Catskills - Sullivan County - Ulster County Real Estate -- Catskill Farms Journal

The long-awaited blog post after an extended delay is mostly winter-related - plus my friend Eric from G5 Insurance must be too busy with his accomplished daughters to poke me about the lack of posting.  

I’ve been busy, in a slow winter way.  I guess I’m also a little tired of talking about the weather, which has been a daily slap in the face of cold, snow and what have you.  Cold wet winters are very expensive and logistically complex for a construction company with jobs spread out over 4 counties and a wide region.  What is true in one area is not true in another. Andrew, our project manager, has had his hands full keeping the job sites open with 3 or 4 different plowing companies which tend to be local in nature.

Trent, our in-house Revit (drafting software) has been busy navigating the various building departments, their changing personnel, requirements and expectations.  Our favorite town to build in, Kerhonkson, has gone from business-friendly to anti-business in head-spinning one year time frame, after Catskill Farms building there for over 10 years, and literally dozens if not more homes.  

The Town of Rochester would never agree they have now pivoted from a place to do business to a place to avoid, but that’s because the new leadership really doesn’t understand the impacts of their changes, be it personnel or process.  But me, as someone who runs a business and has to navigate it, I understand it perfectly well.

It could be a planning board that is looking to obstruct, consciously or unconsciously.  It would be a new building inspector who may be looking for 20 page plans of details rather than the 8 pages that has worked across the Hudson Valley for the past 25 years, because from a résume standpoint he looks great with solid experience in a busy town, but culturally bringing expectations that will be very hard for this rural area to achieve.

Savvy Town Supervisors understand a good cultural fit is as important as a good skillset fit.  This isn’t Westchester, it’s rural Ulster County, and there are few overlaps in what is actually necessary to successfully build a home when one place is hyper-dense, and the other is hyper-sparse.

The problem with a winter severe enough to slow the construction process is that a lack of construction progress also means a lack of cash flow progress since construction progress is necessary to get financing advances or client payments.  And a lot of our costs to run the business happen with or without a lot of construction progress such as payroll, insurance and everything needed to keep the lights on.

On the other hand, we have had the luxury of time to do a lot of office work for these projects that once the weather breaks, we will be not only off to the races, but positioned to pull our scull out in front of the pack.

One thing that is true is that the spring will be busy busy for a lot of subcontractors such as excavators and masons and framers, and that’s when relationships will come in handy so you are able to skip the queue, like buying the Fast Pass when skiing at Killington which allows you to skip the lines, for an extra $75 per day.

New homes going up in New Paltz, Yulan, Narrowsburg, and Kerhonkson.

Ahhh, Aspen.  Just spent 4 days skiing there with a small group of skiers from around the country and literally world champion instructors.  The goal was to improve some fundamentals so I can ski more safely and more efficiently for the next two decades. Mission accomplished.

Wednesdays high school basketball game was between the Aspen Skiers and the Coal Ridge Titans.  Everyone tells you their wealth story and Aspen real estate story in less time than it takes the gondola to travel the bottom of the slopes at the Gorsuch Cafe to the Sun Deck at the peak.  Real estate stories abound, mostly buying early and holding on, with an acceleration over the last 7 years that exceeded all expectations.  In one gondola ride the rider and a lawyer who didn’t know each other were talking real estate transactions (that cost $20k-$30k for legal fees alone) and the gentleman described it as the ‘immoveable vs the indestructible’.  

Aspen is an old silver mining town, it’s heyday in 1880’s or a bit before, with 12,000 persons employed in the mining industry and the related bars, brothels, hotels, eateries and what have you.  Then you had the Sherman Silver Act which set a floor on silver prices, prompted a rush on silver mining since a price floor had been established with the government as the buyer of all things silver, to the repeal of that very same act a few years later when the unintended impacts of the act became clear, and with that repeal a crash of the price of silver when the artificial price and demand were removed, spelling the end of Aspen as a silver mining town.  

Then you had the quiet years, when the population dipped to just over 1000 hardy farmers working a short season, and then the 40’s when the skiing and tourism industry emerged, slowly then all at once.

It’s hard not to hear about ‘Aspen’ but it’s easy to stop your understanding of the place with the superficial ‘billionaire club’.  It’s that, but it’s also hard to get to, limiting the crowds, it’s small with the silver mining days and architecture still defining the cityscape, with buildings no higher than 40’, and many of the original hotels, bars and even miner shacks still standing (now worth $12m for a tiny little spec of Aspen).

