The Housing Bank Bill -- If at first you don't succeed try again

The MV Times News In Brief section published an editorial regarding the controversial Housing Bank. This is not about a for-rent project; it is about affordable property ownership for lower income residents of Martha's Vineyard.

Housing bank bill is re-filed on Beacon Hill

“Hoping for success the second time around, backers of legislation designed to create a fund to be used to support the creation of affordable housing on Martha's Vineyard learned that Senator Robert O'Leary, a key supporter, filed the bill on Jan. 9.

“Senate Bill #781 would impose a one percent fee, paid by the seller, on real estate sales. The first $750,000 of each sale would be exempt. Modeled closely after the Land Bank, the bill would create a housing organization that would be self-funded and award money to a variety of housing initiatives.

“Last summer the legislation, which was combined with a similar effort to create a Nantucket housing bank, passed the Senate but went down to defeat in the House where it was opposed by real estate interests.

“The legislation filed this month no longer contains any reference to Nantucket. The Martha's Vineyard Community Housing Bank Coalition, a group created to push the bill through the legislature, is optimistic that separating the Vineyard from Nantucket will further its chances.

“A copy of the bill is available on the coalition's web site at www.mvchb.org.”

Morgan Woods affordable housing project on Martha's Vineyard nears completion

It’s been about nine years since the Pennywise Path affordable housing project was conceived and set into motion. As the construction progressed and is now nearing completion, the decision has been made to name the project Morgan Woods, appropriately after the former Edgartown affordable housing committee chairman, Fred B. “Ted” Morgan, who lead the project from the very beginning,. This community experiment has been and will be closely watched by all Island towns to gauge its long term success, because there has never been a rental community on the Island of this scale.

I found the following articles informative and thought I would bring them to your attention.

Morgan Woods, a whole new village of attractive homes

The Vineyard's first significant, municipally developed affordable rental housing for low and moderate income residents

Martha’s Vineyard Real Estate Property Tax Bills for all Towns are posted

Property values escalated in 2004 and 2005 to record levels having a direct effect on taxes paid by Martha’s Vineyard home owners in 2006. Requests for abatements flooded the assessor’s offices and the tax matter became contentious. There are still some heated disputes unsettled and many property owners are in arrears, because they simply weren’t prepared for the staggering increase in their taxes -- some more than 50% from the preceding year.

You can go to my website for an explanation of what is generally called the "MIL Rate" and how to compute your property tax, and you can also view the present and past five years of tax multipliers. Here is a recent MV Gazette article that discusses the 2007 Property Tax Bills .

Whether you are Buying or Selling, Owning Real Estate can save you Big Money on your Taxes

A new book “Real Estate Tax Secrets of the Rich” written by Sandy Botkin, CPA, Esq, an IRS insider, reveals the tax strategies you can use to increase your ROIs by as much as 20 percent-whether you're a home owner or a real estate investor. This accessible guide demystifies real estate taxes and shows how to achieve maximum benefit when buying, owning, selling, managing, repairing, and investing in properties.
• Features numerous forms, charts, sample documents, and other valuable tax-saving tools
• Gives you the basics on real estate taxes and shows how to take full advantage of tax loopholes

Taken from the Back Cover…
When it comes to building wealth through real estate, the rich have one important secret: SLASH YOUR TAXES
It's simple: Less tax means more money in your pocket, and more return on your investments. Real Estate Tax Secrets of the Rich, written by a longtime tax expert and IRS consultant, shows you how to use your home and investment properties as money-saving and income-generating tax shelters.
Organized in easy to understand, bite size chapters that clearly explain the strategies, this book also includes charts and flow charts for ease of understanding. Each tip in this book includes a notation from the IRS tax code, showing exactly why it works - and how it's totally, 100 percent legal.
• Pocket thousands of extra dollars when buying and selling your primary home or investment property
• Use new mortgage and tax rules to your advantage
• Make targeted repairs and improvements on your home designed to boost tax deductions
• Protect and reduce your home's “tax basis” to maximize profit
• Make yourself bullet proof from any IRS audit

Did you know you can deduct PMI?

