Volume is up a bit, prices are down a bit, the kind of mixed picture with no particular momentum in one direction or another we've seen for much of the past year. For the most recent 3 month period ending May 31st, there were 86 single family home sales reported in the Sullivan MLS, up from 72 from the 3 month period ending April 30th. That upturn is likely more a reflection of seasonality than any market surge. On the price front, both the median and average prices fell 6% and 5% respectively from the previous month, but were right on par with the previous year.
The troubling aspect in these numbers is that the sales volume is so low, given that prices have dropped by roughly a third from their 2007 peak. To put it in perspective, for the 1st 5 months of 2007 there were 229 single family sales reported in the Sullivan MLS. For the 1st five months of 2010, there were just 140, a drop of 37%!
On the price front, the bump you see in the average on the chart at left can be largely attributed to a single $1.35M sale in March. With that sale excluded, the average price line would have been relatively flat. That sale will pass out of the 3 month data sample in next month's data sample, which if everything else remained stable, would bring us back to a $150K to $160K average. But in looking at the single month sales data as well as what's in the pipeline, we may dip below that over the next couple of months.
Bank owned foreclosures accounted for 19% of closed sales for the latest 3 month period, roughly the same percentage we've seen since the beginning of the year. The average sales price for these bank owned homes was $74,425.
The ratio of closed sales price to asking price slipped a bit 89.6%, while the ratio of closed sales price to original asking price was 79.9%.
The Current Market
May turned out to be quite busy, from a house shopping standpoint. My 2 colleagues and I at CBA were booked pretty solid with appointments on most of the weekends in May. 'Tis the season for new shoppers, so many of the appointments were with first-timers just getting acquainted with Sullivan. Given the much longer shopping cycles I've been seeing over the past year, it may take 6 or 12 months for new shoppers to evolve into buyers.
Buyer interest is more focussed on the affordable to moderate range, with a price target among many home buyers (both primary and second) of about $200,000 or below. Quite a few second home buyers, mostly late 20's to early 30's, are looking for a little getaway in the sub-$150K range, and a smaller group pushing towards $300,000.
We've been working with a handful of buyers above $300,000, but it's a very tough segment. Upper end buyers, probably more than in any other sector, are very value focussed and looking for a great deal. This is the range where I've been least successful at putting together deals because of the wide gap between buyers and sellers, particularly with lakefront homes.
While my colleagues and I have been busy "showing", that isn't translating into "selling". Buyers seem very content to look, and look some more, until they find the "perfect" house. And even then, they're not all that motivated to buy it. I've had the repeated experience over the past few months with buyers who've seen the perfect house, or as close to perfect as they're likely to find within their price bracket, and decide to keep looking. It's like there's an epidemic of indecision. And it isn't always just price. They want to wait for something just a little bit better. Notably, I'm not picking up a fear that prices are going to continue to fall.
One new factor that's a concern among buyers is the possibility of gas drilling in Sullivan County. City buyers are reading about it and asking about it. It's a difficult issue to address because, unlike in Pennsylvania which also sits on the Marcellus shale gas deposit, horizontal gas drilling isn't a reality yet in New York. The New York DEC isn't expected to issue rules governing drilling and permits until the end of 2010. Until there is some resolution on drilling in NY, it is going to cast a pall of unsettledness. Some buyers have been asking about the potential impacts and are focusing on properties or areas of the county where the potential impact is less. Thanksfully we have a lot of areas in Sullivan where the potential impacts are fairly minimal.
An interesting side development is the number of buyers I'm seeing that are looking for larger acreage (30+ acres) properties, either raw land or with a house. I've shown more large acreage property in the last month than I've shown in the last year. Surprisingly, not all of these buyers are hunters looking for recreational property, but are just looking for nice secluded property to build a home, although well priced hunting and recreational property also seems to have high interest.
Sellers, Asking Prices and the Inventory Picture
Inventory has been picking up, with 1,233 single family homes were for sale in the Sullivan MLS at the beginning of June, up from 1,127 at the beginning of May. The average asking price dropped 2.7% to $266,620, the largest single month drop since the downturn started. The median asking price fell very modestly from $199,900 to $199,000. But it takes a lot to move that median because there are 50 listings priced between $199,000 and $199,999!
The drop in the average is good news. A lot of the inventory coming to market in late spring is sellers putting their houses back on the market, after taking them off for the winter. The fact that new listings, relisting and price reductions together resulted in a single month 2.7% drop in the average asking price indicates that sellers may finally be getting with the program. On some individual listings I've seen some very aggressive pricing to entice buyers.
Buyers right now are so ambivalent that it takes "knock your socks off" pricing to get them to even notice your house. And even then, great deal pricing doesn't guarantee a sale. Owners at every price point need to pull out the stops to get potential buyers to fall in love with their houses. No Love = No Sale. There are lots of houses competing for every buyer, and the competition gets fiercer as the price range goes up.
The most difficult part of the market for sellers is arguably the upper end, where buyers are pretty scarce and very particular. Sellers in the upper range seem more stuck on their asking prices, without much movement or room to negotiate. They may have the financial resources to "weather the storm" and are choosing to do so, rather than sell now for less than what they expect.
What Does This Mean for You as a Buyer?
Prices are down, but that doesn't mean everything is "Loehman's priced." There is still a value relationship among different types of properties. Farmhouses with charm on a few acres on a quiet country road may have dropped from $325,000 to $250,000, but they haven't fallen to $150,000. A lot of buyers are disappointed because their price expectations are unrealistically low for the type of property they're dreaming about.
If you're shopping for a great deal, be flexible in your expectations. Perfect houses are seldom the best deals. Houses that need updating, a second bath or an addition to make them more liveable may have been overlooked by "perfect house" shoppers, and the seller may be getting just desperate enough to cut you a great deal. Remember, paneling is your friend — if you're looking for a great deal. Be cautious, though, about compromising on factors that aren't fixable and can have a long term impact on value, like low first floor ceiling heights in old farmhouses (you can often raise the roof on a second floor to get more second floor headroom) or location on a busy main road.
Don't be shy about making offers. I've changed my tune on this over the past few months. Offers, particularly on houses that seem overpriced, are crucial feedback for sellers about how buyers value their property. But keep in mind that low offers below 80% of asking price are seldom successful, so don't get emotionally attached. It's important to remember that the average sale price here in Sullivan County is 90% of asking price, and few sellers have a bottom line of less than 85% of their asking price. So that $400,000 house you love? You may get it for $350,000, but less likely at $300,000. If a seller is willing to accept a $300,000 price, they would probably cut the listing price to $350,000 or less.
If you do make a low offer, don't be surprised if the seller "walks" it to she if he or she can get a better deal. It's an increasingly common practice, particularly if sellers feel they're giving their house away. Often another buyer who's been on the fence may step up the plate with a competing offer.
If you really like a house and it works for you, and you want to get it, be realistic with an offer and be able to support it with solid market data. In certain market segments, particularly in the low to moderate ranges, there have been enough sales and sufficient price stability, to determine a supportable price range. A strong case to support your offer can go a long way to softening a seller's resolve. But if your offer price is just a shot in the dark, with no basis apart from you wanting a deal, it can have the opposite effect, and harden a seller.
Achived Sullivan County Real Estate Market Conditions Reports