The biggest challenge selling real estate here in Sullivan County isn’t finding buyers, it’s finding good houses for them to buy. I’ve blogged about the inventory shortage a number of times over the past year, and largely laid the blame on sellers keeping their houses off market waiting for high prices. But that’s not the whole picture. Lately I’ve been reading a lot about the inventory shortage nationwide, and there’s another factor at play — the lost half decade during the recession when new housing starts slowed to a crawl, and homeowners put renovations on hold.
Nationally, the inventory of existing homes on market is about half of what it was in 2010, and new construction is also running about half of what it was during the peak. There just hasn’t been enough new construction to keep up with demand. 8 or 9 years ago here in Sullivan County, there would typically be about a dozen new construction spec houses on the market. Today, apart from a handful of Catskill Farms houses, spec houses are rare. I’d venture that the Sullivan market could absorb 20 or 30 new builds targeted to 30-something second home buyers from the city (and by ‘targeted’, I mean cool styles designed from a Brooklyn aesthetic, not vinyl sided colonials.) Catskill Farms has that aesthetic down, but only does a limited number of starts a year, and most are sold before they’re even finished. There hasn’t been a “Dwell Modern” style spec house built here in over five years.
Developers are understandably gun shy, after the losses many suffered in the late 00’s, and lenders that fund new construction are pretty gun shy as well.
The other factor that makes it hard to find good houses is that homeowners put the brakes on renovations. Up until 2007, people were buying houses, renovating them, updating kitchens and baths, reconfiguring dated layouts and bringing dated houses into a more modern style. With sharply rising prices, it was easy to get a $50,000 or $100,000 home equity line for renovations. Then the market crashed, home prices plummeted by more than 30%, and money for renovations was hard to come by. Home owners hoarded their acorns and sat tight. So a lot of the resale inventory on the market today doesn’t have the stylish features that current buyers are looking for. Even the shabby chic farmhouse renovations done in the early 2000’s are starting to look dated.
I’m sensing that buyers are starting to adjust to this reality. A lot of buyers I talk with have been looking for a year or more, and not finding exactly what they want. Many are much more open to considering a dated house that they can rework, or buying land and building. If prices rise this year (and given the inventory shortage, that’s likely), that could also entice some developers with cool concepts back into the market.