Sullivan County Real Estate

The New Value Paradigm

In light of the dismal national real estate numbers, a lot of readers of this blog may be  shocked the Sullivan County numbers this month (which I'll post on my Current Market Conditions report in early Sept.) Unless there's a tsunami of closings in the next week, the sales volume numbers are going to be sluggish. But both the median and average sales prices are poised to take a huge upturn. The 3 month average could be up by 15% to 20% over July.

So what's happening? Has the real estate market here suddenly gotten 'hot', with buyers clamoring for houses and pushing prices up? Not at all. What I'm noticing in looking at the 'solds' is that some buyers are grabbing really great deals on "better" properties at higher prices.

Consider some recent examples. A 4 bedroom lakefront house at Emerald Green, on one of the best parts of the lake, sold for $360,000. A dramatic 4BR contemporary on 1.7 acres perched on the edge of Fillipini Pond sold for $350,000. An old boarding house on almost 80 stunning acres closed for $285,000. A very quirky property — a 25,000 sq. ft. "home" on 33 acres, originally on the market for $1.59M sold for $500,000.

These sales, along with others that are similar, sold well above the median sales price, and collectively will pull the average up. This may make it appear that prices are firming, but they're really not. In fact, the prices for these properties are sharply down from where they would have been at the peak, and likely below where they may have sold 12 to 18 months ago.

I expect we're going to see more bargain buying in the "better dress department", as buyers stay on the lookout for great deals. Pricing property, which is already challenging, will likely become more difficult, especially for more unique or special properties. (Note: I'm not talking 'quirky' here, but about those that are truly special.) For example, the Emerald Green and Fillipini lakefront sales would indicate that the market price for a 4BR lakefront home might be $350,000 to $400,000.

But what about a similar sized house on Wolf Lake, with a more desired rustic mountain lake setting? (4BR houses on Wolf Lake can be very tough to find.) Or hilltop contemporaries with wide panoramic views. They're also in very short supply. Demand is such in both cases, that the houses don't have to be "distress priced" to move. I'm sure that the sellers of these houses have taken much less than they wanted, but they didn't go at fire sale prices. They didn't need to.

But the number of those truly special and unique properties, and the buyers for them, are quite small. Most properties, particularly at the upper price points, will need to keep coming down until some of those value shoppers start chirping, "Wow, what a deal! It's amazing that we can get (that much acreage) (that kind of lakefront) (that large a house) for that price." There's a new value paradigm afoot, and sellers are going to have to adjust to it.

July National RE Sales Plummet

The National Association of Realtors just released the Existing Home Sales (EHS) data for July. The numbers even made my jaw drop. Nationally, existing home ssales fell 27.2% in July over June, and are down 25.5% from July 2009. The picture was even a bit more dismal in the northeast, where July sales were off 29.5% from June, and down 30.3% from the same period a year earlier.

Certainly one impact factor was the expiration of the home buyer tax credit. The credit technically expired at the end of April, but that only meant to qualify for the credit a house had to be in contract by April 30th. Buyers had until June 30th to actually complete the sale. So some of those dragged out closings were in the June numbers but not in the July numbers. But that would be unlikely to account for the lion's share of the drop off.

Some folks say the big drop off in the Sullivan market is the sceptre of gas drilling. If that's the case, you'd expect the sales performance here to be much worse than the region as a whole. But in July 2010 (looking at a single month, not my usual 3 month sample)  single family home sales were down 31% from July 2009 — right on par with the -30.3% reported for the northeast region.

Instead, the big kahuna is this damn recession that keeps holding on like a bad winter cold. Folks are just holding on to their money until they see a light at the end of the tunnel.

What's kind of surprising today is that with such bad housing news the stock market didn't fall off the cliff. Down about 1% at 12:30P. There's still a few hours to go, and the last couple of hours of the trading day can be volatile. (Update: I was wrong on this one. The stock market did end up taking a tumble.)

Comments Not Working? Please Help Test

Thanks everybody for checking. It's working now!

Hi, all,

I went in to add a comment to one of my posts (which I do the same way readers of this blog do --- go to the post and add a comment on the bottom.) The Post and Preview buttons are grayed out and won't 'push'. I've tried it in IE8 and Firefox, cleared the cache, even tried it on a second computer. (Weirdly, it does work from my phone.)

I'd appreciate it if anyone dropping on my here could check to see if it does or doesn't work for them as well. If it does work, then you can just leave a comment "Hey, works for me. I'm using (Firefox, IE, Safari) and am on (a Mac, Xp, Windows 7)." If you can't leave a comment, could you shoot me a quick email to davidk@beechwoods.net.

