $250,000. A few of the 50+ acre bargain priced fixers in the $250K to $300K range are also gone.

This is very much a surprise to me, after such a lackluster winter. But it's a bit of a reprise of last year, where we had very little happening during the first couple of months of the year and then all of a sudden affordable-range properties started moving.

Comments

[ar]

The key question, not answered in Dave's post, is the selling prices of these movers, because they are establishing the new value comparables. The selling prices also measure the wealth destruction in relation to boom-period purchases. Too bad this critical information is so hard and takes so long for the average Joe to obtain.

[rod]

Prices have become compelling -

Life goes on - the world didn't end, and Sullivan County is still a bargain (with very limited well-priced inventory).

Real estate is a life decision with long term ramifications- not a liquid investment to be cashed-out on a whim. It's nice that that truism has been reinforced over the past few painful years, and I'm sure the buyers coming through the pipeline presently are well-aware of the commitment being made when purchasing real property.

[Bix]

I'm not surprised that things are moving. That's how markets work. Prices decline, that brings in buyers at the low prices, and then prices eventually work their way up.

For instance, some weeks ago I noted with alarm a house selling for something like 40K on the main road in Callicoon Center. That seems to have sold or gone into contract, as I notice its price isn't listed on real estate sites any more. That is still an awful price (unless the house is a complete wreck that has to be demolished, in which case the buyer would have overpaid at anything near 40K).

[David Knudsen]

ar, have you contacted the county legislators about making sold data easily publicly accessible? That's where that should be happening, like the ACRIS system in New York City. Making sold data, which is public, easily available to the public, is a government function. In most parts of the country, you can click on a county website, and see all the relevant information for a property. But not here in Sullivan. It's pretty deplorable that the public has to schlep to the county building in Monticello if they want to research recent 'solds'.

[Ms Nancy]

My grandfather used to say, "When you buy upstate, you are buying forever"

haha very interesting how true that is today with property being so illiquid, especially land.

[Brad]

David,

What is happening with taxes in this county?
Everything I see has higher comparable taxes than Columbia and even Dutches counties.

I saw an old farmhouse on 15 acres in Fremont with taxes at 12,500!
Another newer ranch in Bethel on only 10 acres with taxes at around 15,000!

I see better value in Ulster, Dutchess and Columbia or Greene counties.

These shennanigans in Monticello better get it together b/c you are going to see a HUGE influx of forsale signs in the coming years.

Brad

[David Knudsen]

Not sure where/how you're getting your tax info. But you need to know what you're doing when you're looking up taxes, to make sure you're not seeing taxes with an unpaid school tax rolled into the next county tax bill. If you post the identifying info on those two properties (address, MLS number if it's on the market, whatever), I'll check out those two. I couldn't find anything in Fremont on 14 to 16 acres with $12.5K in property taxes. I've also posted a pretty in-depth piece about property taxes in Sullivan, and how to make sure you're calculating the correct info, at http://www.catskill4sale.com/taxes.asp.

[Brad]

David, the above examples are not for sale. They are people I know who I looked up.

http://webapps.scgnet.us/IMO/index.aspx

Sullivan County is going to have a real-estate tax revolt!
Mark my word.

Fact: This county has more grievences and more non-payment of taxes than any other county in New York State. This is official information from the treasurer's office.

[Brad]

David,

I believe you paid $1666 per acre 10 years ago for your 18 acres.

What would your 18 acres sell for today?

Brad

[Nick]

I wonder how much the weather matters. It's been like night and day, I went from slogging a quarter mile or whatever up a hill in (literally) four feet of snow to wearing a T shirt and cutting up a few of the downed trees off in the woods (no damage at all through all that, yay!).... re-seeding the lawn, and enjoying the sunshine in what seemed like zero time at all.

It was almost disconcerting how quickly it happened, I had drifts easily 8-9 feet tall maybe a month ago or less, and last weekend when i went back they were just gone entirely.