President Bush has signed a new tax legislation change that makes private mortgage insurance deductible for low and moderate income buyers who don't have the standard 20% downpayment necessary to purchase homes this year.

Home buyers who have annual household incomes of $100,000 or less, purchasing homes in 2007 will be able to get a low down payment mortgage and deduct the full cost of their mortgage insurance premiums on their federal tax returns. The deduction is set to expire at the end of 2007, unless Congress opts to extend it. This is in addition to the mortgage interest tax deduction they already take.

Martha’s Vineyard REALTOR® earns Resort & Second-home Property Specialist designation

Peter C. Fyler, REALTOR® Broker/Owner of SplitRock Real Estate, LLC, and an Exclusive Buyer Agent with 20 years of fulltime experience in the Martha’s Vineyard real estate market has earned the designation of Resort & Second-home Property Specialist. As one of the first 250 REALTOR® members nationally to earn the designation Peter is further distinguished as an RSPS Charter Member.

A recent National Association of Realtors® survey concluded there are more than 140,000 REALTORS® currently working in resort and second-home markets, and the numbers keep growing at a time when investment property and vacation homes make up a significant portion of the overall housing market, accounting for more than one-third of residential transactions.

Savvy buyers increasingly demand the expertise of a real estate professional with proven knowledge of resort and second-home market conditions, because 36 percent of second home purchases are more than 100 miles away from the buyer’s primary residence.

Have We Seen the Last of Real Estate Markdowns?

I realize the Boston market is not Martha’s Vineyard, so the demographic ingredient of people moving out of Massachusetts doesn’t affect our market. However, I think you will find the speculative forecasts given by three diverse professionals -- an economist, an architect and a real estate broker, to be interesting.
(Click here to view >) Market continues a slow adjustment

A Look Back at the Real Estate Market on Martha’s Vineyard

Now that 2006 is just a memory, and for some not a very pleasant memory, we look forward to what 2007 holds in store. Will it be more of the same or a better year for real estate and the economy? Employment still remains high and unemployment benefit claims have been stable for the last few months despite troubles in the manufacturing sector precipitated by the fall off in auto sales and the continued slow down in the housing market. Interest rates peaked midyear and appear to have settled as the Fed continues to hold steadfast in hopes of keeping inflation in check.

Sales of new homes are up, prices of used homes are starting to inch up again and the bloated inventory is starting to deflate, albeit very slowly. In a recent article in the Vineyard Gazette several friends of mine were interviewed for an article titled “Median Home Prices Fall on Vineyard as Real Estate Market Begins to Stall”. I find the title laughable as we have been stalled for quite some time and only within the last few months has activity begun to pickup again as we appear to have reached a floor in the market, shaky as it may be. The media continues to hype the housing bubble giving most buyers uncertain pause as they don’t want to be foolish and enter the market prematurely. Everyone is waiting for that magic sign from above that will say, “Start your engines”.

I think the important points are prices have finally come down slightly and the inventory is up despite the fact that those numbers are going to be confusing and will require thoughtful interpretation. The middle range that Ms Purdy is discussing has always been the softest area in the market, regardless of how strong or weak the market has been. I still maintain that this is an excellent time to buy if you’re prepared to be patient and negotiate strategically. If sellers believe nothing is going to happen for another 6 to 8 months, don’t you think they will be more receptive to negotiation than if they knew better days were only weeks away? More inventory means more competition and more choices for buyers, and that’s a good thing. Furthermore, if we accept the idea that potential buyers are going to rent until they are comfortable enough to purchase, this creates a strong opportunity now for anyone buying an income property. Normally I don’t recommend factoring income potential into financing a property. However, at this time it appears all signs point toward a very strong rental market for 2007. When clients ask me if I think they could rent the property they’re interested in I tell them, “You can rent a tool shed here for $600.00 a week”.

Another important point to make note of is home prices are not out of line comparing other areas on the Cape, the North Shore and South Boston area; it’s the wages that are out of line related to the cost of living on Martha’s Vineyard. If you compare the same jobs on-Island and off-Island, the wages are lower here and that’s driving a majority of the year-round labor force away. We’re returning to more of a second home and retirement market, the way we were back in the 1960’s.