It’s the first time I’ve ever been somewhere where I see how comfortable and comforting the insular club of wealth and connections and confidence of position is so cleanly in view.  I've been to plenty of places where this is true - Martha's Vineyard comes to mind - but never with the reach and touch it attainability. You just aren’t doing anything without running into opportunity or network or advancement.  That strata where social and affluence mobility is assumed, tangible.  I could see how an interloper, a fraudster, an Anna Delvey (Sorokin) type character could quickly assimilate with tall tales of nobility, generational trust fund wealth and gilded lifestyles - it’s so quickly a topic of conversation among the Aspen crowd, a crowd that crows with accomplishment and privilege and its parallel track of hitching your wagon to other’s success, that if you play the part well, spend freely (even if it's debt), have a lot of energy, and remember your lines, I can see how fraudsters quickly assimilate.

On the other hand, I’m reading a book written in 1999 by my friend Nina Burleigh, A Very Private Woman, which details upper class American life in the 30’s-60’s, through the eyes of one of JFK’s lovers, and interesting, this woman is a Pinchot, a local Milford family of lore and owners of the Grey Towers where I volunteered for a winter organizing and catoluging old books.

So the day in day out hob-nobbing, cheek-rubbing, back-patting, leisurely life of lunches, colleges, horse riding, travelling within your little club of privilege provides a very firm footing for where you belong, where you are going, and a sure-footed way of getting there.  It’s just all laid out for you, and there is an entire social construct that provides soft guardrails and red carpets, introductions and soft-landings.

The Colorado ski resorts are getting almost no snow this year, and leading up to my trip it was worrisome, but then two storms in the weeks prior that dumped a foot each provided a decent base when combined with cool temps and snow-making efforts. 4 straight ‘bluebird days’, with crisp bright skies and sun.  The typical 4-5’ base of snow is more like 9” - it’s extreme, worked out well for us, but not many other weeks of ski plans, and will be a problem for the plains and farms and ranches and reservoirs that depend on the melt for their annual reup of moisture and irrigation - a snow pack is like a reservoir, since the soil can only hold so much water before it is saturated, so the snow pack lies above, slowing leeching into the ground during the spring, allowing maximum absorption.

I stayed a little outside of Town near the Buttermilk mountain, - Aspen is actually made up of 4 mountains, not reachable from each other.  A little outside of town, a little lower cost, and since I was 1, alone, and 2, beat after skil lessons each day, I didn’t have much exposure to the ultra high cost of goods and services you hear about.

Fur, real and fake, was everywhere, and I guess this year's jeans look ('denim trends') is a ‘baggy’ blue jean with a loose cut.  Maybe this is old news but I don’t get out that much.  High platform Ugg-like shoes.  It’s a happy place of success and leisure.  I liked it.  Lots of private jets in and out of the airport, and at least the public building of the airport is a bit surprisingly worn and threadbare, like the town is trying to ‘keep it real’, at least at the airport.  With one runway for both incoming and departing flights and unpredictable weather it can quickly become a mess of delay, cancellations and frustration.  Not sure where in the Northeast you can fly directly into Aspen, but it’s not Newark, and regardless of where you are coming from, it’s on a smaller jet, and at least in the case of American Airlines, this felt like not their serviced and high-end line of aircrafts.

So, all in all, a 10 out of 10.  Learned to ski better, got to see Aspen, the weather cooperated, and now I’m home safe and it’s snowing, so my dog and I are just lounging around in my comfortable and quiet home. I'm definitely good at picking a random place to go to, find lodging and logistics and what-have-you, and have a jolly old time.

And as expected, my team in the office and field held down the forts.

Note from Chuck - super interesting conversation I've been following, following a substack article by Mike Green which pokes holes into how the government defines poverty, and the perverse impacts on gov't subsidies as you climb the income ladder from $40k-$100k, leaving you marginally worse off as you pick yourself up by the bootstraps. Education, childcare and healthcare should not be the cross that all middle-incomers die on.

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Why the American Middle Class Feels Like It’s Disappearing

By Jeff D. Opdyke

Today, we’re going to play a game I’m calling “True or Stupid".