Seeing as how demand is probably more consistent than the erratic weather maybe this is the effect of a logjam of pent up shoppers being released finally. I felt like I lived a good chunk of my time up there this winter encased in snow and ice. Suddenly I'm doing the "oh cool, yeah I own a summer house, this is fun" thing again.

Oh and my last propane bill was miniscule, and I probably won't have another until September. Woo hoo! I digress. It's been enjoyable reading all the gloom and doomers on the blog this winter. It's fun to be reminded that there ARE really really good reasons why buying into Sullivan is actually kind of fun. And this winter was BRUTAL. I think I dealt with more snow insanity in one short stretch than even when I lived in Colorado. The fact that sales were horrible in Jan/Feb shouldn't be a total shocker, and if I recall correctly the first real snow came down the weekend before Thanksgiving and I didn't see the ground again until about last week. That's not normal.

[Seymour Phillips Shapiro from Andover where I prepped]

I believe the title of this thread was:

"Stuff is Moving"

Dave, my friend, take a look into the pipeline of pending deals via MLS.

You'll see it's 91.

Anything under 100 is quite weak since this represents deals that will (or will not) close in the next 30 to 90 days out which brings us into mid June.

And then you have to factor of the deals that close in the next one to three months, what kind of houses are we talking about.

Short sales and foreclosures to drag the median sold price down more?

Yours,

Seymour Phillips Shapiro IV

[Cuomo's couisn]

I agree with the realestate taxes from the poster above. This is an expensive county when it comes to taxation.
Why does a house whose FMV at 200k have taxes of $8,500 in Liberty or Bethel?
My uncle has a house valued at 550K in Redhook (columbia/Dutchess border) and pays less than $4,000 in taxes.
In NYC suburbs, for a house to have $8,500 in taxes, it would have to have a FMV of at least $1.2 Million.

If this isn't small town corruption, what is it?
I think the county is selective in taxing the city folk vs the locals.
I will have Andy Cuomo look into this.

[David Knudsen]

Brad, I just looked through every tax parcel in Fremont Center ranging from 13 to 17 acres, and didn't find one with a tax bill approaching $12,500. There are some lakefront homes on Tennanah Lake with bills in that range, as well as some considerably larger parcels, but nothing that I could find that matched your claim of an "old farmhouse on 15 acres in Fremont with taxes at 12,500". To have a tax bill of that amount, a property would have to have an assessment of about $380,000, translating into a market value (with the equalization adjustment) of $584,000. There was a restored farmhouse sold last year on 11 acres in Fremont for $565,000, and the tax bill on that is $9263, which is actually a little shy of the 2% to 2.2% of market value number I suggest as a rule of thumb for property taxes in most areas of the county (with the exception of the village of Liberty.)

So if they're properties that you looked up, please post the property addresses (or if you don't want to post them publicly, shoot them to me in an email), so I can see the same thing you're looking at, and figure out what's up with those taxes. The implication of your post is that it's a cheap house getting slapped with $12.5K in taxes, and not some big fancy renovated farmhouse that might have a market value of $600,000.

Regarding the value of the land I bought, a 4.35 acre piece directly across the road with the same view sold last fall for $80,000, or $18,390 per acre. Now, you can't translate that per acre cost directly (or $331,000), because a lot of my acreage is wooded downslope, but I would venture that if my raw land were on the market today it would sell for somewhere between $125,000 and $150,000, or around $8,000 an acre.

And can you post or email me the cite for the info from Ira Cohen's office about the number of tax grievances and non-payment of taxes. I think that's really interesting, and would like to find out more about it.

And CC, if there's a house with an FMV in Bethel of $200,000 and taxes of $8500, that owner should probably grieve their taxes. Keep in mind that "assessment" is not the same thing as "fair market value". Townships assess at different percentages of fair market value, and it's adjusted with something called the "equalization rate". So a house with an assessment of $200,000 in Bethel would have an FMV is $441,000, given Bethe's 45.31 equalization rate. $8500 in taxes on a house with an FMV of $441,000 would be pretty right on target.

I would agree that taxes in the Village of Liberty, and for some properties outside of the village but within the Liberty school district, are totally out of control. But the rest of the county hovers pretty close to a 2% to 2.2% of FMV range.