I've opened a support ticket with Typepad, but any info I can collect I'm sure will be helpful.

Thanks.

My Tekkeon Battery Backup

I go back and forth about ditching my telephone landline. A landline always seems to work, even when there's a power outage, like there was yesterday at my house. Relying on only a cell phone at my house is problematic, because I live in a cell "shadow" and have to use a cell booster to push the signal into my house. (See my Feb 2009 post on my Wilson booster.) But that cell booster needs electricity. Just a little bit, but electricity none-the-less. So that's been the deal killer for me to ditch the land line. No electric, no booster, no cell.

Then I discovered the Tekkeon MP3450 myPower ALL Rechargeable Battery, an unobtrusive little thing that provides just the power I need for the booster. It's about a hundred bucks. It has a "main" power outlet (with 9 tips) that connects to the cell booster, and a secondary USB power port that connects to my Droid X. My power went out yesterday for about 6 hours. I decided to ride out the outage solely with my cell phone, with the Tekkeon powering the booster. No problem. There was plenty of power to spare.

It may also be possible to power something like a cable modem, if you have a voice-over-ip phone. The Tekkeon comes with 9 different connector tips and variable voltage selections. I'm thinking about getting a second one for extra power for my laptop, so by using the modem connection on the Droid I could stay connected and work for hours when the electric goes out.

I've Stopped Shopping at Target

I no longer shop at Target. I'm asking my friends and colleagues to stop shopping at this hypocritical pseudo-hip retailer as well. Target has promoted itself as the style, fashion and design discount retailer, with a liberal tilt. It makes donations to community organizations, pays lip service to equality with pro-gay employment practices, and stages edgy fashion shows in the windows of the Standard Hotel above the Highline. (Is that a slap in the face or what, right on the edge of Chelsea? And shame on the dozens of models who took part for not turning down the gig.) But Target is nothing more than a profit driven corporate behemoth masquerading under a patina of slick design.

Last month, ostensibly pro-gay Target made a $150,000 donation to the campaign of Tom Emmer, an anti-gay marriage Republican running for governor of Minnesota. (Emmer is also a supporter of the Arizona anti-immigration law and a darling of the Tea Party movement. So I expect Latinos will be exiting Target's aisles in droves as well.) Note the amount of the donation. Not $5,000. Not $10,000. $150,000. That indicates some serious support among Target honchos for this candidate and his beliefs.

Following a growing nationwide uproar about Target by gay people and our friends, and mounting pressure from investors, Target CEO Gregg Steinhafel issued a p.r. driven pseudo apology for the donation. But the company has yet to do anything more concrete, and the hollow apology seems little more than spin crafted by high priced p.r. hacks.

I'll miss Target. I like shopping there and I like their stuff. But no matter how much I like it, I don't want even a fraction of a penny of every dollar I spend there being funneled to anti-gay political candidates. So I've stopped shopping at Target. And I hope you do as well.

Check out this clever agit-pro video from YouTube with a catchy tune "Target Ain't People"

Finally! Latest Current Market Conditions Posted

I finally caught a breath and finished the August Current Market Conditions Report. This month's figures are going to red meat for the market bears. The average single family home sales price reported in the Sullivan MLS for the 3 month period ending July 31, 2010 (hey, how's that for a long descriptor for a single data point) dropped sharply, to $136,704, the lowest 3 month average I've recorded since June 2003. The price picture may be a brighter for the next few months, as the average sales price for the six weeks since July 1 to date are pointing higher.

The most interesting part of the data, though, is on the seller side. Sellers seem to finally be getting the message. The average asking price has fallen more than 2% a month for each of the last 3 months, a cumulative drop of 9.2% since January.

Check out the latest Current Market Conditions report and then drop on back here to leave your thoughts.

I Know I'm Late

I always try to get the Current Market Conditions Report finished and posted by the 12th or 13th of the month. But this month it ain't happenin'. I've been slammed busy the past couple of weeks, with back to back appointments last weekend and this weekend. That's a blessing I'm not complaining about in this market, but it means some things — like carving out the six or seven hours to put together the market conditions report, or mow my lawn, are getting back burnered. I hope to get to it early next week.

Blog Cabin / Bethel Premiers Thurs. Aug. 19

The DIY Network's Blog Cabin tv show took on renovating a dated ranch house in Bethel for its 2010 season. Work on the project has been underway all spring, and the results are pretty dramatic. The results air in a 7 part series, starting Thursday Aug. 19th at 10PM and running through Sept. 30th.