Finally, if you are wondering about foreclosure opportunities, as Chris Wells said, the delinquency rate has not increased. A mortgagor usually has to be 90 days out before a bank considers starting a procedure. All our local banks are pleased to say they have nothing currently on their radar. I also look at foreclosure reports and the properties I see usually work out. Banks are very eager to do business and are introducing products to help prospective buyers. One such product regaining favor with buyers who cannot afford the average down payment is the PMI (Private Mortgage Insurance) mortgage. This will replace the ARM piggyback loans that were so popular when interest rates were historically low and stabile. Ask your banker.

The Land Bank does it again.

In the on-going race between the have’s, the have not’s, and the Land Bank for land acquisition on Martha’s Vineyard, the Land Bank has once again gobbled up some delicious chunks of real estate for the public in perpetuity.

(Click here to view >) Land Bank buys Aquinnah beach, Chilmark field

Is this a good time to refinance?

Although the housing market is still in decline in some areas of the country, low interest rates are spurring a record surge in loan applications for new homes and refinancing to get out of adjustable rate loans due for their first major adjustment.

(Click here to view>) Mortgage applications hit one-year high

What the Heck is a “Granny Flat”?

You’ve heard of the mother-in-law apartment --- that extra room with a hotplate located at the furthest end or deepest bowels of the house reserved for the “extended family” or that youngster who wants to be independent while still living at home. On Martha’s Vineyard, where space is at a premium and any space notoriously becomes a sleeping space, for many years we’ve embraced the concept of the auxiliary self-sufficient apartment or separate guest house. Actually, zoning laws were a lot more liberal in the past than they are today, so it’s not always possible to get approval for a guest house. The towns figured out a guest house or separate apartment quite often is occupied by non-family members and is income producing. Is that so bad?

Today, resourceful Vineyarders are getting around the tightening restrictions if they're not allowed to legally create a functioning apartment or build a guest house, by finishing the area above a garage with what is loosely called a detached bedroom. It appears we’re ahead of the curve because (Click here to view >) The Apartment Atop the Garage Is Back in Vogue.

Martha’s Vineyard: Too Rich For Your Blood?

Have real estate prices on Martha’s Vineyard, Nantucket or the Hamptons surpassed your threshold for pain? I know there are many beautiful places in the world and Vermont certainly ranks as one of them; I spend my honeymoon touring the state on a motorcycle. But ask yourself this question; is living on or near the ocean with all it's curative and spiritual energy not important to you? If that doesn't matter to you, then I guess the next best place could be Vermont.

Click here to view > Luxury Real Estate Snapshot: Vermont

We’re Martha’s Vineyard, We Can Afford It.

In the 70’s, the electric company, called ComElectric, promised everyone electricity was the most economical source of heating energy. They offered incentives to encourage consumers to install electric heat in homes, and baseboard electric heat was and still is the least expensive heating system to install.

Electric heating costs went through the roof in the 80’s while ComElectric became one of the most profitable utility companies, according to the stock dividends they paid. Today with the price of fuel oil and natural gas at record highs, the price of electricity hasn’t seemed out of line, however, NStar has decided Rates will go up on Martha’s Vineyard, while they go down for Boston Edison customers.

The Fall Real Estate Market Has Ended

Now that Thanksgiving, Black Friday and Cyber Monday are behind us and life goes on, we look ahead toward the winter holidays and the end of the year. But what about life for the unsuccessful real estate seller who’s been marketing their property for the past year, doing everything they can to entice buyers only to realize they aren’t moving as quickly to purchase real estate as they were a year ago.

On a historical basis, the fall real estate market has technically ended, so now the dilemma is what to do. Do you leave your property on the market hoping that the right buyer will come along during the winter months? Or do you remove it from the market in an attempt to erase its shop worn memory from the consumer’s mind and put it back on the market next spring as a “New Listing”?


