Recession Real Estate: Is the Sleeping Beauty Stirring?
by Evelyn Bartin

It's mid-February, it's bitter cold, and the wind is whipping up snow drifts all over the place—not the usual time for real estate transactions in the mid-Hudson Valley, particularly during an economic recession. More likely a time for sleeping beauties to keep snuggled in and pull the covers over their heads. But according to several key realtors in the area, our sleeping beauty might just be starting to stir. In fact, is that the flutter of eyelids I see?

The National Picture
Watch the six o'clock news or pick up any newspaper and you'll know that, economically speaking, things remains difficult in the country: we're in the grip of a tough recession; for every day the stock market rallies there are three days it sells off; each month the unemployment numbers continue to grow; reports of bank mismanagement continue to surface; credit remains tight; the "Big Three" car manufacturers are gasping for breath while even Toyota suffers from a marked downturn in sales. Though I'm personally weary of the "depression speak" that the media seems inordinately fond of (FYI, we're not even close to the numbers of the Great Depression!), I do agree with most of the pundits that we're still in the thick of it and will be so for months to come.

And the U.S. housing market—many would agree the Typhoid Mary of our current ailing economy—also remains unwell: foreclosures and short-sales continue; property and house values are driven ever-downward by their surrounding neighbors' misfortunes; potential buyers are frozen in their tracks, fearing for their jobs and/or reluctant to purchase an asset they think may devalue even further.

The Local Snapshot
Without dismissing the national scene, I am nevertheless reminded of the old saying: "all real estate is local." For although one can hardly claim that the real estate market in the mid-Hudson Valley has been robust over the past year, neither can it be said that things are as sickly here as on the national level. Here's a sampling of recent statistics sourced from the Mid-Hudson Multiple Listing Service Inc. (MHMLS):

All in all, not a bad picture: though sluggish, inventory is moving—a particularly pleasant phenomenon in this geography at this time of year; and the average selling price actually bumped up in January, 2009. Even the area's median selling price of $280,000 and average selling time of about four-and-a-half months in January, 2009 is relatively hearty compared to the nation's numbers: $175,400 and six-plus months, respectively, for that same time frame (as reported by the National Association of Realtors). In addition, while actual data are very difficult to find, most realtors also report that foreclosures don't seem to be playing much of a role in northern Dutchess and southern Columbia Counties. Indeed, most would agree that conditions here are far from the "fire sales" going on in the sun-and-sand areas of the country: California, Arizona, Nevada and Florida.

In fact, while the Northeast has suffered less from the real estate "meltdown" than most other regions of the country, property in the mid-Hudson Valley may prove to be among the leaders in holding its own: pre-recession prices were (arguably) more realistic, less affected by "the bubble" than much of the rest of the U.S.; and mid-late-recession prices are faring substantially better as well. Adele George, Principal Broker of Northern Dutchess Realty in Rhinebeck, says that "prices have gone down in the area, but not as much as in other areas…values have held." In fact, there are places here that are chugging along, seemingly oblivious to the bad news. Rick Rielly of Fraleigh & Rakow Real Estate in Rhinebeck, reports that some towns—Athens, for one, in Greene County—have maintained strong real estate sales throughout most of this turmoil.

And with 2009 underway it seems Americans, at least in the mid-Hudson, have begun to remind themselves of the soundness of investing in real estate: George points to the activity of December and January, while Jeff Ackerly of Prudential Serls Real Estate, also in Rhinebeck, adds that many first-time buyers, previously hard-pressed to afford homes in this geography, are now actively in the market and contributing importantly to the sales base. George, Ackerly and Rielly believe that the strong inventory of well-priced homes, particularly those under $400,000, is attracting many new buyers to the area. Their sense is that, once these properties get scooped up, more and more buyers may well be ready to come forward as well.

Rielly also further reports that related businesses in the area—local banks, mortgage brokers, home appraisal companies, etc.—have also seen a rise in activity during this past January. While a good portion of this increase is due to existing homeowners refinancing their mortgages, some has also come from a growth in new business.

All this said, it would be a disservice not also to report that there are a few pessimists: local realtors who believe it will be at least another year or two before seeing a meaningful turn-around. However, this group is decidedly in the minority. Most area realtors tend to be optimistic, encouraged by the recent picture, particularly so with "the Obama effect" in play and spring around the corner.

The Myths
Prognosticating aside, local realtors do seem to agree that sales would strengthen dramatically if potential buyers would shake off their belief in two myths: 1) banks are not lending; and 2) a seller will accept any offer if it's "cash."

