The phrase that likely best describes the latest Sullivan County real estate sales data is "treading water." That's better than sinking, but it's certainly not soaring. For the 3 month period ending July 31st, there were 105 single family sales reported in the Sullivan County MLS, up a hair from the 101 sales for the 3 months ending in June. For the single month of July, there were 40 closed sales. These sales numbers are running only about 40% of the peak, when we saw some months with close to 100 sales. But the numbers are improving from the lows of this past winter.
On the price front, we're seeing a mixed picture. The $150,000 median sales price for the 3 months ending July 31st was up 4.8% from the June 3 month median, while the average sales price was essentially flat. Year over year, the median is down 13% and the average is off 17.5%. Compared to the peak in June 2007, the median has dropped 22% while the average has fallen 37%.
Single month data is less reliable than the larger 3 month samples, but can be helpful to indicate where we may be moving. On the price side, July was softer than June, with the average sales price for the 40 sales this month only $145,088, while the median for the month dropped back to $139,375. This points to a possible drop in the 3 month sales figures for August and September.
One surprising piece of data is a sharp drop off in the percentage of foreclosure sales. For the 3 months ending July 31st, only 15% of the closed single family sales were bank owned, compared to 24% in June and 36% in May! During the late winter and early spring, 'blame' for the drop off in prices could be greatly laid on the high percentage of foreclosure sales. But that isn't as significant a contributor to the overall price picture that it was a few months ago.
The other striking aspect of the latest numbers is the lackluster activity in the upper end of the market. Of the 105 sales during the latest 3 month period, only 8 were above $300,000. And during July, only one sale —a lakefront house that sold for $430,000 — closed above $300,000! The market for higher priced property continues to be very, very soft and this is a key factor in the drop off in the average sales price.
The Current Market
The bright spot in July was the continuing pickup in buyer interest and activity. The 3 of us that work together at Catskills Buyer Agency were booked with appointments every weekend in July, and quite a few of other agents I talk with regularly also reported being busier. However, busy-ness with showings doesn't necessarily translate directly into closed sales. But it is a pre-requisite.
The buyers I'm seeing continue to be very value focused, but without quite the rock bottom, bargain hunting zeal of a few months ago. Earlier in the year, buyers were looking only for deals and approached every house as a distressed fire sale. That's loosened up, with buyers returning to looking for the best house, not just the best deal.
There's a sense, particiularly in the moderate range and below (under $300,000) that we may have seen a bottom, and the fear that prices may fall another 15%, 25% or even more has abated. (That's not the case at higher price points, where the dearth of sales has resulted in less price confidence.)
Price wise, the lion's share of interest is in the affordable to moderate ranges. The hot spot among second home buyers continues to be about $250,000 for something 'cute or charming with some privacy in a quiet country setting.' This target range is down about $50,000 to $75,000 from where it was 12 to 18 months ago.There's also substantial interest in a simple 'cabins in the woods' under $150,000. In both cases, I'm noticing some willingness to expand price up a bit for some extra feature, like a view, a stream or pond, or a slightly larger or more nicely renovated house.
There is some interest in better properties at higher price points, but it's much more tepid. My two colleagues and I are working with a half dozen clients looking for larger farmhouses or contemporaries with more acreage, or larger lakefront properties with price ranges upwards of $500,000. As prices rise, there seems to be a wider gap between buyer property expectations and seller price expectations. There is just not a perception among better property buyers that the properties they're seeing are great deals, or even just great values.
Another notable element among buyers this summer is the length — and depth — of the home shopping process. Serious buyers are leaving no stone unturned. I'm working with a number of clients who've made repeated house hunting trips here, looking at upwards of a total of 40 houses. And they're not just looking here. Many are shopping in other areas as well, from the Berkshires to the Poconos. They're looking for just the right house in just the right setting at just the right price. And if they don't find it, they're willing to wait.
Sellers, Asking Prices and the Inventory Picture
Inventory rose markedly in July, from 1,045 single family homes in the Sullivan MLS at the beginning of the month to 1,150 at the end of the month. The uptick is likely more seasonally related, as inventory typically rises here through the summer, and there are actually about 10% fewer homes on market now than a year ago. On the price side, the 'average' median asking price dropped 6% from $215,000 to $202,499. The average fell a smaller amount, down 2% from $269,933 to $264,896. This marks the sixth month in a row that the average asking price as moved down.
