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Thursday, April 16, 2020

Farm 55 Sold, and the Raging Debate about What Comes Next in the Hudson Valley

This home marries both the barn and the farmhouse idea, with a pretty classic front elevation and loft interior.  It was a gradual and years long evolution from a much smaller cottage people liked.  Sold last Friday to a client that has been with us from the beginning of the project.  3 bedrooms, 3 baths and 1800 sq ft, plus a killer large basement that can be built out over time.

There is a debate raging, a conversation taking place, about what the virus means to the Catskills housing and business environment.

Over and over again I hear about how glory days are here again as soon as the yellow caution flag is lifted, that both the local construction industry and the clients that support them are just sitting around revving their engines, ready to get back to business as usual, Engines revving and waiting.

The argument being used revolves around the post 9/11 surge the Hudson Valley saw in real estate, as people fled to safety.  The more I hear people talk about - and it really is the prevailing sentiment - the more I tend to be convinced, even though I don't believe it, if it's possible to have both those ideas/beliefs living together in the same home (my brain - believe me, anything is possible up there in those nether regions).  Families will seek the safety of the Catskills as the City becomes scarier.  It's a reasonable argument on the surface, if safety is the only input.  A lot of my daily conversations are with businesses that really need it to be true, so there is the real danger there that 'hope' is clouding 'facts'.

And personally, I fear the facts are in contradiction to this sentiment.  Primarily, this pandemic has permeated NYC and surrounding areas in a way that neither 9/11 or the financial crisis did. Most people who buy our homes are not bankers and finance people - they are musicians, chefs, bar owners, shoe store owners.  Many people who buy in the Catskills are being directly impacted by this shutdown.  Do I think Catskill Farms will continue to find a dozen buyers a year?  Yes.  Do I think the larger real estate environment up here will be impacted negatively?  Yes.

I think quite a few people/families who bought homes up here over the last 5 year - using AirBnb to hedge their bets and expenses - might end up losing their homes, but because of forbearance and other tricks this won't be evident right away.  This will have the 'positive' impact of freeing up more inventory, and subsequently reducing prices, which had gotten a little heady.

I think town offices - planning boards, building departments, health departments, town boards - will be so backed up when this lets up, if it lets up, that there will be a built in delay to any rebound as these people struggle through the backlog of permits and inspections.

Towns and Counties are going to get crushed by the lack of real estate transfer tax, sales tax, building fees, and the thousands of other revenue streams that are being decimated currently and for the foreseeable future.

4th, a lot of the reason people come to the Catskill is Community (with a capital C).  Getting together, doing small town things, dinner parties, festivals, concerts restaurants, parks, hiking.  What are the Catskills if you are prohibited from partaking in the essence of the Catskills.  Still has value, but much reduced.

5th, most of the small business community that make up the main streets of Narrowsburg, Callicoon, Woodstock, Rhinebeck, Saugerties, etc... are not in position to weather this cashflow storm, or if they do limp through, they are in no position to robustly restart and reinvest when this is over.  From a cash flow standpoint, it literally is like starting over.

6th, realtors can't even show homes, and when they can it will be different and less effective, and slower.  And sellers will be scared to have people in their homes.

And Ultimately, the new Catskills exist because a swagger and confidence that puts it on par with Napa Valley, Austin, Nashville and a lot of other very desirable areas - though I would argue with the deep bench of replacement players.  So when a long established business shutters, or a newly established business never takes root, the impact is real.

3 short months ago, my thought about the Catskills was that while it will never be wholly secure, a lot of the financial and personal talent invested over the last 10 years seem to have positioned us in a way that was a permanent step/advance forward, that even a step back would leave us many steps ahead (and that's new - before, recessions stole most progress) - and then here we have this black swan event that caught people unawares while they were doubling down in a go-go economic environment that looked to have long legs.

I guess the one argument I heard yesterday made some sense - that if you back up enough, you could see a whole new approach to living, where people who live in the city and play in the country, end up parking their families up here and traveling back and forth to the city.  this would make sense if 'social distancing' continues, because being cooped up in a tiny apartment with no parks and playgrounds would motivate families to make decisions and choices they never thought they'd be making.  While that may produce a vibrant construction and real estate environment, the pivot would be dramatic and painful and disruptive.

And I guess that's the thing we will all be coming to terms with as we make our way to Acceptance - challenging and changing the way we thought life was going to be.  A very tough ask for most of the upper middle class and above families who thought they had life by the tail.

It took Lulu, a very respective dog, years to make this move from the dog bed, to the chair, to the lower regions of the bed, to the upper section.

Here she is watching a solitary squirrel with seemingly no friends who has been hanging around every day trying to figure out how to access the bird feeders I hung.

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