The December closed sales data for Sullivan County real estate is now in, so it’s now possible to compile full year data and take a look at how 2015 shaped up. I’m working on my January 2016 Current Market Conditions Report now, which will include full year data and should be posted in a week or so. The quick takeaway is that, in 2015, the number of single family home sales in Sullivan County was up a staggering 21% over 2014, while at the same time, the average sales price was down 13% and the median sales price fell 6%. All of that in a year when some agents were lamenting the tight inventory in some market segments, and we some bidding wars, with 10% of homes selling for 101% or more of asking price. Talk to different agents here, and you can hear a dizzying array of conflicting perspectives — it was a great year, it was a terrible year, they were busy crazed the first half then dead or vice versa, prices are up or prices are down.
Part of the problem is coming to a single conclusion about the real estate market in Sullivan County is that it’s actually comprised of a number of very distinct submarkets. The east county market is different than the west county market. The differences aren’t just geographic. We have different buyer subgroups — investors, primary home buyers, second home buyers and religious or affiliate groups. And within each of those categories there are even more sub-slices. Among investors, for example, some are looking to pick up cheap houses to turn into subsidized rentals, and others are looking for fixers to flip for the second home market. All of these submarkets behave somewhat differently, and respond to different factors.
But back to the question of the price slide in 2015. Was it equally distributed across the price spectrum (meaning the whole tide went down 6%), or did some boats sink and others stay relatively afloat? If someone had the time or inclination, they could do an in-depth analysis but it would require a lot of work to code or categorize each sale plus a lot of slicing and dicing of the data. Instead, I took an interesting down and dirty swipe at the data, with one question — was the price drop equal across the price spectrum, or did different price segments behave differently? The lower price range here is heavily investor driven, while the mid and upper ranges are more ‘second home’ focused, with largely owner rather than investor buys.
To look at this, I divided the single family home sales for 2014 and 2015 into four tranches, or quartiles, each comprising 25% of the sales grouped by price, from the lowest to highest. Lo and behold, there is a statistically significant difference in the price drop between the quartiles from 2014 to 2015.
|Quartile of Sales||Avg $ Price
|Avg $ Price
|Total Full Year||$165,160||$143,874||-12.9%|
The poorest performing quartile was the bottom one, with a 20% year to year drop in the average sales price. This isn’t a total surprise, given the surge in investor buys of cheap fixers early in the year following the casino announcement. Many of those were total handyman’s that may not have found a buyer at any price a year earlier.The third quartile (which in 2015 covered a range from $118,000 to $200,000, with an average of $152,949) only posted a 6.2% price drop. In 2015, that was a red hot range for second home buyers, with a surge in younger buyers looking for an affordable starter getaway. Jump to the highest quartile, and the year to year price drop more than doubles, to 15%. The is definitely in line with comments I made frequently last year about the softness in the upper end of the market, where there were some jaw dropping price cuts by sellers and surfeit of inventory relative to demand.
This is just one way to look at the data, but I thought an interesting one I wanted to share.