Something that also needs to be taken into consideration isn't just the value of a house in different areas, but how much house are you talking about? A house in Westchester valued at $1.2M may only be a 4BR, 2.5 BA house on 1/4 acre. That same house at Emerald Green here in Sullivan County might have a market value of $250,000, and a tax bill of maybe $5500.

I'm not saying that taxes aren't high here. Certainly the tax rate is, partly because property values are lower(the roll), partly because so much property in the county has agriculture and forestry exemptions, and partly because we have so little commercial tax base. Some of it is a function of mismanagement in this county in the past, and some to the stubborn adherence to home rule, which I've riled about on this blog a number of times. But I don't think it's due to corruption, and I do think the township assessors for the most part do a pretty good job and try to be fair.

If you think your taxes are out of line, grieve them! Talk to the assessor. Ask them why they think your house is worth $400,000 when you think it's only worth $250,000.

[Brad]

Grieving wont help as budgets are already set. An assessor will not bring one's FMV down 50%. They have budgets to adhear to and that's it.

On the price per acre of your property; it's interesting how in 10 years, your land alone would sell for 4.8 multiples the amount even after the bubble is open and done with. This is another example of how land here in SC has a long way to go reach pre-bubble levels. My home in nyc is worth less than double of what it was worth in 2000. I think paying double of what they paid in 2000 is fair. Not almost 5x that amount.

Brad

[David Knudsen]

Brad, you clearly don't understand the process. If you demonstrated, through the presentation of responsive comps, that the value of a house had dropped by 50%, the assessor would have no choice but to reduce the FMV for assessment purposes on the property. However, the assessor may not agree with your selection of comps, and may counter you with a different properties that demonstrate a different value. Then it can end up in court, and there are probably hundreds of court cases a year that end up in court over these valuation disagreements.

The tax roll and the tax levy are different things. The tax roll is the total value of taxable property in a tax area. The tax levy is the budget divided by the tax roll. So ultimately as values decline, the levy will go up. So a reduction in the assessment on a house doesn't necessarily translate into a corresponding reduction in taxes.

So to say that "greiving won't help" isn't really true. No, it doesn't reduce the jurisdiction's budget. But it can bring your property in line with where it should be from a valuation standpoint.

I'd still like to check out those properties you mentioned before, with the $12,500 taxes on 15 acres in Fremont, and the ranch on 10 acres in Bethel with $15K. So please post them or send them through in an email.

Finally, I'm sorry you didn't make such a great purchase in NYC when I probably made a savvier one here in Sullivan County. But to say that because your house only has appreciated X amount in 10 years means that all real estate everywhere should also only appreciate X amount as well is just plain silly. That's like saying that because you bought some stock at $50 a share that's now worth $75 a share, all stock in the same period should only appreciate by that same percentage.

[SWSIII]

Dave, my man.

I think you are confusing "Appraiser" with "Assessor".

It's quite easy to be confused about these terms.

An "Appraiser" sets current market value on property by using current compariables of sold properties.

An "Assessor" is hired and paid by a town. An "Assessor" might use recent sold properties but if a township has a specific "equalization rate", it is quite hard for the individual to know what their home is worth since the equalization rate is never par value.

If the property owner thinks they are getting fleeced by their town, it's better to find out what similar properties on the block are "ASSESSED" at and work from that figure.

Samuel Whitmore Schabel III

Andover? Wow! Anybody playing lacrosse at Choate on this board?

[David Knudsen]

No, I'm not confusing "appraiser" and "assessor". Yes, you do need to find out what similar properties are assessed at, because in any given town, all similar properties should be assessed at a similar amount. And that's one of the strong cases for making a grievance, unequal assessments. But assessors are also very cognizant of what houses have sold for, and it is that sales information that helps them establish the market value for property. The equalization rate, by the way, is publicly available, and some townships do actually assess at 100% of market value (Lumberland in Sullivan). Others assess at anywhere from 3.56% to 75% of "market value". You can find equalization information here: http://www.orps.state.ny.us/cfapps/MuniPro/muni_theme/county/county.cfm?swis=48 The grievance process can be a complex one. But assessors absolutely do take into consideration recent sales when determining both the market value and assessed value of a property.