The rules are simple: I’m going to give you a dollar value, then the context, and you decide if it’s true or stupid. I’ll give you the answer: it’s “stupid”.

So, let’s play…

The number: $37,482.

The context: That’s the Supplemental Poverty Measure (SPM), as determined by the US Census Bureau for 2023. It applies to a family of four, implying a poverty line of $3,124 per month.

Now do the math in the real world.

Rent for a family of four is commonly $1,750 at the low end and about $2,140 at the high end. Let’s use the low end.

Health insurance for a family of four averages $2,131, though you might find it “as low as” $1,500—with big deductibles and co-pays. We’ll use $1,500 and pretend this family never needs care.

Food for a family of four runs about $993 a month if you’re very thrifty, and up to $1,600 if you’re not. We’ll take the thrifty number.

Utilities, including a mobile phone plan, run $600 to $750 a month. Use $600.

So using the cheapest end of every estimate, you’re already at $4,843 a month for the four biggest necessities: shelter, healthcare, food, and utilities.

And we haven’t included a car payment or lease (most households have one), the cost of keeping an older car running, or gas to get to work and the grocery store. We haven’t included credit-card debt, which more than half of households carry. We haven’t included replacement clothing, school supplies, or childcare. And we haven’t included the “something unexpected,” because life always delivers that, too.

That’s why $37,482 is a stupid number.

Sure, someone can justify it with formulas and wizardry. But the practical poverty line for a family of four—based on what it takes to live a normal American life—looks a lot closer to $72,000 a year, or about $6,000 a month. Below that, surviving to the next payday becomes an emergency.

I came to this topic because of a recent Washington Post story about Michael Green, chief strategist and portfolio manager at Simplify Asset Management. He took issue with how the Census Bureau defines where poverty begins and ends.

Under the SPM framework, the government defines poverty as income at 83% or less of median household spending on food, clothing, shelter, utilities, telephone, and internet.

Again: stupid.

Where is healthcare? Childcare? Transportation? Debt service? What about taxes taken out of paychecks and paid on consumption? Those aren’t optional costs. They’re baseline costs of functioning in modern America. Leaving them out produces a poverty line that’s mathematically convenient and socially meaningless.

That’s the point Green was making when he argued the real poverty threshold for a family of four is closer to $140,000, give or take.

Yes, that sounds egregiously high. Lots of people disagree with him. I think the number is too large myself. But even if it’s too large, it’s too large in the right direction—because it at least attempts to include the real costs of daily life and highlights just how warped America’s cost-of-living crisis has become.

And if you’re thinking, “Okay—poverty, yada yada. Why does this matter?”

Because it points to a deeper rupture in the American economy, and it helps explain why politics feels like it has run off the rails.

A solid middle-class life was once treated like a birthright in America. Today, for much of the country, it’s barely a dream. Polls have been flashing the same message for years: large majorities say the American Dream—defined as a comfortable, stable middle-class life—is dead.

And what do people do when they feel like they have nothing left to lose? They rebel. They revolt. History is packed with examples.

We’re seeing echoes of that in modern elections and modern anger. In certain ways, Trump is a manifestation of a burn-it-all-down mentality. He’s also a symbol of a Gatsby-esque society where the wealthy and the ruling class extract ever more wealth from everyone else.

The long-term numbers support the direction of that story. In 1970, about 61% of Americans were in the middle class. Today it’s closer to 51%. In 1970, the middle class held about 62% of America’s wealth. Today it’s closer to 43%.

That’s a barbell economy: lots of wealth at one end, lots of strain at the other, and a thinning middle connecting the two. That kind of system doesn’t stay stable forever. Something always breaks.

Something will break this time, too.

The core point is bigger than any single “solution” people talk about: when the official poverty line says $37,482, it’s not just stupid. It’s a signal that too many people are falling behind with no realistic path to catch up.

If you study history, you understand that this is the point where revolutions begin–a revolt of the masses. And a New American Revolution is coming…

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I’m in Aspen. It was less than 2 weeks ago I was in St Petes.  A month before that Costa Rica, and a few weeks before that, Houston. Until I put it in writing, I forget I get around.  And when I think about it, it makes sense; I have a team that has a got handle on things, and I’m not getting longer.  In aging, while I may have 35 yrs left, the truth is you start to slow in the mid-60’s and by 70’s you may be active and healthy but you are definitely narrowing what you want and like to do. So, now is the time.