I’ll admit the inventory is pretty fat right now. According to the Martha’s Vineyard Listing Information Network (LINK), there are about 500 homes and condos on the market, that’s up about 25% since this time last year. The Multiple Listing Service (MLS) Property Information Network puts the number of unsold condos and homes in Massachusetts at about 44,817. That’s a 15% increase over last year. The statistics go on to point out that only 19.5% of all properties sold in 2005 went under agreement from December through February 2006. The period between March and May was much stronger with 31.8% of properties going under agreement, but that’s always been the general scenario. Let’s face it, with all the holiday shopping, parties and winter vacation planning, who has time to think about trekking around looking at houses.

Since I’m an Exclusive Buyer Agent most seller agents will disagree with me. I believe a seller should leave their property on the market, because regardless of whether you are attracting a low-ball buyer or someone who really loves your home, a buyer is a buyer and by removing your property from the market you may miss that buyer. During a buyer’s market one of the first things a buyer wants to know is, “How long has the property been on the market?” Buyers have been trained to wait. Why? Because the longer a property has been on the market, the more opportunity there may be for negotiation. Buyers can find out how long a property has been on the market and how many price reductions there have been. I don’t believe leaving a property on the market during the winter months implies the seller is desperate. For gosh sake, why would a seller put their property on the market during a buyer’s market if they were not motivated. Trolling for buyers with over priced ego listings makes no sense in a market like this. I love the seller line, “We don’t have to sell.” Okay, but if I bring an offer, am I holding a gun to the seller’s head? The worst a seller can tell my buyer is no thank you. Or better yet, perhaps my offer could inspire a dialog and begin a creative negotiation process. Isn’t that better than hosting a lot of Looky Lou’s who you never hear another word from?

Here is my advice for the serious Martha’s Vineyard real estate home seller who will stay the course and keep their property on the market during the winter:

1) First and foremost, PRICE YOUR PROPERTY ACCURATELY. You can either be ahead of the curve or chase the market.

2) It is the holiday season so let your home reflect the holiday spirit.

3) Keep the interior light and bright. After all, the winter months tend to be grey and gloomy so lighten up.

4) One of the biggest hurtles for a prospective buyer to get over is envisioning interior spaces when each room is piled high with the seller’s prize possessions like the last 10 years of Field & Stream magazine, your Star Wars collection, or the 1200 piece collection of Depression Glass you’ve been collecting since you were first married. Hide the junk!

5) Keep your interior looking fresh and cheery with cut flowers, bowls of fruit --- anything that is remindful of the warmer weather to come.

6) No one will be able to see how nice your property looks with 12” of snow on the ground so keep a photo album available to show prospective buyers what your prize gardens and outside areas look like during the other three months of the year.

Do you know the condition of your heating oil fuel tank?

We all use some sort of energy to provide heat for our homes. Over the years we have become more conscious about pollution and its effects on the environment, both below and above ground. The Environmental Protection Agency (EPA) has tightened regulations on everything from coal and wood stoves to oil fired boilers and the storage tanks that fuel them.

On Martha’s Vineyard, prior to transferring a property to a new owner, it is mandatory that an underground oil tank be replaced with an above ground storage tank, preferably installed in a basement, shed or garage. Massachusetts DEP and DPS do not require abandoned oil tanks to be replaced if they are not leaking. However, Martha’s Vineyard local governments require that all abandoned oil tanks be removed. The procedure begins by notifying the fuel oil provider who in turn contacts the local fire department for a Permit to remove an Underground Heating Oil Tank.

About 15 years ago I represented the seller of a summer home close to the water. The home was heated with oil and there were two 275 gallon oil tanks in tandem above ground behind the house. The house was not occupied and they did not have a caretaker. One day when I was about to show the property I smelled a strong odor. I discovered that one of the 275 gallon oil tanks had sprung a leak. If that wasn’t bad enough, as it was emptying it siphoned out the contents of the other 275 gallon oil tank. To make a long story somewhat shorter, I can tell you that it cost over $20,000 to remediate the effects of the oil spill. The insurance company would not cover one dime of the cleanup because the house was not occupied and there was no caretaker. When I was investigating the cause and having new tanks installed, I learned that the fuel oil supplier had purchased inferior tanks from off shore sources. Because of inconsistencies in the wall thickness, the tank rusted through prematurely. I think you will find the following article very interesting because if you heat with oil, aging oil tanks can pose costly risks.

