Tuesday, August 29, 2006

Corey Kupersmith Begins Construction of South Woods Farms

Mr. Corey A. Kupersmith’s relationship with Oak Bluffs and this Island, albeit a fiery one, started sometime back in the 1990s when Mr. Kupersmith, a developer from Greenwich, Connecticut bought the old Webb’s Camping Area for $2.5mm. Mr. Kupersmith continued acquiring land in the area in what is called the Southern Woodlands, some with unclear title, until he had amassed an additional 190 acres giving him a total of 280 acres.

His vision was for a luxury golf course community; however, his proposals were summarily rejected time after time in one of the ugliest skirmishes yet to befall the Vineyard. Finally the Martha’s Vineyard Land Bank stepped in and purchased approximately 190 acres for $18.6 million thereby preserving 2/3’s of the Southern Woodlands.

During the beginning half of this year, many of us have wondered what the dramatically wide swath of excavation is cutting into the woodland off of County Road. Well, now we all know it is Mr. Kupersmith going ahead with his approved South Woods Farm subdivision of luxury homes.

Personally, I think it’s a shame a resolution couldn’t be found that would have allowed for a PUBLIC golf course with REASONABLE greens fees along with other forms of recreational activities like tennis and swimming, something that would have been accessible and affordable for all. I guess we’ll all have to wait for the greatly anticipated Martha’s Vineyard YMCA, but that’s another story.

Terminal Seller Uniqueness – The Vineyard Way?

I’ve always believed Martha’s Vineyard to be a unique and very special place, but I try to keep my elitist attitude in check. However, for as long as I can remember, when prideful owners compare properties, they boastfully maintain their property is special and unique. It's quite common when we see properties selling for over 20 million dollars, usually the first thought that comes to mind is, and “They paid that much for that property!” And then after thoughtful reflection we come to the (ir)rational conclusion, if he can get that much for his property, surely mine is worth X. No two properties are the same and the same goes for buyers, circumstances and timing. Each property must be evaluated individually and objectively. I see it all the time in the middle to lower end of the market based purely upon what is happening in the higher end of the market. Certain areas will appreciate more quickly than others since it all comes down to location, but there are many other dynamics that effect how the various price lines are marketed.

Vineyard property owners generally believe they are not affected by what is going on in the rest of the market, they think their holdings are recession proof. To some extent that may be true. But today it seems all we’re hearing from the media is the bubble has burst. Of course the news media survives on sensationalism and fear. They don’t know our business and quite often editorialize to suit themselves. The market is crashing in many areas and down trending in other areas where the experts have predicted a soft landing. All the while the market is building in other areas. We cannot deny the fact that the inventory of homes on Martha’s Vineyard is steadily increasing and sales have fallen off significantly, but this is not a bubble burst, it is suppose to be a leveling of prices into what will be a healthier market --- except for one thing.

I like the recent article Peter Miller wrote titled Marathon Sellers Race Realty where he speaks of that one thing --- real estate exceptionalism. I think we all know history repeats itself and if that is true, in this case, sellers who resist reality as we approach the long cold winter may get themselves into trouble, especially if they’re highly leveraged, in a position of negative amortization and with ARM’s that will realize dramatic interest rate hikes during first adjustments sometime before March 2007. Sellers are shooting themselves in the foot every week by making insignificant and repeated reductions to their over-priced properties, that is, overpriced for this market. As a result, serious buyers who watch every tick of our market continue to sit back intent upon waiting out the sellers, wondering how low they will go. In the meantime sellers are paying all those carrying costs and chasing the market as it continues to slide. This is not as bad as the early 90’s but I fear the outcome may be the same. My advice to sellers is, listen to the objective professional opinion of a seller agent. Sellers have got to stop telling their agents what their property is worth. If you are engaging them to market your property, let them do their job. LISTEN! If you’re fortunate enough to get an Offer, think carefully and MAKE THE DEAL. What you perceive to be a low offer today may end up looking like a high offer in the next few months.

Friday, August 25, 2006

Is This Really The End Of The Real Estate Boom?

Jim Cramer of “Mad Money” says the Boom is over and if you own investment real estate, get rid of it and invest in corn flakes. July was one of the worst months for real estate in a long time with the number of unsold homes climbing to a record high. Furthermore, sales of existing homes dropped to the lowest point in over three years, and that down trend caught most economic analysts off-guard. The supply of homes for sale rose to over a 6-month supply which is the highest it has been in the last 10 years. A Commerce Department study reported new home sales, accounting for 15% of the market, fell by 4.3% and is down 22% from the same time last year. The supply of new homes, meaning new construction, rose to the highest documented level since December of 1972. I wonder if they took into consideration the population boom since 1972? Also, price gains slowed since a 14% increase last September, but we know that and I don’t consider that to be unmanageable appreciation. My definition of a boom is when appreciation rates reach the 20% to 30% range. I still maintain that the Vineyard market is unique and somewhat recession proof. Granted, a lot of people are moving off the Island for various reasons including lack of ability to make a living here, but I believe more upper-middle class people and retirees will take their place converting properties into suitable vacation and income properties. Baby boomers (1946 to 1964) who are reaching retirement age will be divesting themselves of their oversized primary residences in favor of more modest accommodations. They will have the resources to afford a second home in a calmer surrounding or escape urban centers altogether in favor of no maintenance condos or low maintenance homes in recreational areas with golf, tennis and boating. They will have the money to do what they want and their movement will signal the beginning of the next real estate market upswing. Think about it, 27% of the population fits into this category and that adds up to 76 million “boomers” getting ready to retire. I’m very optimistic about the future of Martha’s Vineyard and its ability to adapt to the sociographic changes. I am also confident real estate will always be a good investment in the long run.