1) The truth is, banks are lending. If your credit rating is solid, if you're ready to fork over a reasonable down payment (these days usually about 15-20 percent), and if your salary is secure and in scale with the cost of a property and its attendant mortgage, you will get financing. Fortunately, there are many skilled and experienced local realtors who will point you to the right lending source and help you through the process.

2) The other truth is that sellers in this area are not prone to the national disaster mentality, particularly sellers of higher end properties. In fact, local realtors report that in northern Dutchess and southern Columbia Counties many owners of higher end properties have chosen to simply pull their homes off the market, calmly waiting out the cycle. Those who remain active sellers have mostly adjusted their prices downward in response to current conditions but also staked virtual signs on their lawns that say "bottom feeders not welcome." They know that mid-Hudson Valley real estate values have not fallen nearly as much as the national averages. In short, our local sleeping beauties may no longer be waiting for their charming princes, but they're not ready yet to start kissing frogs.

The Opportunities
Historically in this country real estate is (almost always) among the soundest of investments, often the most reliably profitable. Given the precarious state of most other potential investments, that's saying a lot. So whether you're planning to buy, build or renovate, the time to take advantage of the market may well be now, for a host of reasons.

Money is cheap: Mortgages are at historic lows. Depending on the particulars of a deal (appraised value of the property, amount of the down payment, buyer's credit rating, size of the loan, etc.), some local lending institutions are quoting rates as low as 4.75%. If you're a first-time buyer, the federal housing tax credit of up to $8000 included in the recently-passed stimulus bill is also a big plus. And this one, unlike that passed last year, is not only potentially $500 bigger, it also does not have to be repaid.) Rates for home equity loans and lines of credit are also at all-time lows. So if you're thinking of upgrading that kitchen or bathroom, this is a great time to invest in your current home and increase the value of your property.

Going "green" can make improvements cheaper still: Without even mentioning the new credits/rebates for green building included in the 2009 federal Stimulus Bill, some banks in the area are offering "green mortgages"—ones that will "front" the cost of a significant green investment in your home and will then roll the payments into your mortgage. For instance, if the cost of a geothermal heating and cooling system or a solar-sourced power system is more than you can bear, a bank will incorporate this amount into your mortgage, allowing you to pay for the investment over the course of the loan. In addition, whether you're building from scratch or renovating an existing home, there are also significant tax credits for installing green systems. Local realtors also report that green technologies afford homeowners a big edge when it's time for them to become home sellers.

Homeowners in the mid-Hudson Valley appear to be taking advantage of these incentives, as sales for green technologies are booming. Larry Steel, a representative for Enviro-Tech, a leading geothermal company based in Poughkeepsie, reports that 2008 was a record year. Also, some home building packages offer cost advantages for going green. Atlantic Custom Homes/Lindal Cedar Homes, located in Cold Spring, has always provided cost efficiencies by supplying all the building materials from one source (and they are currently offering meaningful cost cuts on upgrades and extras for a custom-designed home). However, Lindal—whose philosophy for some time has been "green from the ground up"—is now also offering significant discounts and rebates for their "green specified homes," whether pre-designed from their catalog or custom-designed to your tastes.

Housing stock is solid and good buys are everywhere: Current inventory in the Valley includes everything from large, ultra-high-end estates to modestly-sized, modestly-priced condominiums. While inventory may not be so vast as in more upbeat economic times, it is certainly not rife with the flotsam-and-jetsam and abandoned foreclosures we see and hear about on the six o'clock national news.

Land deals abound: Much beautiful mid-Hudson Valley acreage has become available only recently, much of it at very smart prices. If building your dream house is what you desire, you will find both raw and ready-to-go land throughout the area, with some spectacular parcels now pricing at about $10,000 per acre for Board of Health-approved land.

The "A" list of contractors and trades people is available now: Business for architects and designers, builders and general contractors, carpenters, roofers, plumbers and the like has slowed down tremendously. Dealing with them now will afford you the best of the best in terms of talent, service, timing and price.

Waiting for "the bottom" is a dangerous game: The only way to tell if we've "hit bottom" is to see prices begin to rise; but if you wait that long, you will have missed the moment. Whether bottom or near-bottom, this is an undeniably good time to buy. Right now, prices are down and fair; and, within reason, most sellers will negotiate even a bit more. Even if you buy now and prices do go down another chunk, there's no foreseeable way to lose if you plan to be in your home for at least five years. And who, I ask you, wouldn't want to be nestled in the arms of a mid-Hudson Valley beauty for the next five years?

Evelyn Bartin is a home designer and construction planner and manager for homeowners. Her business, e bartin home, is located in Milan... in the beautiful Mid-Hudson Valley.