For a sneak peek at the renovation, check out the Blog Cabin website. That's where you can also enter to win this house, starting Aug. 19th. One of the big attractions of the popular Blog Cabin series is that one lucky viewer wins the house they build or renovate each season.

Catskill Farms was the lead designer and builder of the project, but the on-air is covered by teams of Blog Cabin personalities who drop in for individual episodes dealing with specific parts of the house, like the kitchen, the baths, landscaping, etc. I'm pretty sure Chuck Petersheim, the owner of Catskill Farms, gets some on-air time, though, because I noticed prior to this taping he took off a few pounds and got an upmarket haircut (lookin' good there, Chuck.) And that was no small feat, because Chuck's wife Lisa is a great cook.

The most exciting thing about this project, apart from shining a spotlight on Sullivan County, is that it shows what can be done to transform a plain, ugly duckling ranch house. City folks looking to renovate a country place generally think "farmhouse", but there aren't that many untouched farmhouses available, and often have significant drawbacks like low ceiling heights. There are more opportunities here in Sullivan County for the rehab-inclined to transform a dated ranch house, and this series offers a lot of inspiration.

If you want to do a drive by of the house, the address is 349 Happy Avenue in Bethel.

The Value of Cash

There must be a lot of cash sitting on the sidelines. I would venture that about half the potential buyers that have called me recently say they're looking to pay 'all cash' (meaning they won't need a mortgage.) While paying cash certainly streamlines the purchase process, most all cash buyers have the expectation that by paying cash and not requiring a mortgage will have extra appeal to sellers and therefore a sharply better deal.

In some scenarios, cash is king. But in many situations and to many sellers it doesn't have anywhere near as much value as cash-laden buyers believe. One situation where cash has great value is when the sellers want to close quickly. But "need to close quickly" situations are less common than you might think. Another is bank owned foreclosures, where either the lender's tight closing deadlines make arranging financing difficult, or the home's systems aren't operable to qualify for conventional financing. Rehab or fixer properties are another category where cash has weight. While it's certainly possible to get financing for rehab projects, the process is time consuming and cumbersome.

The vast majority of buyers don't fit into those scenarios. In other situations, including short sales, all cash is somewhat more appealing, but more in the range of a few percentage points on the price, not the 20%, 30% or 40% that all cash buyers often think it deserves. Yes, a cash sale does shorten the closing cycle by three or four weeks, and it eliminates the risk of an appraisal shortfall. But if the deal has been struck at a good supportable price, the shortfall risk should be minimal. Even in a short sale, a lender's decision on what they'll accept will be based more heavily on time on market, listing history, and the amount of the outstanding debt than on whether the buyer is paying all cash or arranging financing. Don't get me wrong — cash has some value. But it's unlikely to sway a lender in a short sale to agree to a price of $250,000 when their approval model indicates $350,000.

With regular "non distress" sellers, it's striking sometimes how little attention they, or their agents, pay attention to the financing terms. Their eyes go right to the offer number and that's what they focus on. Unless there is some other motivating factor, they just don't seem to care that much about whether a deal is cash or financing.

That's not true in all cases, and all cash buyers should certainly try to determine whether all-cash would be a significant factor in a negotiation. But don't be overly surprised when the cash element doesn't result in the seller agreeing to a much lower price than if you weren't paying all-cash.

NY Senate Passes Drilling Moratorium

In an unexpected move, in the wee morning hours yesterday the New York State Senate approved a moratorium on the issuance of any permits for gas drilling in the state using horizontal hydrofracking until May 15, 2011. The vote was 48 yea, 9 nay, an overwhelming bipartisan showing. The moratorium bill now needs to go back to the Assembly for final passage when it reconvenes on Sept. 15th. But the Senate vote was the big hurdle.

The moratorium is shorter than anti-drilling activists had originally hoped for. Initially they were pushing for a moratorium until after the U.S. Environmental Protection Agency completes its study of hydrofracking, not expected until sometime in 2012. A month ago, it was thought that any moratorium bill was unlikely, lost in the dysfunctional rubble of the Senate's budget maneuverings, so the 11th hour passage came as a pleasant surprise.

The Senate action reflects growing citizen concern in New York about hydrofracking, and that this is not a peripheral issue where lawmaker votes can slip under the radar. Kudos to Catskill Mountainkeeper for keeping this front and center with New Yorkers. For the first time I have some real hope that New York may have some political backbone left, and will stand up to Big Energy to ensure that if drilling does come to New York, it will be on our terms, and not on terms worked out in back rooms between Dick Cheney and the energy hacks.