Tuesday, August 22, 2006

Closing costs up 8 ½ percent in Massachusetts

Published in REALTOR(R) Digest August 21, 2006
A newly released national survey of real estate closing costs found that home buyers in Massachusetts pay more, on average, for loan origination, title and document preparation, and other settlement services than the typical home purchaser, but far less than consumers in New York and Texas, who face the highest closing costs in the U.S. The survey, by Bankrate.com, reflects state averages for 21 related settlement fees associated with the closing costs on a $200,000 loan to a buyer with an excellent credit history who made a down payment of at least 20 percent on a single-family home in the state’s largest city. Nationally, the typical home buyer paid an average of $3,024 at closing, excluding taxes and escrow fees, which reflects a 10 percent increase over the 2005 average closing cost of $2,748. Home buyers in New York were found to pay the most for closing costs at an average of $3,887, while residents in neighboring Connecticut (which placed 6th) faced the highest closing costs in New England, paying an average of $3,284. In Massachusetts, home buyers currently pay $3,143, on average, at closing, which is up about $250 over last year, and places the Bay State 14th overall among the U.S. states for highest closing fees. New Hampshire residents pay among the lowest closing costs in the country, ranking 49th nationally, at an average of $2,734.

Monday, August 21, 2006

Does Your Personal Residence Qualify for a 1031 Exchange?

We all know the IRS rule about exempting the first $500,000 for married people and $250,000 for single individuals from the capital tax gains when selling a property you have lived in for the last two out of five years. However, there is a possibility depending upon what that property was used for during the other three years of that five year period that your personal residence can qualify for a tax free exchange. Here is a very interesting article explaining the Personal Exchange.

Tuesday, August 15, 2006

My New Home Has Problems, What Can I Do?

My wife and I bought a second home a few years ago in a newly developed planned community. There is a homeowner Association and the developer has an office in the complex as they continue to market their new homes. After we purchased the property we found some problems with the construction. What were we suppose to do? We contacted the Homeowner Association, but in our case they were of little help. We contacted the developer; they referred us directly to the builder. Luckily, the builder is a good guy who took responsibility for all his mistakes. But, what if he wouldn’t? What rights would we have? Would we have to sue the developer and builder, and how would we go about doing that? Should the Homeowner Association step in, and what can they do? Here is a book titled Construction Defect Litigation that speaks to the potential problems that can arise and what to do.

Monday, August 14, 2006

Car Show Supporting Edgartown Parent Teacher Organization

On Saturday, August 12th, the Edgartown PTO hosted their first ever car show. My dear friend, Rob Young, aka Robert A. Young Electrical Contractors was the guiding light behind this unusual event. We all know that most people on Martha's Vineyard, especially those living here year round could give a tinker's damn about cars beyond getting them, their kids, fishing gear and their tools from here to there. However, there are some pretty neat cars squirreled away in barns and garages around this Island.

Rob has a pristine BMW Z3 M Roadster that is a Sunday driver, and I have a '95 Chevy Caprice wagon that is driven even less than that. What's so special about a Chevy WAGON and what does this have to do with real estate. Well, I admit this is a digression from my normal discourse, but this WAGON used to be my real estate car until my increasingly obsessive hobby ran away with me and it was no longer suitable as a sedate house touring car. Another friend of mine who happens to be a home inspector has a '63 Corvette split-window coupe that's fully restored, and a 2003 Z06 "Arrest Me Red"Corvette with 405 HP. We all dusted off our cars, hoped they'd start and got together to support this event on the most beautiful day of this summer. There were over 40 cars in attendance at the show.

I bought my wagon new in '95 and worked on it for about 7 years. I blame my folly on a semi-retired race car engine builder, Ray Baker, who became a client of mine and to whom I sold a house in Oak Bluffs a number of years ago. I also credit a lot of my insanity to the encouragement and support of my many friends in several Impala Super Sport clubs around the country. Thanks to Ray and the Impala guys, I've spent tens of thousands of dollars and equally as many hours making my WAGON the unique "Grocery Getter" that it is today. I started a trend. I guess all that love and effort paid off on Saturday, because I actually won an award at the car show. It wasn't my first award, but this was special to me.

Friday, August 04, 2006

Island affordable housing bill killed by House

The question of affordable housing for workng class Vineyarders has been a heated topic of discord for many months. The solution for how to maintain a balanced population on this fragile Island will not come easily. It is more complicated than it appears, and could establish a precidence for other towns and cities to manipulate a seller (or buyer) fee to self-serve their purposes, I.E. town sewer upgrades, etc.

It was believed the House would not render a decision before its current session came to a close; however, they somehow squeezed it in and voted 91 to 64 against legislation that would have created a fund to subsidize affordable housing on Martha’s Vineyard.

As a real estate broker, EXCLUSIVE Buyer advocate and owner of a property valued above the $750,000 baseline, I've been subjectively opposed to this legislation and am pleased that it's been rejected. In my opinion, it doesn't matter who is charged with paying the fee, be it the 2% Land Bank BUYER fee, or the 1% SELLER fee for sales above $750,000 --- the BUYER is the one who will ultimately pay. Of course I have other reasons for my opposition, but ....