The first quarter 2016 continued the strong upward trend in year over year sales volume we’ve seen since Q2 2015, with first quarter 2016 single family home sales in Sullivan County up 43% over the first quarter of 2015. 173 single family home sales were reported in the Sullivan and Hudson Gateway MLSs between Jan. 1 and Mar. 31, 2016, compared to 121 a year earlier. That’s a remarkable number, and reflects the robust buyer activity we saw at the end of 2015 (closed sales lag buyer activity by 2 to 3 months.)
On the price front for sellers, the picture wasn’t as rosy. While the average sales price clocked a modest 3.7% year over year increase, the median sales price fell 9.7%. A big factor on the price front is the continuing investor buys of inexpensive foreclosure and handyman houses that picked up after the casino announcement in Dec. 2014. During the 1st quarter of 2016, houses that sold for less than $50,000 accounted for 24% of the total volume, compared to 15% during the 1st quarter of 2014.
Both volume and prices were down over the 4th quarter of 2015, but that is likely due to market seasonality. The 3rd and 4th quarters of the year tend to have more ‘second home’ market sales, which are generally at a higher price point than the primary and investor sales that comprise a larger proportion of 1st and 2nd quarter sales.
A bright spot in the sales data is some pick up at the upper end. During the 1st quarter of 2015, there were no closed sales above $500,000. This year, there were 4 sales recorded, including 2 at the Chapin Estate. (In the mid range, there were 12 closed sales Q12016 between $300K and $500K, compared to 8 a year earlier. Those may not seem like big numbers, but they’re significant because they point to increasing interest in the mid to upper range. The upper end is still far from robust, but it may be coming off of life support.
The bid/ask ratio during 1Q2016 was 90%, just about the same as a year earlier. But there’s one interesting drill down tid bit in the bid/ask data. During the 1st quarter of 2016, 20% of sales were full price or above, compared with 15.7% of sales a year earlier. This lends credence to reports of more multiple bidders on properties.
| 1/1/2015 – 3/31/2015
| 1/1/2016 – 3/31/2016
|10/1/2015 – 12/31/2015
|2010 – Full Year||485||$160,589||$139,900|
|2011 – Full Year||472||$164,345||$138,000|
|2012 – Full Year||476||$150,939||$134,000|
|2013 – Full Year||569||$155,589||$124,000|
|2014 – Full Year||580||$165,298||$125,000|
|2015 – Full Year||699||$143,874||$117,500|
The very mild winter weather has been kind to the real estate market here, with quite a bit of buyer activity. Apart from the couple of weeks I was on vacation, I’ve been booked almost every weekend since mid January. There’s always a mid winter ‘second season’ here, with buyers looking to have a house for the summer. But I can’t recall it ever being as busy as this year.
While the requests I’m getting for farmhouses, lakehouses, cabins and other places with a country getaway vibe, are very similar to a year ago, I’m sensing a very different mind set among buyers. A year or two ago, most buyers I worked with were hunting for a bargain and had a fixed price ceiling. Even though there was more inventory than today, it was hard to put deals together because buyer expectations for a house often didn’t align with price realities. Very few buyers were willing to bump up their price range to get more of what they wanted.
Roll forward a year or two. I’m sensing that buyers are shopping for the right house, rather than just landing a ‘bargain’. They’re still value focused, but less fixed on price. I’d venture that more than half of the clients I’ve sold houses to the in the past six months have increased their initial price ceiling by as much as 25-30% to get something more ideal with fewer compromises.I’m also seeing buyers lob far fewer low ball offers when the right house comes along.
(Apr 2015 Sullivan MLS)
Sullivan & HGMLS
1st Qtr 2016
|All single family homes||$248,726||$169,000||$141,060||$106,200|
|Non-lakefront, 10+ acres||$417,409||$321,950||$267,392||$241,500|
Sellers and inventory
The number of single family homes listed for sale in the Sullivan MLS in mid April 2016, 920, is down 4.2% from the 960 houses on market at the same time a year ago. With demand up, there’s a bigger squeeze on that inventory. Usually heading into spring we have a decent selection of ‘carryover’ inventory that didn’t sell in the fall. This year, that’s not the case. A lot of that ‘carryover’ sold at the end of last year.
The average asking price for single family homes listed in the Sullivan MLS in mid April was $248,726, up slightly from the $245,814 average ask in April 2015. The current median ask of $169,000 was down from last year’s $175,500. For all intents, its a wash; the ask is flat. Tempering across the board price hikes are listing agents who’ve become more ‘tough love’ on pricing. The more experienced agents here are very busy, and I hear from quite a few that they’re turning down new listings if sellers have unrealistic price expectations.
There continues to be inventory shortages in some key market segments. 3+ bedroom lake houses under $400K and 2BR’s under $300K are in short supply, as are farmhouse / cottage charmers in the $200-$300 range But sellers need to be cautious about overreaching on price if you’re in a high demand segment. A $350-$400K lake house buyer usually won’t look at something priced at $495K, and the upper $400’s for lake houses is a low demand segment. There will likely be some price appreciation in tight inventory segments this year, but don’t expect huge jumps. The lending environment is very tight, and to land financing there has to be good support for value.
The outlook heading into summer
There are no signs that the real estate market in Sullivan County is going to slow heading into summer. The big question mark is whether there will be sufficient inventory in key segments to meet demand. Another summer of tight inventory will throttle sales.
The dramatic year over year gains we’ve seen in sales volume will likely pull back, because as the year progresses those gains will be measured against a higher base. The 43% year over year jump in the first quarter isn’t sustainable.
I expect demand to continue to be price and segment related. Sullivan County is primarily a middle class second home market, so the strongest demand will continue to be in the affordable to moderate ranges. While there is a little more tire kicking at the upper end, I expect demand to remain sluggish above $500,000.