The Bottom Of The Market Feels Like A Bumpy Road

It’s the New Year, and just in time the banks are raising interest rates, but just a little – so far. However, the banks are also relaxing their down-payment requirements because they are seeing increased confidence in the housing market. The truth, according to one banker friend I spoke with is because they are not making any money. They need to make loans to make money. In some markets borrowers can now borrow 95% of a property’s value. Of course one would hope this means property values are not going down any further and loan applicants are going to be scrupulously vetted?

Despite favorable sales figures as we finished out this year, Tim Warren Jr., CEO of the Warren Group sees home prices bouncing up and down along the bottom during the next 3-6 months, and possibly throughout most of 2010 even though sales figures will appear to continue trending positively. This is the way it was in the early 90’s as we pulled out of the last recession. Some economists call this an “L” recession. For sure the recovery is going to be slow, but I do think it is safe to say we are at the bottom albeit a bumpy bottom. I believe in making a decision about when is the best time for you to buy an investment property one indicator you should pay attention to is interest rates. When interest rates go up this can herald the onset of an inflationary period.

Warren feels it was the rush to take advantage of the initial first-time home buyer tax credit by signing contracts before November 2009 expiration that contributed the biggest boost to the market. Wednesday’s WSJ reported that first-time buyers made up 51% of purchases in November, according to NAR. The initial first-time home buyer tax credit has been extended and broadened to include more potential buyers which may once again give a boost to the housing market. Contracts have to be signed by April 30, 2010 with closing dates on or before June 30, 2010. According to Carl Reichardt, an analyst with Wells Fargo, “The spring selling season would be critical to determining whether a possible double-dip is at hand, or whether housing’s recovery will regain steam.”

Tim Warren believes another reason for the upturn is the brighter unemployment figures in Massachusetts which in turn enhance consumer confidence. Okay, but one of my sources tells me the actual national unemployment figure is above 17%, if you factor in the non-registered ‘shadow’ unemployed.

News Flash: Massachusetts unemployment rate drops slightly from 8.9% to 8.8%
Read about it here > http://www.businessconnector.biz/news/show/523

In January, it is predicted that 1,000,000 unemployed workers will lose their benefits. Another prediction is going to be a surge in commercial foreclosures as more companies lay off workers and close doors in leased office spaces. But who knows? I still believe in miracles.

THERE IS A LOT OF UNCERTAINTY AS WE HEAD INTO 2010

Will we see more Foreclosures? Will we see more Short Sales? Will we see more Unemployment? Sadly, the answer to all these questions is yes. Most likely all of these events will once again push home prices down further. Here’s another question: will interest rates go up? Most analysts say yes; they will go up in 2010.

It’s clear that people are in the market now making purchases. They are taking advantage of the low – very low interest rates and the newly rewritten and extended first time home buyer tax credit. Many are using this new opportunity to trade up to the home of their dreams. But does this mean the market is recovering or do we have further to travel before we bottom out? I just don’t know.

Here's what HomeGain.com, a web marketing company that tracks the real estate market, has discovered in a recent survey.

62% of home BUYERS think homes on the market are overpriced.

76% of home OWNERS think their homes are worth more than their real estate agent recommends.

41% of home OWNERS think their homes’ listing price should be 10%-20% higher than their real estate agent recommends.

24% of real estate agents think home prices will go up in the next 6 months.

48% of real estate agents think home prices will remain flat in the next 6 months.

Note: NAR says 2mm people benefited from the first go-around of the tax credit. During this extension period of the Home Buyer Tax Credit, home owners who have been in their homes for 5 years can realize a tax credit deduction of up to $6,500 expansion, but they have to act soon.

Click here to read more > http://www.marealtor.com/content/Homebuyer_Tax_Credit.htm

What I do know is, as long as you have job stability, the monthly payments of your loan are affordable and not a stretch or based upon any projected rental income, and you are buying the home of your dreams that will make you happy for the long term, this is the time to buy. As I have said before, up or down, in ten years $10,000 to $20,000 will not matter, but don’t buy something just because the prices are attractive now – at least not on Martha’s Vineyard.

There are a number of properties on the market right now that appear to be very attractive buys. However, many of them are using an “As Is” caveat. That is because the seller usually does not have the funds to make any repairs that could possibly be discovered during a Structural Home Inspection. He is telling you the Buyer up front that no matter what the problem is; it is your problem. Your home inspector or your real estate agent may try to minimize the costs of the required repairs, but let me assure you nothing is inexpensive here on Martha’s Vineyard. Don’t romance yourself into false assumptions; have your buyer agent get you the facts. I do that for all my clients because I hate surprises.