[Helen]

what about when a buyer pays about a certain % above or below the FMV. Does the sale price become the new FMV?

[BD]

David, who is going to buy all the assets from the baby-boomers when the baby-boomers want to redeem? It sure doesn't look like Gen-X really has the money or cares in making purchases.

[TwinPeaks]

David, you sure you would be able to get 8k per acre for your land if it were unimproved?

Check this one out by Freda located on John Dietz rd. It's the most comparable to yours with views and location. It sold during the boom for 80k. Current owner trying to flip it for 4 years now but can't sell. It can't fetch more than 60k today. Why would anyone spend 3-4k per acre when you can now get land in Orange county for 3k per acre?

www.fredarealty.com/realestate/index.asp?ListingLocationID=&ListingCategoryID=5&ListingID=368#

[David Knudsen]

Kind of academic, Twinpeaks, since my property isn't on the market. Maybe it wouldn't pull $125K to $150K, maybe more $100K to $125K. And maybe I'm wrong, that now wouldn't be the time to sell nice land until there are more folks who want to build houses.

Even though I'm not a seller, I could be suffering that affliction that befalls many sellers — that owners of an asset tend to overvalue that asset, versus what the market is willing to pay for it.

As regards land prices in Orange versus Sullivan, without seeing the actual land available there for $3000 an acre, it's hard to make a comparison. But do send along the link, when you find it, for a 20 acre parcel with western views for $60,000 in Orange County.

[Kev]

Here is one, asking 4200 per acre in Orange county.
Perfect horse property for sale by realtor.

http://hudsonvalley.craigslist.org/reb/1665861542.html

Tax Map #5-1-10.2 in Minisink, 1.5 hrs from NYC
High and dry, no wetlands.

Why would anyone want to spend more than 3-4k per are for land 1 hour north?

I know the land and can tell you it will probably sell around 3k per acre after a year on the market.

PS When you see so many realtors selling off their lands, you know there is trouble coming.

[David Knudsen]

"Why would anyone...?" is a subjective call. Maybe someone wants to be closer to the Catskill Park, wants property with a bigger view, wants to be closer to fly fishing, or whatever. If that property is right for someone, it could be a great deal at $4K and change per acre. But it may not be right for everyone, and one thing I find is that raw land tends to be very personal among buyers. They tend to look and look and look until they find the land with just the right emotion.

But you can't make a broad brush statement that because there is a 70 acre piece in the far northwest part of Orange County on the market at about $4,200 acre, then it follows that another 70 acre piece, which may have very different characteristics, an hour north is worth 'only' some percentage of $4,200 an acre.

This property does illustrate an interesting phenomenon that may offer opportunities. There was a lot of speculation during the run up years on larger raw land parcels that could be subdivided for a profit. probably more so in Orange (banking on the continuing suburban expansion around NYC) than in Sullivan, although there was plenty of that here, as well. The market for developer property, and subdivided lots for new homes, has sort of collapsed, and as a result there are probably a lot of investors looking to get out of these properties. So I think it's fairer to say that investors may be looking to sell of lands, not specifically Realtors. The Realtor, in this case, may be wearing an investor hat.

This is creating an interesting situation, and significant downward price pressure on larger size vacant land parcels. There aren't any developers out looking for them, at least in my experience. And at $4,000 an acre, in 70 or 100 acre chunks, they're too expensive for the moderate range buyer for personal use, who is looking for a nice getaway home site. They're out looking at a lower total price range, maybe $40K on the lower end to $125K on the upper end for something with a view or stream. They're looking for 5 or 10 acres, not 70 to 100. We're in this situation right now where a buyer can pick up 75 acres for $200K and change.

[Bix]

At one point last year I was looking around for an overseas friend who was interested in buying raw land as an investment. We came up with very little, mainly monstrosities like a 5-acre parcel in Bethel for $250K. Eventually he gave up.