I just pulled the latest sales data for single family homes in Sullivan County from the Sullivan and Hudson Gateway MLSs. The numbers that came up shocked me, so much so that I went back and checked and double checked. For the most recent quarter (3 months ending June 30, 2015), the median sales price was $80,000. That’s down 33% from the same period in 2014 (2nd quarter 2014 median was $120,500.) The average sales price for the quarter fell 20% year over year, from $166,396 to $132,460. However, the number of sales shot up 23%, from 120 during the second quarter of 2014 to 152 in second quarter 2015. To put this in context, I’ve been tracking sales prices since 2002, and the median sales price hasn’t been below $100,000 since July of that year.
Prices move up and down from month to month, and there are seasonal variations. But I can’t recall ever seeing such a dramatic price move. So, of course, being the data junkie that I am, I had to try to figure out what’s going on. While the data is a shocker, what’s going on may not be so bad.
Sullivan County is a “tale of two counties.” There’s the “new Catskills”, largely the western and northern parts of the county (plus the central and southeast lake areas) that have enjoyed a renaissance over the past decade. These areas have attracted a new generation of second home buyers from the city, who’ve renovated houses, established new restaurants and businesses and have put hamlets like Narrowsburg and Livingston Manor “on the radar.” Then there’s the “old Catskills”, parts of Monticello, Liberty, South Fallsburg, Woodbourne and some other areas in the eastern part of the county. This is the old “Borscht Belt” that saw years of decline following the closure of the old Catskills resorts and never really recovered. Houses in some of these areas fell into disrepair or were abandoned. Some houses could sit on the market for years, particularly handyman or poor condition houses you could pick for next to nothing that even investors couldn’t justify dumping money into.
If I drill down into the sales, it looks like the market for handyman fixers has taken off in the past 3 or 4 months. People are buying these places, and I would assume to fix them up. Quite a few are ‘investor buys’, where an investor is looking to flip or more likely turn a house into a rental. That may related to the casino announcement in December, with investors making spec buys in hopes of cashing in on demand for workforce housing for the casino. It’s an interesting phenomenon, that some of these houses you barely give away a year ago are finding new owners.
The other key statistic in the data is the increase in the number of sales. A 23% increase in volume year over year is HUGE and can be largely attributed to these fixer buys.
There is one other factor likely impacting the latest data. Typically we have a pretty strong ‘second season’ for second home sales from mid January through mid March. These are folks looking to be in a house for the summer. Most years I put about a quarter of my business on the books then. This year, almost nothing. That’s can be largely attributed to the miserably cold winter. Almost nobody ventured out to look at houses, and the winter market was pretty dead. It takes a couple of months to close on a house, so first quarter buying activity would be reflected in the second quarter closing numbers. There are three distinct market segments here — second home, primary home and investor. Second homes generally are a higher price point market than primary or investor, and there weren’t many of those in the market basket this year to pull up the median and average sales price.
It’s going to be interesting to see what happens with the numbers over the next couple of months. The summer selling season is shaping up to be pretty strong, and quite a few houses in the mid range are now in deals. But that investor pick up market is churning along at a good pace, too. I don’t work that market, but I’ve spoken with a few agents that focus on it, and they’re saying that there’s a rabid appetite for cheap fixers, some of which are being picked up within a few days or weeks of being listed.