The good for buyers is that some sellers are coming to terms with the declining market and adjusting their price expectations. The key word in that sentence, though, is "some." Quite a few new listings, particularly of so-called 'better' properties, have come to market in the last month at asking prices that have literally made me scream at my computer "Are they out of their mind?" or scouring through the listing for the secret ingredient that justifies the price — like something in the remarks referring to the Ferrari and Lamborghini that are included in the sale. I look at some listings and think I'm in the Twlight Zone.
But I suppose those are the dynamics of a market. Because not every house is overpriced, and every seller out of touch. It's just that they're so noticeable, like someone showing up at a beach party in a powder blue tuxedo. There have also been quite a few houses coming to market at some pretty attractive prices, like a few 3 and 4 bedroom lakefront houses now under $400,000. And there have been a number of price reductions, some dramatic, most more modest, on existing inventory. Overall, though, I'm not seeing a lot of eye popping, "oh my God" deals that are causing buyers to whip out their checkbooks.
A lot of seller don't seem to get that their house is competing against a huge number of other houses for a buyer's attention. 40 sales a month and 1,200 homes on the market translates into about a 30 month supply. Of course, it's not quite that direct because those 1,200 houses are spread over a wide range of categories and areas, some with more demand than others. But a house has to really stand out from the pack to get interest. As I scan through the houses that have sold, almost every one was one of the lowest priced houses in its category, offering the greatest value.
Sellers, if you're contemplating a price reduction, make it meaningful. I see a lot of "token" reductions come through the MLS that do more harm than good, in terms of my perception of the property and the motivation of the seller. Say your house isn't moving at $249,000, and your listing agent encourages you to lower the price. So you agree to lower it to $244,000. Frankly, that just says you're not motivated and don't agree with your agent that your house is overpriced relative to the competition — and you're only lowering the price to placate them. A meaningful price reduction would be to $225,000, or to get some jaw dropping attention, $199,000.
What Does This Mean for You as a Buyer?
Second home buyers looking in the sub-$250,000 range should be aware that it's not quite the "buyer's market" they may be expecting. In fact, the demand for good houses in that range with the setting and features most requested by second home shoppers is outstripping supply and the selection is limited. The picture is very different for buyers looking above $300,000. Buyer demand thins out dramatically as you move into higher price points. A buyer looking around $250K to $275K who can move up into the mid-$300's (and away from the mid $200's pack) may be able to nab a lot more for their money than the price difference would suggest.
Value focused buyers may want to temper their pursuit of perfection. Are there beautifully renovated "Love, Valour and Compassion" farmhouses with wrap porches, open kitchens and private settings overlooking pristine ponds? Sure, but even at a 'great deal' price they're likely to sell for upwards of $600,000, not $250,000. Can you find a good farmhouse at $250,000? Yes, with some perseverence. But it will very likely need some work, possibly an updated kitchen, a second bath, replacing some paneling with sheetrock, reconfiguring the layout or rebuilding a porch.
Avoid the clump. You might be surprised at how most second home shoppers from NYC fall into a few very narrowly defined categories. Cute and charming farmhouses on some acreage on a quiet country road, pond, view and barn a plus; rustic cabins in the woods (fireplace a must); and lake houses with that 'On Golden Pond' setting. The narrative pull of these styles is very strong, particularly for more "authentic" versions (i.e. no vinyl siding, no paneling, no carpeting.) Demand for these houses is pretty high, while the supply is quite low. Many buyers think that 'the country' is just chock full of authentic farmhouses. But in truth, we probably have less than two dozen 'good ones' come to market here every year, and less than half a dozen that rise to the level of "Love, Valour, Compassion" perfection. If you broaden your criteria, you're more likely to find a great deal.
If you want to play hardball in a thin market segment, it pays to keep overall relative value in mind. At upper price points, you don't generally find a lot of distressed sellers who need to move their properties. In fact, you may encounter a lot of stubbornness. You need to be calm and present a rational justification for your offer price. While it may be a buyer's market in some segments, you still should be prepared to defend your offer price and ask the other side to support their counter offer or bottom line.
Avoid the temptation to think that every seller is in trouble, desperately needs to sell and should be thankful to you as a savior for your low ball offer. For the most part, it's just not true, particularly for the types of properties most of the second home buyers I work with are looking for. Keep in mind that the average sales price here is 89% of the current asking price. Some houses, of course, sell for less than 89% of asking price and a lot of factors go into the final price of the house. But buyers who believe across the board that every $250,000 house should sell for $150,000 or even $175,000 will likely come up empty handed.
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.
