The big news is that the median sales price for a single family home in Sullivan County set a new record of $195,000 in December — up 4% from November and 7.7% from a year earlier. While prices were up, the number of sales for the 3 month period ending December 31 were actually down 21% from a year earlier. The average sales price, which is a less reliable measure of market trends, was up slightly from November and essentially flat from the year earlier period. (In the graph at left, you'll notice a drop in the average from its summer high — but the June/July/Aug peak was heavily influenced by a single large sale. Adjusting for that sale, the average has been essentially flat for 12 months.)
Real estate in Sullivan County appears to be bucking both regional and national trends, where modest price pullbacks (in the 2% to 5% range) are being reported. While price appreciation has certainly moderated from the breathtaking rates of the bull market, there is no evidence of a price downturn here.
The Current Market
I'd sum up the current market, from a buyers' perspective, as reasonably active, very selective and somewhat cautious. The fear that gripped buyers last summer and fall appears to have passed — Humpty Dumpty didn't come crashing down. But the unbridled exuberance of a year ago hasn't returned, either, which is keeping a cap on prices.
The low to moderate sectors (up to about $350,000) are quite active, with some life returning to the upper middle range ($350,000 to $500,000.) The upper end of the market, above $500,000, remains very sluggish. In the last 2 months, for example, I haven't received any calls about lakefront property at Chapin Estate (where lakefront lots start at about $500,000), which was a solid upper end performer for the past few years.
The brake on the market is not a lack of demand, but rather a lack of good inventory. In the 2 key second home market segments, $250K to $350K and $350K to $450K, there just aren't many great properties available, which is surprising to many second home buyers who expect that there will be dozens of cute, attractive, private, etc. houses to choose from.
I'm seeing a lot of interest among new second home buyers, who are just starting their search for a vacation getaway. They're at the 'information gathering' stage, and are not necesarily familiar with Sullivan County, or many of the other second home areas convenient to NYC. A challenge with many of these first-timers is that price expectations are often unrealistically low for the setting, acreage or house style they're dreaming about. The good news, though, is that Sullivan County is at the top of their list, and often their first stop. While we're not seeing a lot of quick sales out of this group because they're just at the beginning and exploring a lot of options, I think they will bear fruit in the spring and summer. when they have a better understanding that Sullivan offers the best second home value within 2 to 2 1/2 hours of NYC.
Recently, I've gotten a lot of calls about larger acreage (30 or 40 acres or more) for a personal home site rather than for development. This is picking up as a hot market sector, even with the price per acre running $10,000 or more for good property.
While interest is certaining picking up, one common element is a total lack of pressure to buy. I attributed a lot of buyer hesitation in the summer and fall to "bubble burst fear", but that, at least at a conscious level, seems to have largely abated. That fear has been replaced by a lackadasical epidemic of indecision. Today buyers see something that they really like — and would have bought in a heartbeat a year ago — and decide to keep looking, in case something they really, really, really like comes on the market.
Sellers, Inventory and Asking Prices
Inventory is remaining pretty stable, with 1,057 single family homes on the market as of Jan. 1, 2007, about the same as the beginning of Dec. 2006. The current level of inventory is up about 50% from the lows during mid-2005, and represents about a 12 month supply. WIth a 12 month supply, some observers might be inclined to call a strong buyers market, however that would be deceptive. The inventory of appealing houses — whether in the primary or second home markets — is far smaller. Inventory remains very tight in some categories, like renovated farmhouses on acreage, houses with big views, or well done lakefront houses in nice settings — three of the most in-demand sectors of the second home market.
The median asking price is holding at $239,900, roughly the same its been for 12 months, while the average asking price has recorded a modest 4% decline from its peak of $301,156 last June. For the 3 month period ending 12/31/06, the average sales price to final asking price was 92.3%, with less than 25% of properties selling for less than 90% of asking price. The ratio of sales price to original asking price was 87.6%. Neither of these ratios has shown a marked decline; during the peak of the market, the average sales price was about 94% of asking price.