So as this year skids to a close, let’s keep our eye on the prize, have a clear vision of what is important and move forward with intelligent thinking.

If You Don't Buy a House Now, You're Stupid or Broke

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth for Business Week.

NAR 2009 Profile of Home Buyers and Sellers

The National Association of Realtors® just released their 2009 Profile of Home Buyers and Sellers. The report summarizes the responses of 9,138 buyers and sellers who bought or sold a home between July 2008 and June 2009.

47% of all buyers were first time buyers.

62% of first time buyers reported that the primary reason for buying a home was the desire to be a homeowner, 35% of all buyers reported that as the number 1 reason.

The median age of all buyers was 39, same as last year.

83% of all first time buyers are under the age 44.

62% of all buyers are under age 44.

68% of the buyers surveyed in the Northeast make less than $100,000 per year.

63% of all buyers had no children residing at home under the age of 18.

Buyers in the Northeast moved an average of 10 miles from where they currently lived.

90% of all buyers used the internet to search.

84% of buyers reported the photos to be the most useful information.

The number one action taken after viewing a home online was to drive by or visit the home.

66% of buyers reported that they used a print ad to search, but only 84% to 90% (depending on the print medium) reported that those sources were "not useful".

36% of buyers found the home they purchased through an agent, 36% found the home they purchased online, less than 3%found the home they purchased in a print ad.

77% of buyers purchased their home with an agent.

85% of sellers sold their home with an agent.

39% of the mortgages were FHA loans.

87% of buyers viewed real estate as a good investment.

Let's Play What's My Market

I was reading an article the other day that posed an interesting question about the current market. What kind of market are we in, a Buyer’s Market or a Seller’s Market?

As you know, the definition of a Buyer’s Market is one where there are more properties on the market than there are buyers willing to buy them. When a buyer makes an offer on a property, and the seller does not accept the offer, the buyer is likely to end negotiations and move on to another property because the market is perceived to be the land of plenty.

Is that true now? Are you looking for a particular property or type of property? Are you finding an abundance of properties that fit your profile? If the answer is no, then this is not a Buyer’s Market for you.

Conversely, a Seller’s Market is one where there is a large audience of eager buyers and limited inventory, resulting in multiple offers and a frenzy that inevitably drives up the final sale price. Believe it or not, this is happening in many areas of the country like California. Is it happening on Martha’s Vineyard and what is your view of the Martha’s Vineyard real estate market?

My opinion is that we are in a market we have never seen before. This is a bipolar or, dare I even say, a psychotic market. This is a market where the banks, lenders and appraisers control and determine the value and the fate of the market. This is also a market that depending upon the price line, location or circumstance can be a seller’s market, a buyer’s market, a lien-holder’s market, a lender’s market (there is a difference) or an appraiser’s market. Another facet of this market is what we call shadow inventories. There is an inventory of properties that are not on the market but available for sale if and/or when the market appears stable enough for those silent sellers to get their price. The banks are also holding inventory they have reclaimed through foreclosure, not so much on the Vineyard at this time, but to a great extent in other areas of the country. They are holding them until they feel they have a better chance to recoup their loss. Many of those properties were originally part of the ‘short sale’ inventory.

It would seem with prices and interest rates at historically low numbers first-time home buyers and trade-up home buyers would be running into the market and into the grateful open arms of eager sellers anxious to make a deal. Buyers should realize what a once in a lifetime opportunity they have to purchase the home of their dreams at today’s dollars and historically low interest rates. However, there is a pervasive sense of entitlement on both sides in today’s market that is preventing buyers and sellers from coming together.

Okay, so what is the problem? Ironically, as I am writing, I got my answer in a response to a conversation I am having with a seller agent regarding a buyer client who is interested in a couple of her listings. She says, “… both are pretty motivated...but these are not distress sales. We'll obviously consider any offer.” Who would put their property on the market today if they are not ‘motivated’ to sell? Ignoring the market data, sellers believe they are entitled to higher prices for their homes, and buyers believe they are entitled to even further discounts on homes that have already been heavily discounted. So once again, just like when we were children at our first dance; buyers will sit on one side, sellers will sit on the other side, both acquisitively looking at each other and missing the ‘last dance’.

