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.