But 35 yrs looked at another way, from the power of compounding money you’ve saved, is a ton of time.  You read that Warren Buffet’s wealth grew from something impressive to something astonishing after he turned 65 - that’s not because his investment strategies got better - it’s because of the power of time and the math behind compounding, or what Buffett called the 8th Wonder of the World, is true and undeniable.  Whatever your growth rate, divide it into 72 and that’s your clock of doubling.  And anyone who’s ever fallen for that 3 card monte trick of taking a million dollars or 1 penny doubling for 30 days (example not meant to be accurate), understands what doubling means. 

It means $5m at 60, $10m at 70 (at a conservative 7% growth), $20m at 80, $40m at 90.

Or at 10%, $5m at 60, $10m at 67, $20m at 74, $40m at 81, $80m at 88, and $160m at 95.

Time, it turns out, matters more than size.  That’s why getting started early in investing is suggested when possible.  You put $30k away when you are under 30, and you can out earn someone who spends a lot more time putting more money away later for longer.

I’d like to know when Domino’s pizza got so expensive, and when they started charging for delivery.  A large pie, with tip, is pushing $30.  I haven’t ordered it for awhile but have twice in the last two months with the same shock.  And coffee - a cup of non-craft coffee used to be $1 like 3 years ago and now it’s $2.50.  Bagels with cream cheese $4. Fast food $12+ for a combo meal.  All these everyday items of convenience are actually expensive, insidious tax on everyday living. I’m sure it’s a lot more pervasive throughout the grocery store than my quick analysis.  

Trump putting institutional and private equity large-scale purchases of single family homes in his sites in a WSJ article. I’ve read differing accounts as to whether the impact is as impactful as the worrywarts claim and haven’t read the definitive analysis that proves one way or another that the large block purchases from these investors have caused inventory shortage and housing price inflation.  To me, it seems like tight inventory and higher prices exist even where private equity isn’t present like the NorthEast.  The other side of the argument revolves around the lack of homes being built over the last 15 years, due to onerous zoning and permitting.

I notice my best friend Lulu (my dog) is starting to get a little cranky in her old age - 13 yrs old- a little snippy with the kids, a little noise sensitive at construction sites.  I don’t know if I’m getting the same way but I have two pet peeves that are really getting under my skin - 1, there needs to be a public awareness campaign about using cell phone speakers, it’s becoming the norm that you just let your content roll out obnoxiously to the world (I know I’ve talked about this before) but I actually don’t think people know it’s rude - I think in some proportion of the situations, people just don’t realize you shouldn’t do it.  2nd, and this is fast becoming a real issue for me, is that people need to use their own restroom on a plane - economy has a restroom, biz/1st has a restroom - don’t come marching up front just cause it’s convenient.

I’m a pragmatic person so I wouldn’t be suggesting these campaigns without some reasonable belief that they are achievable. A little education, a little enforcement, a little public humiliation.

A great Willie Nelson article in the New Yorker recently.

It is sort of amazing with all the crazy weather, with all the hundreds of thousand of parts that go into each house, with all the room for human failings and shortcomings, how few and far between our warranty issues are- I mean, if we hear from a client once a month, that’s a lot.  It’s just a testament to a few things - 1, we are building good homes, with good materials. 2, our clients are reasonable, and 3, we take care of a lot of things early when people are just moving in so that keeps the issue from lingering or spreading.  But seriously, with all the winds and ice and rain and heat and dry -that’s a lot of stress on a home, and our homes stand up to it.   Looking at my profit and loss last year, we did $6m or so of homes, and the warranty costs to me for the year was $22,000 or so, and a lot of that was one big problem.  It’s a testament to why we’ve been around for 25 years, and why we sell a lot of homes, even if it feels messy up close and personal from the inside looking out.

I’m in Aspen, one of the many places that saw tremendous real estate appreciation over the last few years- same as Jersey Shore, LA, Telluride, Austin, Hamptons and a thousand other places.  I’m just not sure I understand where all the money came from- it sort of just came out of nowhere, printed, and now exists in the form of real estate appreciation.

It's been a bearded winter, not by design, just by negligence. My one eye and glasses seem to be permanently and independently crooked.