For the 3 month period ending Jan. 31. 2009, there were 106 closed single family sales reported in the Sullivan Multiple Listing System, down 23% from the same period a year earlier. The three month average ($178,155) and median ($148,500) sales prices were down 9% and 10% respectively from year earlier levels. Some data watchers may notice that there was an uptick in the average sales price from the December 3 month reporting period, to $178,155 from $171,058. However, don't get too excited. That uptick is wholly accounted for by a single $1.75M home sale at the Chapin Estate in January. With that single sale pulled out, the January 3 month average drops to $163,185.
Regular visitors here know that I'm a strong advocate of using 3 month data samples rather than single month data to reliably illustrate trends due to the small number of sales here. But the latest 3 month data may paint an unrealistically rosy picture of the market. Many of the sales closed in November, for example, reflected buyer activity before the September Lehman collapse, while December and January reflect more current buyer activity. On an single month basis, the November '08 median sales price was $149,500. That dropped to $140,000 for December '08 and fell further to $129,000 in January '09.
One factor pulling the median price down is the significant pecentage of foreclosure sales. For the latest 3 month period, 23 of the 106 reported sales (22%) were bank-owned properties. The median sales price for these foreclosure sales was just $72,750.
Notably, in an indication that we are firmly in a buyer's market, the ratio of selling price to asking price fell below 90%, to 89.2%, for the first time since I've started tracking sales in 2002..
The Current Market
There was a noticeabe pick up in activity in January in the more discretionary, personal use parts of the market. It was the first month since last August when I was booked with appointments every weekend. I've also been fielding a steady stream of email and phone inquiries about properties. A number of other agents in the county I've talked to have also reported more activity, but by no means is the pick up universal.
While the pick-up in interest is a good sign, it doesn't mean we'll necessarily see a marked bump in sales over the short term. The buyers I'm talking with, for the most part, are very cautious and tentative. But interest is being piqued by a growing attitude that prices have come down and now could be a good time to buy — for the right property at the right price.
Buyers right now are absolutely price driven. They want a deal, and who can blame them. They're in the driver's seat. By buying now, they're taking a risk that the market may fall further in this economy, and they want to be rewarded for taking that risk. If they don't find a deal now, they'll wait. There is absolutely no pressure to buy, and no fear whatsoever that prices may be higher in six months if they don't buy now.
Buyers are essentially saying to sellers, "Make me an offer I can't refuse." The question I'm asked over and over again by buyers is "How motivated are these sellers?" Buyers may love a house, but their interest drops way down if it isn't a motivated seller situation. We're also starting to see an offshoot of this buyer attitude — reverse bidding wars. I know of a few situations recently where buyers have found two houses the like and pitted the two sellers against each other to offer the best deal.
On the price front, I'm seeing buyers in 3 distinct categories, with a noticeable absence in others. First are buyers in the affordable end of the second home market, looking between $100,000 and $150,000 for a small cabin or cottage. There's an excitement among this group that, with prices falling, the second home getaway they've been thinking about may be coming back into their grasp. There's another group of second home buyers in the mid-$200 range back in the market for mid-sized farmhouses or "vacation chalet" style houses on a few acres with privacy. Buyers looking for these types of properties have been the core of the Sullivan second home market, and it's good to see them back, even though at a sharply lower price point. (A year ago their price range would have been in the low $300's.)
The third somewhat surprising group are upper range buyers (above $600,000) shopping for a great value in more "trophy" property. I've talked to a few folks in the last month who perceive that this may be a great time to grab a great value on something very special. This group of buyers is very small, and not to be mistaken for a surge in upper end interest. But the fact that there are buyers looking in this range at all is a big change over the last few months.
One interesting shift is the professional profile of buyers in all three groups. For the most part, they're younger professionals working in fields other than finance like education, IT, health care, law or government. There's an almost unspoken sense that for the past few years they've been priced out of a market driven by bonus-driven financial types, and to paraphrase an Obama-ism, "Our time is now."
Sellers, Asking Prices and the Inventory Picture
The inventory of single family homes on the market remained steady in January from Decemeber, with 920 homes on the market. This is about 8% less than a year ago. There just hasn't been a surge in inventory, as many have expected. One reason is that, in a heavily second home market like Sullivan County, selling, just like buying, if often discretionary.
Between December and January, the average asking price slipped slightly, from $286,550 to $280,326, while the median asking price held steady at $199,900. While this aggregate data indicates that sellers aren't making large price cuts, that isn't quite an accurate picture. This past month a number of properties had large price cuts, as much as 30%, that made them stand out as great deals. Some other properties have been relisted well below their previous asking prices, or put on the market at very attractive levels. The sellers in all these cases fall into the "motivated" camp. The percentage of homes that fall into the 'great deal' category is small, but those houses — and the interest they're generating — are driving the market.
In fact, with buyers so value focussed, an asking price that is perceived as a "great deal" is the ante to play. "Shock and awe" pricing seems to be the only way, for the time being at least, to generate buyer interest. An asking price that might have seemed good a year ago isn't today. Buyers are willing to look at houses that are OK-priced, but I'm finding that they aren't making the short list, much less generating an offer. And buyers are even refusing to look at houses they perceive as overpriced relative to their competition.
What Does This Mean for You as a Buyer?
It's definitely a buyers market, and that does present some good opportunities. There is a subset of homes here with motivated sellers or in distress situations. That's where buyers shopping for good values today should focus. Of course, the inventory of "motivated seller" properties is only a small subset of the total inventory, so the house you love, or the house with all the features on your checklist, may not be "on sale".
Be open to different options to land a great deal. If you want a farmhouse or a lake cottage, that's the first choice you should give your agent. But a great question to also ask is "What are the best deals in your opinion in this price range — style or setting aside?"
Keep in mind that low price doesn't always mean great value, particularly over the long term. I talk with buyers all the time who've been searching properties on the web that may be dirt cheap, but aren't necessarily great values. The fact is that, even with the market downturn, you're unlikely to find that idyllic little farmhouse on a quiet country road bargain priced at $99,000. Sure, there are sub-$100,000 'farmhouses' out there that look appealing from their closely-cropped photos that don't show the busy road location, the junk yard next door or the crumbling foundation and rotting sill plates.
Keep in mind that a property "priced to move" is probably going to be priced about 15% to 20% below its competition, not 50%. Quite a few buyers I've spoken with lately have somewhat unrealistic price expectations, even for a buyer's market. Consider what I often conjure as my "benchmark", that elusive 3 bedroom, 2 bath house on 1/4 acre on Swinging Bridge Lake. In June, 2007, it might have sold around $550,000 to $570,000. In June 2008, a good example sold for $495,000. Today, the good value price for something similar is probably around $450,000. It's not, however, $325,000 — where some folks may expect the price to be in a "buyer's market".
Don't rely just on automated systems, like Multiple Listing automated searches, to keep you informed of deals. Reach out and make a connection with a Realtor. There's a lot of "back story" behind quite a few listings right now. There are a number of sellers who have indicated to their agent that they are "very motivated" and to put the word out that they are willing to deal, but don't want to reduce their asking price.
Be realistic about what's likely in your market segment. For example, lots of second home buyers ask me about foreclosure properties, but foreclosures are much less likely among the types of houses that have strong second home appeal. I have yet to see a lakefront or renovated farmhouse come through as a foreclosure sale, although that could certainly change. But someone looking for a more suburban style house on an acre within the commuting circle in the SE part of Sullivan may want to hold out for a foreclosure property or a builder's closeout.
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.
