The food industry has used this trick for years to maintain the line on prices while increasing profits — reduce the serving size but keep the price the same. A similar phenomenon seems to be happening with Sullivan County real estate. Not so long ago, land here was dirt cheap. When people sold old run down farmhouses, they didn’t bother to subdivide off large chunks of acreage because there wasn’t that much value to it. An old farmhouse on 100 acres might sell for $250,000, but if you divided off 50 acres, the farmhouse on 50 acres might fetch $225,000, but the extra 50 acres would only sell for $50,000, so why bother.
Today the situation is very different, and land has become much more valuable. A 50 acre parcel of good land could sell for $300,000 to as much as $500,000. The land under a modest, partially renovated farmhouse on 100 acres is often worth much more than the house. The house and land together could have a value of $1 million, but as I’ve written extensively before, we don’t have much of a $1M+ market here. So the solution to maximize value is for the owner to subdivide off a parcel or two from the main house, and sell, say the house on 40 acres for $600,000, and two 30 acre parcels for $250,000 each.
That’s just what’s happening. A modest farmhouse on Stewart Road near North Branch on 80 acres is being subdivided into 2 parcels, with the house and 50 acres on the market at $699,000, and the remaining 30 acre parcel of raw land listed for $199,000. Over on Beechwoods Road, a large renovated farmhouse on 97 acres is being offered for $1,200,000 — but the owner has started the process to subdivide off the house and 37 acres, along with 2 land parcels and plans to relist the house on the 37 acres under $700K.
Buyers in every property category seem to have a psychological price ceiling. For a ‘nice farmhouse on acreage on a quiet country road’, that’s somewhere in the $600’s; its not in the $800’s or $1M+ range. Both of these sellers, I think, understand that. And one way to both maximize their profit and stay under a psychological price threshold is to ‘reduce the serving size’, or sell the house with less acreage. The result is that better farmhouses now typically come with 30, 40 or maybe 50 acres, rather than the 60, 80 or 100 acres that were common a few years ago. Houses on 100+ acres are becoming rarer, and typically now carry pricetags above the $1 million mark.