HouseLogic.com - A Great New Educational Web Site

I am a REALTOR® which means I belong to the world’s largest professional association with 1.1 million members. The National Association of REALTORS® or NAR has become one of the most powerful lobbying groups in the nation since its inception in 1908.

Most consumers do not understand what NAR does and probably think it is self-serving and has no relevance for them. NAR cares about the homeowner as well as those dreaming of becoming homeowners. That is why it enforces a strict Code of Ethics for its members. However, that is not all.

In an effort to bring better understanding for the real estate profession NAR has launched a new educational website, currently in beta format, that is aimed at engaging as many of the 75 million homeowner households as possible even if they are not currently in the market. HouseLogic.com is not merely another marketing channel for REALTORS®; it is focused on becoming an informational mecca for consumers providing useful tips, hints and articles, aimed at motivating homeowners to take more interest in their homes, more interest in maintaining and improving the value of their homes, and ultimately more interest in taking political action that supports home valuations, home sales and homeownership. If successful, with the voice and concern of the nation’s homeowners behind it, NAR would become an invincible force at practically all levels of government advocating for homeowners and the REALTORS® serving them.

Take a cruise through www.HouseLogic.com and see what you think. Knowledge is Power and SplitRock Real Estate creates Power Buyers.

Where To Now Martha's Vineyard?

Are you upside down? Did you know one in four home owners in America with a mortgage are under water? By that I mean their home is worth less than what they owe. The beginning of 2010 will see more Option ARM’s coming to term. In many cases where home prices have fallen drastically borrowers are so deeply under water that they can't refinance their mortgage in order to take advantage of take advantage of the current lower rates. "We're declining hundreds of loans each month," said Steve Walsh, a mortgage broker in Scottsdale, Ariz. "The only way we will make headway is if we allow for a streamlined refinance where the appraisal is irrelevant."

5.3 million homeowners have mortgages that are at least 120% of their homes’ value. According to Mark Fleming, chief economist of First American Core Logic, homeowners whose loan to value ratio is greater than 120% are more likely to default and 520,000 of these borrowers have received default notices. Even if they want to sell (Short Sale), they can’t afford to --- they’re stuck. Sanjiv Das, head of Citigroup's mortgage unit said "Beyond 120%, the most effective modification is a complete loan restructuring, including a principal reduction. Mr. Das goes on to say “Borrowers who are less than 20% under water are likely to maintain their mortgage if their loan is modified and the payments reduced”.

As financial institutions continue to struggle with how they are going to solve the mess they have created, about 588,000 borrowers defaulted on mortgages last year even though they had employment and could afford to pay. That is more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said. Previously the advice to borrowers has been, only by defaulting on their loans will lenders pay attention and consider adjusting rates and principals in line with today’s market. However, lenders have been reluctant to reduce mortgage principal over worries about "moral contagion, with people not paying their mortgage or re-defaulting because they believed the bank would reduce their principal," Mr. Das said.

I expect that we will see more loan defaults on Martha’s Vineyard and more foreclosure auctions at the beginning of 2010 despite the fact that we have leveled out in our market. In the early 90’s we called this moment in the market a “trough”. I also think the Martha’s Vineyard recovery will slow down because; with the optimistic forecast more less-motivated homeowners have placed their properties back on the market at overly optimistic prices. I believe the result will be a stall in the market because everyone is confused. However, I still maintain that this is a great time to buy. Look at what you have going for you. Interest rates hit an all time record low this week averaging 4.78% on a 30-year fixed-rate mortgage --- this has never happened before in all the time Freddie Mac has been keeping records. For comparison sake, the interest rate last year was 5.97%. "Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage," said Frank Nothaft, Freddie Mac chief economist. Interest rates will only go in one direction from here, and don’t forget the extended and broadened home buyer tax credit; it no longer applies only to first time home buyers.

I want to urge you, if you see something you like take a run at it. You will never know what you can negotiate until you engage, but be patient, realistic and resolute in your objective. $20,000 one way or the other today is not going to make a difference ten years from now.

Great News for Martha's Vineyard Home Buyers!

First-Time Home Buyer Tax Credit

President Obama signed the Homebuyer Tax Credit into law after overwhelming votes for it in Congress. The credit takes effect as of November 6, 2009. To be eligible, a purchase contract must be signed by April 30, 2010, and close on or before June 30, 2010. This is a very narrow window of opportunity so pay attention and don't miss out.