However, this should not be read as encouragement to sellers to hold firm to their asking price. Houses that are selling may be averaging 92% of their asking price, but the key is that their asking price is within striking distance of market value. Overpriced houses for the most part aren't even getting shown, much less getting offers. Buyers are demanding resonable and demonstrated value for their money.
A curious "I'm giving my house away" mentality has settled in among many sellers, making negotiation quite challenging. Let me try to explain. Say a seller listed their house originally at $399,000, which was grossly overpriced and seldom shown. ('Market value' on the house might be around $325,000). At their broker's encouragement, they dropped the price after a couple of months to $379,000. It was shown a little more, but no offers. Then they come kicking and screaming to $349,000, just under the magic $350,000 threshold and within 'striking distance' of that likely $325,000 market value. At $349,000, the seller believes they're giving the house away because, after all, they've already discounted it $50,000 from $399,000 — so they turn down offers even slightly below their fire sale price. Now, maybe the seller accepts a $345,000 offer (which is still above what the seller should reasonably expect) and the inspection turns up a problem. The seller refuses to negotiate any further or repair the problem (insert here 1- septic 2- well 3- buried oil tank or 4- roof leak)— after all, they're giving the house away. . The key here is that the buyer doesn't think they're stealing the house — they're paying close to full price, and they expect some flexibility and compromise. So the buyer walks.
I would venture — with absolutely no hard statistics to back this up, just my recent experience and lots of Realtor chatter — that more than one third that enter the offer process (and with reasonable offers, not fire sale low ball offers) are not progressing to a close. Buyers aren't super-motivated right now, and if the seller is too much of a hassle, they're saying "To hell with it, another house will come along." I have to say that my buyer-clients have been pretty reasonable lately, and with some of the 'bad behavior' from sellers, I don't blame them for walking.
What Does This Mean for You as a Buyer?
Be realistic and flexible about what you're looking for. There just aren't a lot of 100% perfect houses. Those houses you see on magazine covers are few and far between, and if they're fabulous enough to be featured in a magazine, they're also probably pretty expensive. Here in Sullivan County, there are usually 4 or 5 'magazine quality' houses on the market at any given time, and are usually prices in the upper ranges, from $500,000 and up.
Keep in mind that the inventory of good houses is pretty limited. One thing I hear again and again is "We really like this place, but we're going to wait for something even better to come along." Sullivan is a pretty rural county, and we just don't have a lot of houses here, period. I can, however, give you a good idea of the likely turnover in the property category you're looking at.
When considering prices and value, its important to remember that while price appreciation has slowed here from peak rates, prices here have not dropped. The price/demand situation here is much more akin to Manhattan than either Long Island or Florida where there have been measurable price pull backs. Expect prices overall here to be similar to prices over the past 12 months, not 10% or 20% below where they were a year ago.
If you're not that familiar with Sullivan County, be aware that Sullivan is not a 'single' market, but rather a collection of submarkets, with different attributes and price points. South Fallsburg and Jeffersonville may both be in Sullivan County, but they have very different price points. A good parallel is the close in Jersey suburbs just on the other side of the Hudson from NYC. Union City, NJ may be only a few miles from Hoboken, but they have very different price points and appeal. I often recommend that if you're new to Sullivan County that you come up and spend the day just driving around to get the lay of the land without looking at any houses, and you'll likely narrow in on the areas that are most appealing to you.
Don't assume the market dies here in the winter, and you're the only buyer out looking. In fact, the period from mid January to mid March is one of the busiest in the second home market. The reasons? One is end of year bonuses in the city. The other is that if you want to be in a house for the summer, you need to start looking in the winter.
If you're considering buying a home here in Sullivan County,
please give me a call or drop me an email. I'd be happy to talk
with you
about finding and buying a home here.
