Catskills Buyer: To wait or not to wait, Part 1
How to navigate a
schizophrenic marketplace
By JENNIFER GRIMES
“If you were a potential buyer over the summer, what’s your mindset now?” So went my Instagram poll the other day. The responses were not unexpected, with the word “waiting” dominating. But others referenced looking forward to property prices dropping and seem to be anticipating reentry when that happens. Is that a good strategy? National media refers to the state of the housing market using doomsday language, but our area does not always operate in lockstep with the rest of the country. So what are we seeing in terms of price movements, buyer behavior, and what can we expect over the coming months?
The waiting game
Your answers to my poll included some common threads: “Waiting for prices to drop further”, “Still waiting for the perfect house!”, “Still looking but budget is lower due to interest rates”. And one who cut to the chase, “We are screwed.” Then to the opportunists: “Yes, but for the right price and no bidding wars”, “I’m preparing to buy a vacation home within the next year or two”, “Not until prices go down enough to offset the interest rate increases.”
For those most impacted by financing cost increases, downsizing the budget and taking advantage of adjustable rate mortgages may be the two best options. But for the others there is a range of criteria that will get them back in the game.
ARE PRICES DROPPING YET?
For many, the decision to buy seems to be hanging on whether and how much property prices drop. So is it a buyer’s market or a seller’s market? The answer is yes. To illustrate, let’s look at some stats: There were 95 sales on the Ulster MLS in the last 30 days. 52% sold under asking price, 17% at ask, and 31% over ask. So 48% still sold at or above ask, likely making those sellers happy the market was in their favor. There were 98 sales in October in Sullivan Co., which generated prices at 94.3% of the ask. What these numbers illustrate is that at least for the moment*, demand remains robust enough to prop up the value (even increasing value) for a chunk of the market. *Keep in mind sale prices are lagging indicators. So these numbers reflect offers made in August / early Sept following two Fed hikes of .75% each. Two more followed, making November and December’s numbers important for understanding further changes in pricing and behavior.
This buoyancy does fly in the face of logic and the nightly news. To quote an economist in The New York Times recently, “Mortgage rates are sky high, prices are sky high, and there’s no inventory,” said Mark Zandi, the chief economist at Moody’s Analytics. “This may be the worst time in my living history for the home buyer — it just doesn’t make sense.” Nice.
REAL WORLD EXAMPLES (good news + bad news)
I’ve now shared some stats and quotes, we laughed, we cried. Here’s what I’m seeing out in the real world: The most desirable properties still get substantial, and often aggressive interest from mostly Metro New York buyers. And that’s across all price points. By desirable, that usually means some combination of superior style / architecture and good to great location and / or amenities.
But for more middle of the road listings, or generally decent properties that have a “flaw” (poor location, weird layout, outdated kitchen/bathrooms, etc.), their levels aren’t holding up to 2021 levels. Pushing the pricing envelope is a failing proposition but for the most in-demand listings. Witness my inbox on any given day with a slew of alerts to “Price Improvements”. So the market is, in a word, “fragmented”.
Cases in point re the strength in some parts of the market: In just the last few weeks we received multiple offers over ask on some of our own listings, including Weiden Lake House, Moss End Cabin, Mid Century Mini, and Hemlock Farmhouse. They all saw substantial downpayments from 30% up to all cash. It was not uncommon for sellers to choose all cash over higher or even much higher financed offers.
But some members of the team have been delighted to usher their buyers through the process in what feels like a Brand New World: That is, theirs is the only offer on the table. Or better yet, they negotiate a sale at below ask. One of my agents said 5 of his 6 recent deals all sold under the asking price, and inspection issues that buyers used to have to accept unconditionally now warrant renegotiation. That clearly indicates that buyers have more leverage now.
Using time as a strategy
One of the key data points to know is how long the listing has been active, as that can be an indicator that there may be some wiggle room on price. And it doesn’t mean there is a problem with the property. Since the volume of showings has markedly decreased, it can be a sheer function of the new timeline for selling property. Caution: This isn’t automatic license to lowball. For some properties the process has just slowed down. Buyers are taking more time, being more deliberate, with the sense of urgency greatly diminished. As an example, I have a tricky, unconventional listing that needs all new systems (4 DuBois St) that had been active for months, but in spite of that, it went to three-way bidding (ultimately selling under ask). So there is no single playbook for navigating the inconsistent market currents.
WHAT DOES THAT MEAN FOR BUYERS?
The sweeping real estate market commentary from national news outlets is often not indicative of our “local” market. And truth be told, there is no quick soundbite for where we are. For all the price drops, the market is segmented by desirability. Listings with the “It” factor, if priced rationally, will get eyeballs, showings and the possibility of multiple offers. Still. But all bets are off for the other listings that will not be in the running for that more choosy and financially resourceful buyer. And that’s where the opportunities are for buyers who are not willing to bid over ask in a market that most feel has topped out and should be coming down.
What’s driving the continued demand for Upstate real estate in the face of higher interest rates? We’ll take a look at that in To Wait or Not to Wait, Part 2.
“The most desirable properties still get substantial, and often aggressive interest from mostly Metro New York buyers”
“Inspection issues that buyers used to have to accept unconditionally may now warrant renegotiation”