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

[ANM]

interesting CNN news item today suggesting a Double Dip in housing prices. Is so, expect even greater slowdown in secondary housing markets.

http://money.cnn.com/2010/08/24/real_estate/existing_home_sales/index.htm?source=cnn_bin&hpt=Sbin

ABNM

[C. Edwards]

Yes it's all bad all over. Not just in Sullivan.

But David, I don't inderstand one thing. Up to 10 years ago, real estate taxes in Sullivan, Ulster, Dutchess and Columbia were much more reasonable compared to market values. RE taxes are out of line with FMV's. What has happend in the last 10 years that RE taxes are so high? My road isn't even paved. It's the last one to be plowed in the winter. I don't have children that utilize the sullivan west school district, yet my taxes are double of my Nassau county taxes and my upstate home is half the size!

For some reason, I think second home owners are targeted with higher taxes.
Also, I notice RE taxes are similar or even higher in Sullivan than they are in Columbia or Dutches. Things are getting out of hand.

[Baubles]

I live in Dutchess County. We've been 'browsing' for a 2nd home in Sullivan for a while now. While I've seen some really enticing prices, and we've been tempted to bite, the number 1 factor that is now holding us back is the taxes. Smaller houses on smaller plots of land than our primary residence are over double the taxes. It's insane. I just can't justify spending 10k a year on taxes in Sullivan, when my house in Dutchess county costs under 6k in taxes.

[Ken]

I seem to remember several stories about the construction of the Sullivan West High School and what a fiasco that ended up being with cost over runs, etc. Didn't that add a significant increase in property taxes for those in that district?

Aside from high taxes, it's also not helping that the construction on highway 17 is causing nightmares every summer for people trying to get back to NYC on a typical Sunday afternoon. Maybe brokers should remove their favorite tag line "2 hours from the GWB" until however many years it takes to finish the construction. The timing couldn't be worse.

[David Knudsen]

Baubles, I'm not quite buying that taxes are double here in Sullivan compared to Dutchess. I think in Dutchess they're probably all over the map, just like they are here in Sullivan. I just went and looked at a couple of Realtor websites for Dutchess, and pulled up properties in the $450,000 range with from 3 to 5 acres. I saw taxes ranging anywhere from about $5,500 to $16,000, and everywhere in between.

Probably the biggest difference between here and Dutchess is the number of people. In Dutchess, there are 282,878 people in a county with 825 square miles, or 355 people per square mile. In Sullivan, we have 76,189 people spread over 997 sq. miles, or 76 people per square mile. The number of taxable living units per square mile is one of the biggest factors affecting property taxes per living unit. And here in Sullivan, the average FMV "fair market value" of most of that taxable real estate is very, very low. If you have a house here with an FMV of $350,000 or $400,000, you're probably in the top few percentiles of taxable value. The percentage of very low value properties here to the total tax roll is probably much higher here than in Dutchess.

There are other factors, of course, like amount of taxable commercial property (we don't have a lot), large acreage with tax exemptions (and agricultural and forestry exemptions far outstrip the oft-maligned non-profits here), and the inefficiencies in our government (due much to our cherished home rule and 8 separate school districts.)

[Joey]

I agree. Sullivan's taxes are way too high. I was looking at a home on 40 acres in wawarsing whose taxes were only 2800. I've seen homes on similar acreages in Livingston Manor or Bethel with taxes nearing 10,000 per year. That is way too much.

On side note, actuaries predict the USA will be bankrupt within 5 years.
Double the income tax, RE tax, capital gains tax and allow the bush tax cuts to sunset and we will still be bankrupt.

[Baubles]

David...I appreciate and value your advice. You've obviously gone back and done research for us. (Thank-you.) But a lot of this is a buyer's impressions of the area. If you go out and see multiple houses and all you encounter are taxes 10k and above it leaves a bad taste in your mouth. There's lots of competition out there right now, and buyers will go some place else if they don't like what they encounter. I can't imagine I'm the only buyer put-off by those high taxes.

[ch]

Baubles, why would you want to buy in Sullivan if you are coming from Dutchess? Better off staying where you are. It's a better area.