Martha's Vineyard, Nantucket and Cape Cod from Space

I thought this picture taken from 220 miles above the earth was very cool. Take a look at "The Cape and Islands"

When is the Commission not enough?

There’s an expression, “When the going gets tough, the tough get going”. This is a tough time in the real estate market for both buyers and sellers of real estate, but mostly for sellers. So, what do the sellers do when the going gets tough? They get creative and start offering all kinds of incentives and inducements to help peddle their houses. What kinds of incentives? To the buyers, they offer trips to exotic places, or a Range Rover in the garage, appliance upgrades, landscaping, cash contributions toward closing costs, etc.

But did you know, they’re also offering incentives and inducements to real estate agents --- cash incentives. Is this right or is this wrong? The debate gets heated and there’s really no clear cut answer. I know for a fact that some disclosed dual agents and facilitators believe it’s none of the buyer’s business if the agent is offered a cash incentive to sell a property.

For me, as an exclusive buyer agent, the answer is clear and simple, just the way my business model is. I may not conduct side negotiations or make private deals with the seller. Any moneys beyond the co-fee offered by the seller’s agent must be disclosed to my buyer client and it is my policy to pass those moneys along to my buyer client. I’ve had numerous discussions with seller agents telling them how in my opinion this sort of tactic is foolish. They would be better served pricing the property correctly rather than attempting to manipulate the real estate agents. But, “When the going gets tough, the tough get greedy”.

A recent Wall Street Journal editorial begs the question:
(Click here to read >) "Do real-estate agents have a secret agenda?"

Factoid: Home price decline bumps three Massachusetts communities out of the “million-dollar club”.

The Warren Group tabulates housing market statistics and they are reporting median home prices three Boston suburbs have dropped below the one-million dollar mark.

The report goes on to single out four communities in the state where median home prices still remain above the one-million dollar price range; they are downtown Boston, Weston, Nantucket and on Martha’s Vineyard, the Town of Chilmark.

The National Association of REALTORS® reports there has been no price bubble in the Massachusetts housing market

If you're interested in seeing just how the market is doing, here's some interesting data. Despite the fact that we've been experiencing a mild price correction over the last twelve months, the National Association of REALTOR® market analysts are reporting the median home price statewide in September 2006 only dropped by 9% since the peak median price observed back in July and August of 2005. Condo prices on the other hand dropped only 6% in approximately the same time period. Therefore, the data reported in the NAR Home Price Analysis Reports offer little support to the belief that there is or was a “bubble market” here in Massachusetts.

The MAR Second Quarter 2006 Report will show you where we are in terms of home sales and selling prices. Remember, it’s just a guideline and in areas like Martha’s Vineyard and Nantucket the numbers are going to be generally higher.

This graph will take you on a quick trip back to those deadly days in the early 90’s when the Annual Housing Supply in Months in Massachusetts was overflowing.

Not all housing markets are created equal and Martha's Vineyard is one of them.

We’ve been hearing about the real estate market leveling off at the beginning of 2007, but I still think we have little further to go before we turn around.

Prior to what I believe was a media induced market decline, I was a firm supporter in the idea that Martha’s Vineyard was not a bubble market. The Vineyard is recession proof and could not be affected by what was happening in other parts of the country. Well, I was wrong (sort of) because the bubble news spread like a dirty bomb. At least for a brief period, it hit us all in one way or another, and some real estate speculators and buyers who were infected by grossly overextending themselves may not recover. However, for those who can hang in there for the long haul, you will be just fine.

Some economists are now talking about superstar places in the country, especially coastal areas where land is limited, zoning laws restrict development and the rich are drawn to for work and play. Could they be talking about Martha’s Vineyard and the Boston area?

I think this New York Times article speaks to this question and supports the notion that Martha’s Vineyard real estate is and will continue to be an excellent investment. (click here >) All Housing Markets Are Local, Except When They’re Not