Not only is the existing $8,000 tax credit for first-time homebuyers extended but a new "Homebuyer Tax Credit" of up to $6,500 for some existing homeowners has been added. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.

The qualifying income limits are being raised to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.

Martha’s Vineyard Land Bank “M” Exemption

In an effort to stimulate home sales to first-time home buyers, the Martha’s Vineyard Land Bank has increased the credit amount of the “M” Exemption. The “M” Exemption is a credit given only to eligible first-time home buyers toward the Land Bank Fee of 2% of the purchase price of real estate on Martha’s Vineyard.

Prior to September 1, 2004, the “M” exemption was $100,000 and in order to qualify all parties on the deed may not have ever owned real property at any time, not just on Martha’s Vineyard but anywhere. Subsequently, it was increased to $300,000 and the exemption was available to first-time purchasers of real estate who will domicile on the property within two years and hold the property for at least five years from the date of transfer. In the case of spouses, either spouse can have owned or possessed an interest in real property prior to the time of purchase, but not both spouses. As of October 27, 2009, per a recent amendment to the land bank law, first time purchasers may now claim a $400,000 "M" exemption. All of the other requirements of the "M" exemption are unchanged.

Mortgage Interest Rates Remain Below 5%

Although inflation is an assumed and anticipated part of our future economic recovery, the Fed anticipating continued slow growth during the next few months voted the status quo for interest rates with their announcement this week that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." Rates will stay where they are for now because the Federal Reserve group believes that even with economic growth ahead, it will be at a manageable pace.

On Martha’s Vineyard, for loans up to $417,000 you can get a 15-year fixed rate mortgage for 4.5%, with no points and a 30-year fixed with one point for 5.1%. 30-year loans are actually down by an eighth of a point at maturity.

Martha's Vineyard First-Time Home Buyers See Continued Signs of Assistance and Relief

According to an article in the WSJ this week, the Senate has reached a compromise aimed at continuing assistance to first-time home buyers in the form of a tax credit. The agreement still has to pass the full Senate and the House but if it is approved it will extend the existing $8,000 tax credit for first-time homebuyers as well as add a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.

Housing-industry sources in Washington are saying the qualifying income limits will be raised to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000. Should this new agreement become law, buyers must have executed sales agreements by April 30, and be able to close escrow by June 30, 2010.

On Martha’s Vineyard, in an effort to stimulate home sales to first-time home buyers, the Martha’s Vineyard Land Bank has increased the credit amount of the “M” Exemption. The “M” Exemption is a credit given only to eligible first-time home buyers toward the Land Bank Fee of 2% of the purchase price of real estate on Martha’s Vineyard.

Prior to September 1, 2004, the “M” exemption was $100,000 and in order to qualify all parties on the deed may not have ever owned real property at any time, not just on Martha’s Vineyard but anywhere. Subsequently, it was increased to $300,000 and the exemption was available to first-time purchasers of real estate who will domicile on the property within two years and hold the property for at least five years from the date of transfer. In the case of spouses, either spouse can have owned or possessed an interest in real property prior to the time of purchase, but not both spouses. As of October 27, 2009, per a recent amendment to the land bank law, first time purchasers may now claim a $400,000 "M" exemption. All of the other requirements of the "M" exemption are unchanged.

To learn more about the Martha’s Vineyard Land Bank please follow this link > What is the Martha's Vineyard Land Bank?

How long until we return to a balanced real estate market on Martha’s Vineyard?

My guess is 18 months. The unsold housing inventory of all properties and classifications on Martha’s Vineyard is just over 800 units. In any normal market, one that is balanced, the average time on market is about 90 days. When the inventory absorption rate or days on market (DOM) goes beyond 6 months we consider that to be a ‘buyer’s market’, and conversely when the average is less than 90 DOM we call that a ‘seller’s market’. When the inventory is high, buyers are in a better negotiating position --- as a rule. In order to thoroughly analyze the market you have to consider the various classifications and price lines as well as locations and the type of market. I think in our second home market the average time on market is a little longer. Buyers do not have to buy and sellers do not have to sell; they already have their primary residences.

As an example, taking only single family residences (SFR) on Martha’s Vineyard during the last 12 months, the average time on market was 317 days. Currently, the inventory of only SFR has increased to 516 units, so using the previous DOM rate we have about a 2 year supply of homes to absorb. I think it will be a lot less than that, as many more buyers are gaining confidence in our economic recovery and realizing the bottom of the market is here. Eager investors are entering into the market in increasing numbers to take advantage of the lower prices and attractive interest rates – below 5%!

