January 1, 2009, The New York Times: Catskill Home Prices: How Low Will They Go?

Catskill Home Prices: How Low Will They Go?

Jennifer May for The New York Times

PREPARATION Ronny Murphy, a Sullivan County broker, gets ready for a showing.

Jennifer May for The New York Times

ON THE MARKET Mark and Lisa Hellman, with their children Avery and Owen, outside their renovated farmhouse in Youngsville in Sullivan County.

Jennifer May for The New York Times

The entrance to the Highlands at Bethel, where lots are for sale.

Fred A. Bernstein for The New York Times

A PERSONAL INTEREST Randy Florke, a broker in Sullivan County, in front of his house in Livingston Manor. He put the property up for sale a year ago at $299,000. It is still for sale but the price has dropped to $199,000.

Some sellers have had to reduce prices by a third or more. (His own house in Livingston Manor, which he had hoped to sell last year for $299,000, is now listed at $199,000.) And still, he said, buyers are scarce.

But during a drive last week past some of the houses he would like to sell, as sunlight reflected off the perfectly white snowbanks, the situation seemed far from bleak. Mr. Florke said that, if anything, “part of me is thrilled about this market.”

When he started selling weekend houses in 1996, he said, prices in Sullivan County (the heart of what has traditionally been called the Catskills) were so low, he was able to help Manhattanites of modest means buy second homes.

“It was an exciting time,” he said, recalling days when young couples, with only $100,000 to spend, could find a farmhouse fixer-upper. “And I feel like we’re recapturing that moment,” he said. He recently listed a house for $85,000, a price, he said, he hasn’t seen in years.

Mr. Florke, who has several other businesses, can afford to be sanguine. But for many in the Catskills, this is a tough winter.

“Buyers think everything should be a fire sale,” said David Knudsen, a broker at the Catskills Buyer Agency in Liberty, who said the average sale prices declined more than 15 percent from November 2007 to November 2008. At the same time, he said, the number of closings was down by about a third.

The tightened credit market is part of the problem. But even those buyers who can get financing are playing wait-and-see. “They don’t have one iota of motivation to do anything,” Mr. Knudsen said, because they think both prices and interest rates are going lower.

At the same time, Mr. Knudsen said, “many sellers are in la-la land,” unwilling to recognize how low buyers expect prices to go.

And that — the expectations gap — means houses aren’t selling.

In early October, in his Catskills real estate blog, blog.catskill4sale.com, he called the situation an “economic Armageddon.”

A few weeks later, Sullivan County’s largest brokerage, Yeager Realty, with 40 agents in Liberty, Bethel and Rock Hill, shuttered its offices, after a 24-year run. (The company’s owner, Paula Yeager, said she would continue to work from home.) .

Indeed, with so many fewer serious buyers, Mr. Knudsen said, he thought the best advice to some sellers was to close up their houses for the winter, rather than keep them open for the occasional — very occasional — showing.

“If they want to come up for a weekend, they can stay in a motel,” he said. It’s cheaper, he said, than heating the house all winter.

True, Ronny Murphy, a broker at Coldwell Banker Currier Lazier, in Rock Hill, said she has sold a few places recently — one, in Fremont, was reduced to $205,000 from $300,000 — and that she had a “quite a few” people looking in December. Some of them figure “real estate is a better place to put their money than the stock market,” she said.

At the same time, Ms. Murphy said, a number of sellers have taken their houses off the market, because the Multiple Listing Service reports how long they’ve been for sale, and they don’t want the listings to say “one year.” They’ll put them back on the market, as fresh listings, in the spring, she said.

Mr. Florke said that he had an offer on his own house, but the buyer needed financing, which required an appraisal. And the appraiser said he couldn’t come up with comparables, because there hadn’t been any sales in a 10-mile radius in several months.

Homeowners who haven’t been able to sell include Mark and Lisa Hellman, who own a large farmhouse on a spectacular site in Youngsville. After buying the place for $275,000 in 2004, they put $500,000 more into a gut renovation. “I got my dream kitchen,” said Ms. Hellman, surveying her six-burner Viking range and Sub-Zero refrigerator, amid a sea of tasteful cabinetry. The entire house is ready for the cover of a magazine, thanks to the decorating efforts of Ms. Hellman (who is an executive of the fashion house Versace).

But the Hellmans — who have two small children and are considering exchanging their city and country homes for a single suburban residence — put the house on the market in mid-2007. At the time, they were asking $1.2 million. Soon they had an offer for $1 million, which they rejected as too low.

Now their asking price is $985,000, and still no one has looked in months, said Mr. Hellman, an executive of his family’s building maintenance company, Temco Service Industries. That may reflect a particular softness at the high end of the market, Mr. Knudsen and other brokers said.

But the Hellmans have something in common with many people offering houses in the Catskills: they don’t need to sell.

“You don’t see a lot of distressed sellers up here,” said Dorothy McArdle, the owner of Apple Tree Realty, in Andes (a small town in Delaware County). People who bought second homes in the Catskills, she said, have tended to buy places they could afford, and to make large down payments. “You don’t see the high loan-to-value ratio” that is causing problems in other areas, she said.

The owner of a house on a pond in Andes recently lowered the price to $299,000 from $329,000, said Ms. McArdle, who is listing it. She said she had seen “some reductions more drastic than that, but in those cases the original asking prices were inflated to begin with.”

Having sold real estate in Andes for 30 years, Ms. McArdle said she remained “optimistic about the market.

“Right now, people are scared. We need to get through the inauguration, through the winter. At the end of March, the beginning of April, we’ll see an increase in activity.”

But at what prices? Mr. Knudsen said the Catskills were seeing “a move to moderation.” He said that in 2007 “the sweet spot in the second-home market” — where a mid-range New York City buyer would be looking — was around $325,000. “That would have bought a chalet-style house,” he said, “with wood floors, cathedral ceiling, three bedrooms, two bathrooms — a really nice getaway.”

A year later, he said, buyers expect to pay about $100,000 less. “The buyer that I’m seeing in what I call the mid-range — employed, not wealthy, the middle-class urban buyer, looking for a getaway — is looking in the mid-200s. But I don’t know that their expectations have necessarily shrunk as fast as their budgets.”

Some of the biggest bargains may be not in homes, but in homesites. In mid-2007, Redstone Properties, a national developer of subdivisions, began marketing lots in Bethel, in Sullivan County. The lots were priced at $149,900 and up. Some of those same lots, which range from 4 to 10 acres, are now available for as little as $69,900, according to Toby Potterton, the sales manager for the development, the Highlands at Bethel. He said that the company was actually bullish, and that it wanted to sell the land so it could use the money for larger projects.

Undeveloped land isn’t the only real estate available for under $100,000. When a neighbor asked Mr. Florke to list his house — a cute cabin with an unfinished interior — Mr. Florke decided to price it at $85,000, making it his least expensive listing in years. (In 2007, he would have asked almost twice as much, he said.)

“Everyone asks, ‘Are we at the bottom?’ ” Mr. Florke said. His answer: “I don’t know, but there are some great deals out there.”

Indeed, he said, “this may become one of those periods that people look back on with nostalgia, talking about the bargains they were able to pick up.”

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