Sullivan County Real Estate

The Debt Crisis and Real Estate

Almost everyone I talk with is totally disgusted by the dysfunctional circus playing in Washington over the debt ceiling. People are venting their frustration in blogs and posts all over the internet, so that isn't the purpose of this post. The uncertainty, though, is taking it's toll on real estate in some very concrete ways both here and I'm sure across the country.

The biggest wild card is interest rates, specifically what will happen to mortgage rates if the debt ceiling isn't raised and interest rates rise as a result. Nobody seems to have a good handle on how high mortgage rates may climb if the unthinkable happens. A quarter or half point won't likely have that great an impact — the rate for a 30 year fixed mortgage would hover in the 5% to 5.25% range, still historically very, very low. But a 1% jump would change the affordability picture big time.

A question I'm getting from buyers is how they can protect themselves from skyrocketing interest rates if they go into contract on a house. One way, of course, is to lock their rate now. But the longest rate lock available is typically 60 days, and in some situations — particularly short sales — the transaction may be unlikely to close in 60 days. I've heard of a few situations recently where buyers have decided to lock and pay extension fees at the other end, to hedge. The fee to extend can be as much as 1% of the loan amount, and the option to extend (and the cost to do so) may not be guaranteed.

Another option is to put a rate cap in the contract as part of the financing contingency, so if the buyer is not able to get a mortgage loan at or below the specified interest rate they can cancel the deal. The spread may be 1/2% above the rates being quoted at the time of contract. Sellers typically don't like rate caps, because they see them as an out for buyers. But the risk exposure for sellers is generally pretty short. Buyers usually lock their rate within a couple of weeks of having executed contracts. The exceptions are short sales (where buyers may wait until lender approval of the short sale to finalize their mortgage) or transactions involving subdivision or some other factor that will add to the closing time.

If we enter a volatile interest environment, buyers can't be expected to shoulder all the risk. If sellers insist they shoulder all the risk — by refusing to accept rate caps or share the cost of extension fees — buyers may just close their checkbooks and wait on the sidelines until things settle down.

6 Sullivan County Post Offices Face Possible Closure

The U.S. postmaster released a "study list" today of 3,700 post offices nationwide being considered for possible closure as a cost cutting move. Six Sullivan County post offices — Fremont Center, Highland Lake, Kenoza Lake, North Branch, Obernburg and Pond Eddy — are on that list. Keep in mind that this is the 'study list', and the number of post offices closed in Sullivan may be less. For example, if North Branch, Obernburg and Fremont Center were all closed, residents in a wide northwest swath of the county will have to drive west to Hankins or Long Eddy, east to Callicoon Center or Roscoe, or south to Hortonville or Callicoon, to pick up their mail. (Much of that part of the county isn't covered by rural delivery.)

Click here for a complete list of all the post offices nationwide on the study list.

Stylish Can Be Hard To Find

I see hundreds of houses on the market here every year. A great many of them are very nice, but only a handful rise to the level of truly stylish. Stylish, of course, is a subjective moniker, and hard to define. It's one of those things that you know it when you see it, but you'd be hard pressed to put it into words. But buyers sense it. When I show a house that's more 'stylish', they often express much more delight and appreciation. Something interesting frequently happens when showing more stylish houses — buyers often sit down for a while in the living room or other common space to enjoy it. Recently I showed a house I particularly like at Merriewold, and we all ended up sitting for ten or fifteen minutes on this lovely screened in porch!

So what makes one house 'stylish' and another one not? It's not just money. There are some very pricey and large houses on the market here that are fine, but not really stylish. And there are some smaller, less expensive houses that just ooze style. A big factor is interior decoration and color choices. But it's also the architectural style, setting, fit and finish, and lots of little details like doors and windows.

One challenge in selling more stylish houses is that they're not cheap. They're never the least expensive, pound for pound, in any given property category. You can pick up a more run of the mill 3 bedroom, 2 bath house on 5 acres here for $250,000, but something similar but with a lot of style might run $300,000 or $325,000. And some stylish houses can be indiosyncractic, very unique expressions of their owners' tastes.

In the slideshow at the left, I've pulled together 11 houses currently on the market here that I consider quite stylish, ranging in price from $349,000 to $1.8M. You may be saying to yourself, "There are over 1,000 houses on the market and David only picked out eleven?" This doesn't mean that there aren't dozens and dozens of other very appealing houses on the market here, but rather that truly stylish places are few and far between.

To look at the individual properties in this group, you can click on a house as it cycles through the slideshow. Or click through here to see all of them together, with additional details,

Latest Market Conditions Posted with June Data

I just posted my latest Current Market Conditions report, with sales data for Sullivan County through June 2011. The latest sales data is refreshing. The sales volume for the latest 3 month period is about on par with the same period a year ago, as is the median sales price. The average sales price, though, shot up 17.4% from the same period a year earlier. The reason? More sales at higher price points. For the latest 3 month period, there were 9 sales above $400,000 (including 4 between $600,000 and $800,000), compared to the same period last year when there were only 4 sales above $400K (and none above $600K). While I wouldn't call the activity robust at higher price points, it indicates some revival of interest above the affordable to moderate range.

Please check out the latest Market Conditions Report and then drop on back here to share  your thoughts on what you see happening in the Sullivan County real estate market.