Although the inventory is high, and actually increasing, in spite of all the recent sales, I attribute the increased inventory to more owners rushing their properties to market or re-listing their properties because they believe we have turned the corner and now is a better time to sell.

There are still those home owners who will be facing major loan adjustable rate resets before the end of the year and they want to get out now if they can in order to save their credit rating. Short sales continue to be a slippery slope for both sellers and buyers, but lenders are getting more assistance allowing them to be receptive to home owners applying for loan modifications. I do believe we will see more property loans in default even though a good majority of them will never go to auction, at least not on Martha’s Vineyard.

You still have time to take advantage of the many available and affordable opportunities in this market with the assurance that an investment made today will appreciate handsomely within the next five to seven years. Just remember, as the supply diminishes and demand increases those so-called good deals will become fewer and far between.

Martha's Vineyard Condos are getting cheaper, but are they a wise investment?

We all know prices have dropped during the last 4 – 5 years, and in some areas like Las Vegas the roll back has been crushing and as much as 60%. But for most of the country it has averaged 25-35%. On Martha’s Vineyard the roll back has been to 2003 and 2004 prices, or about 15-20%, and in some price lines and Island towns there has been practically no depreciation.

Now that prices are dropping below $400,000 for a ‘habitable’ SFR, condo prices are also going down. As a result, more buyers who want to get a foothold on the Vineyard as home owners are turning to the less expensive condo market. However, there are growing concerns to be aware of when purchasing a condo in this economy and at this time.

All condo communities have associations and association dues that each owner is responsible for on a regular basis. The dues go toward day-to-day maintenance and taxes as well as maintaining a cash reserve for emergencies and major repairs like replacing roofs and siding. Because of the down turn in the economy -- loss of jobs, etc., many condo owners are unable to pay their fair share and that puts the burden on everyone else.

It is important to examine the homeowner’s association by contacting the association board and asking to review the financial documents, which you have a right to do before you close on a condo unit. You also want an inspector to examine the condition of not only the unit you are purchasing but also the common areas that the association is responsible for. You want to find out how dues are paid and what percentage of owners are current on their payments.

According to Leonard Baron, professor of finance at San Diego State University, in an interview for the WSJ, here are some important points to consider when purchasing a condo.

· The condo docs, master deed and financials can be voluminous and the information is tedious to go through, so don’t wait until the last minute to review them and do make sure you get all the documents. Prof. Baron advises that you request to review the condo docs the minute you are in escrow, and request at least three days to review them.

· About two-thirds of any condo association's budget should be operating expenses such as water, lights and landscaping. The remainder should be allocated as a reserve fund for items like roof and siding maintenance and road repair -- any items that are not considered routine and regular maintenance. “See if expenses exceed revenues due to foreclosures, unpaid dues or other reasons. If they do, ask the association what their plans are to make up the shortfall, and whether you should expect an assessment increase or higher dues. Ask also if there are plans to save costs by cutting pool hours, or the number of mowings or clubhouse cleanings. This could affect not only your comfort, but also the future marketability of your home.”

· Find out if a reserve study has been done. This is not required in every state, but it is becoming more common. A reserve study looks at all long-term anticipated maintenance and projected structural replacement items (i.e. roof) over a 30 year period. The costs are tallied and put together onto a payment and maintenance schedule. Your monthly dues should cover the monies that needs to be put away to establish the reserve fund account. Baron says "Many times the boards, under pressure by the owners, will hold the line on raising fees, to the long-term detriment of the property.” He estimates that most associations are only funded 50% or less, and you should have serious concern as to the health of the association if they are funded below 40%. "You could be hit with thousands of dollars in assessments if something expensive fails," he says.

In a number of markets where condo complexes range upwards of fifty to one hundred units, unless the association confirms adequate funding, many banks will not approve a mortgage. I have never been enthusiastic about condos on Martha’s Vineyard; it is not what I consider to be Vineyard lifestyle. Despite what you may think about upkeep on a home verses a condo, on Martha's Vineyard modest single family homes are very easy to take care of, and you own the dirt. Keep it simple; isn’t that why you want to be here?

Happy Days Are Here Again, but For Whom?

I take my responsibility as an EXCLUSIVE buyer’s advocate very seriously. I have been saying for many months, now is the time to get into the market, but very few people listened.

