Monday, November 27, 2006

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.

Tuesday, November 21, 2006

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.

Thursday, November 09, 2006

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?"

Wednesday, November 08, 2006

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.

Monday, November 06, 2006

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.

Sunday, November 05, 2006

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

Will the price of heating oil go down for Martha’s Vineyard home owners?

New England home owners are scheduled to receive a break this winter due to a 25% reduction in global oil prices. However, some of us realizing how volatile the world situation is today have gone ahead and locked in the price we are going to pay this season. Last winter I came out ahead with that strategy, so it will be interesting to see what happens this winter. Here is the full story as reported in the Boston Globe: (click here >) Heating oil prices tumbling in N.E.

Friday, November 03, 2006

Are you trying to time your entry into the Real Estate Market?

If you’re considering getting into the market but trying to time your entry, now may be the right time. Interest rates are low, the economy is strong and inventories are high. According to a report issued by the National Association of REALTORS®, it appears we are experiencing a leveling trend in the market that may last beyond the first of next year. Read the full NAR story here.

Good News for recent Martha’s Vineyard home buyers with Adjustable Rate Mortgages.

With many adjustable rate mortgages approaching their first reset, this may be your window of opportunity to refinance and convert to a fixed mortgage. Fixed and adjustable mortgage rates are down and averaging at or below last year at this time. Fannie Mae VP, Frank Nothaft says, “With mortgage rates down this week, we may see a spurt of refinancing by those who want to get out of ARMs that are scheduled to reset in the next year while interest rates are still comparatively low.” Read the full CNNMoney story here.

Thursday, November 02, 2006

Blue may be the new green: What better color for a seaside home on Martha’s Vineyard.

For years we have been using the classic Calvin Kline inspired bleached white furnishings dark woodwork combination, but now it looks as though Cool Blue Is Hot.

Adjustable Rate Mortgage holders may find themselves “Upside Down” in the Massachusetts housing market.

As the real estate market struggles to regain its footing, 24% of home buyers who bought during the peak years of the market using Adjustable Rate Mortgages are finding themselves facing payments they will not be able afford. ARM's escalated more rapidly than fixed rate mortgages, and in many cases it was the first time home buyer who was foolishly beguiled into overextending themselves using ARM's to get into the home they wanted. They were able to afford more home than they really needed, instead of a comfortably affordable starter home that they could use as a stepping stone in the future. Many of these buyers will not be able to refinance and convert to fixed rate mortgages. Because they financed most if not all of their purchase, they remain blindly optimistic the market will turn around sooner rather than later if they can just hang on. However, they may find themselves in an “upside down” equity position with the value of their investment lower than their mortgage.

To learn more, read these two Boston Herald articles:
Poll: A third of adjustable-rate mortgage holders worried about payments if rates go up

Housing market ‘upside down’ : More homes selling below purchase price