Real estate market update
Surprise - it's raining.
It appears the big 2024 push is over. Sure, we are busier than ever, and have closings queued up monthly for the rest of the year, but the heavy heavy lift of getting stuff out of the ground is mostly behind us for now. And with land being so damn hard to find, I’m not sure when if ever we will be pounding out the work like we did over the last 15 months, or really the last 4 years since the commencement of the pandemic and the bum-rush from NYC to the Catskills.
With 2 more Ashokan Acres homes set to close in the 3 weeks, that takes that total number to 5, out of 9 total. 4 in Narrowsburg well on their way as well. The next decision will be where to go from here. Chasing the never-ending hamster wheel of squeezing margins out of immense cash flow, or something more exciting - by more exciting, I actually mean less exciting, since the act of developing/designing/building/selling can begin to seem a bit repetitive when the only goal and result is to wake up and do it again. For 24 years.
At Ashokan Acres, even the homes that aren’t complete are well along, with the least along being insulated this week. We struggled with the wells up there in terms of finding water affordably, but even that heavy lift is now complete. That project has been difficult - lots of poor weather, and lots of hard rock. We’ve hit a lot of rock when we endeavored to build a home across the Catskills, but this rock is of a different nature - it’s seriously hard. So anything from well lines, to electric lines, to septic tanks take on a different nature when you are fighting the rock of this type. The heavy lift of this development project - with the day in day out challenges - makes it unlikely I attempt to do it again soon, even if there were lots of viable plots available, which there aren’t. Land is in very short supply.
Land is in very short supply especially when you contrast it with a softening real estate market - day by day, the market is getting softer, which for us doesn’t necessarily mean less homes or lower prices, it just means the discipline to buy land priced right is even more important. Luckily, I stayed disciplined, and didn’t pay more for good land - at least not top prices. I’m definitely paying more, but still staying the course. But overall, the market is definitely adjusting to a post-pandemic return to earth status quo - I just saw the other day a good real estate company advertising ‘12 Open Houses This Weekend’ - mostly Sullivan County stuff. That’s a lot, and that should begin to bring prices down for the market in general. For us, it reminds me that staying the course and making small and gradual price adjustments to our product, instead of doubling like everyone else, keeps us perfectly able to continue to produce homes regardless of this upcoming Catskills correction. Moving fluidly, like water, with the market, as we always have.
Even with the correction, however, it doesn’t mean that there will be an abundance of land available, especially in Ulster County where it actually is near zero. Quite a few people in my business - not as long lived, hence more susceptible to exuberance - bought land and small developments where the land was going for $200k plus. Meaning a $1.5m house. To me, that was never the sweet spot, and I walked away disappointed from quite a few projects that I actually really wanted, but in the end, that pricing discipline was important, and I’d be kicking myself now if I was carrying that type of land at those prices. I think our current prices, adjusted by county, are very sustainable, and inexplicably for a market leader, below the top prices we could get.
That said, the Catskill Farms’ homes are in high demand. As always. It’s a good product, and we do a good job. And as we ‘slow down’ (defined as twice as busy and fast as anyone else) for the first time in 4 years, it’s apparent at how good we really are, and how committed our team really is, and that people who build with us really are fortunate, because the stories that paint a more arduous building journey are more often told then our repeated streamlined success stories.