The recover in the housing market, not only in Massachusetts, in many parts of the country has occurred faster than we thought it would. My concern is that the market does not understand the new dynamic and that will create discontent and an unreasoned lack of agreement between buyers and sellers.

Now that the summer season has officially ended we are seeing a deluge of properties coming onto the market For those sellers who wanted to spend one more season in their Island homes before they put them on the market, the time has come and that is why we are seeing the appearance of some really nice properties.

And for some who have been suffering the discomfort of their evaporated portfolios, their hope for the kind of seasonal rental income that would support their vacation homes until next summer, that income may not have materialized due to the soft summer rental market, so those properties are now for sale.

For property owners who were smart enough to refrain from cluttering the inventory until the market showed signs of recovery because they were not distressed and did not have to sell; they are being induced to test the waters again. Their reemergence is fueled by a pervasive attitude that the economy appears to be improving, along with statistics to support the fact that the bottom has generally come and gone.

“The percentage of listings with price reductions declined slightly from July to August, and when sellers did slash their asking price they made smaller reductions”, according to a national study by Zip Realty.

In another study done by Zillow.com comparing listing prices to selling prices during July, “U.S. homebuyers paid 3.3 percent less than list price on average, down from 3.5 percent in June and 4.6 percent in January”.

Although we are seeing an apparent rush to market on both sides, the fact is buyers can no longer assume owners with properties for sale are highly motivated, In fact, we have been at the bottom of the market for a while now and the horizon is clearly brighter for sellers than it has been in the last 5 years. I received this email from a local bank the other day:

“Our mortgage staff reports that there are a lot of inquiries, a lot of requests for prequalifications, and applications have begun to pick up…all of this is certainly a good sign that the market is a "happening" place. People are obviously past the point where they are just perusing the real estate guide and trying to figure out just how low they can convince a seller to go…..this rate reduction should be a further spur to deals being made. We all wish you the best of luck this fall…to paraphrase my favorite Irish saying, ‘May the wind always be at your backs from now on!!’"

Here is positive spin demonstrating that the region shows signs of rebound.

The real estate market cannot be rated as a good or a bad market because what is good for one can be bad for another. For the last 3 years it has been considered bad for sellers because no one was buying, yet if a buyer decided to make a purchase, the market was good for them. I think we can all agree the recession has bottomed out and with interest rates still historically low --- under 5%, and with no immediate signs of inflation; this is still an excellent time for buyers to take advantage of once in a lifetime opportunities. But it is also good for sellers. Sellers are no longer feeling as though they are being thrown to the wolves. The market is starting to balance out and sellers are feeling more hopeful and empowered.

In order for you as a buyer to be successful you need to adjust your thinking a little bit and keep your eye on the prize --- a home on Martha’s Vineyard.

1) You are no longer in total control so your expectations of ‘take no prisoners’ will no longer work.

2) You will no longer be able to present a litany of demands to sellers and expect them to acquiesce. You need to be reasonable and willing to leave something on the table --- choose your fights.

3) You have to look at your investment opportunity from the standpoint that the market has gone down anywhere from 10 to as much as 30 percent in some areas and in some price lines. So no matter what, you have to realize you are making a much better purchase than you would have within the last 4-5 years.

4) You have to be willing to negotiate, be patient, be flexible and in the end remember that Martha’s Vineyard is a lifestyle, an emotional decision as well as one of the better long term investments you will make. This Island is a finite commodity and it is not growing any larger.

For buyers today what is most important is to have good representation by a skilled negotiator. Someone who is knowledgeable about the entire market, someone who will thoroughly investigate all details of the property you select so you are fully informed and not surprised later on by things you did not know about. You want someone who will represent you 100% throughout the process and be there for you afterward. You want an exclusive buyer agent. You want SplitRock Real Estate, LLC.

Entering into the home buying process is like wandering through a corn maze, you can make a lot of wrong turns if you are without a knowledgeable guide who knows the way.

A Vineyard Primer Not Just For The Obamas

When I was a young child, my family would “summer in the Hamptons”, which describes the three towns near the far end of Long Island, NY. I remember the trip out there as if it were yesterday. It was an easy but boring 3-hour ride from Westchester County in our 1949 Ford “Woody” station wagon. We knew when we were getting close because the scenery would turn into potato fields and all you could smell was duck and chicken poop. The houses my family rented looked like the barracks I lived in during my military basic training and none of them were air conditioned, but they were right on the water. We would stay all summer and we rarely had a TV, but life was wonderfully simple.

The other night I watched the pilot program for a new TV series, ROYAL PAINS, on the USA Network. It’s about a young surgeon played by Mark Feuerstein who is fired from a hospital, sued for malpractice and blackballed. He decides to go to the Hamptons with his brother, the accountant, for a weekend of party crashing and debauchery, but he ends up staying for the summer as a concierge doctor to the rich and famous. What I like so much about the show is that it presents a showcase of the Hamptons in 2009. It sure has come a long way since I was a little boy or even since I went back there during my college years for fun and mischief.

Martha’s Vineyard could become, maybe it is already, the new home of the rich and famous --- the CEO and celebrity playground. With properties like Steve Rattner’s newly completed 15,000sf plus compound on Obed Daggett Road on Cedar Tree Neck, and the equally excessive estate properties belonging to high rollers like Brian Roberts, Dirk and Robert Ziff, Jerome Kenney and Bill Graham in the area, Martha’s Vineyard is losing its battle to stay small and simple the way it was 40 years ago when I first drove my yellow Corvette roadster off the ferry.

Many of us have received calls from the White House advance agents inquiring about accommodations for August rental lodging. The general consensus here is that the President will be renting a house on Temahigan Avenue close to the State Police headquarters, maybe the old Gloria Swanson house on the water side. There is still no definitive word on what the Clintons are planning, but we keep hearing about Ted Danson’s home up-Island and Chelsea’s wedding plans at the large Chilmark estate of long time Clinton friend and Washington power broker Vernon Jordan.

I guess we will just have to accept the fact that we are no longer inaccessible and anonymous; we have a reputation now that people like to brag about, and complain about. Maybe one day we will change our name to Martha’s Vineyardton. Here is a short essay that appeared in the Boston Globe titled A Vineyard primer for Obamas that provoked dozens of reader comments. The comments section is always fun to read because people have such strong views for and against what is Martha’s Vineyard. The Vineyard is all about passion and emotion and trying to hold onto what most of us remember as being so special and what so many new comers imagine still is so special. It is all of our jobs and responsibility to do all we can so that we don’t become just another East Hampton. Sure we have famous people here, but on Martha’s Vineyard no one gives a damn and we leave them alone. If you ‘GET’ the Vineyard and you want to be here, I can help you get the right place to live your dreams and balance your life. SplitRock Real Estate represents Buyers Only and their dreams.

Martha's Vineyard Is Now Open For The Season --- Game On!

Our high season has finally arrived with this Memorial Day weekend. Old familiar faces are reappearing in the check-out line at Cronig’s. Young impatient preppy kids with newly minted driver’s licenses driving Daddy’s Mercedes act as if they own the road. Day trippers who have no clue where they are going whiz around precariously on mopeds, and islanders who are no longer able to day dream while behind the wheel of their cars or come and go as they please in pursuit of their daily chores are snapped back into reality, reminded that their space is no longer theirs alone, at least not for the next ten weeks. The Vineyard has awakened like a huge pinball machine once a quarter is inserted. Game on!

I hope it is a wonderful summer for everyone who really loves and appreciates this Island, understands its pace and recognizes that it is one of the only places on earth where you can recharge your physiological battery, redefine your spiritual center, nurture relationships with family and friends, and just “BE”. This is a special place and I love it. Having said that, I am going to go spend time with my wonderful wife, visit with good friends, go fishing, eat some great food and just “BE”.

To Fish or Cut Bait, that is the Question….

It’s been a couple of weeks now since I planned a fishing outing with a good friend of mine for this weekend. He came to the Island this morning, and I really wanted to go fishing. Instead, I am working for several buyer clients who are going fishing; they are not sitting on the dock cutting bait. They recognize the time is right and the fish are in; they are getting rigged and ready to catch their prize winner.

Remember a few months ago when the property inventory was up around 800 units? Today the inventory of available SFR, Vacant Land, Condos and Commercial properties in all towns totals 658. There are 17 properties under Purchase and Sale Agreement and 10 Offers to Purchase. This is only a count of those properties updated in our LINK system. I can assure you there are more properties under negotiation and it is not uncommon to have multiple offers and bidding wars on the nicer properties.

To a great extent, the public opinion about the depressed state of the real estate market is based upon other parts of the country that are not as special as Martha’s Vineyard, not even close. But did you know property sales in some of those depressed real estate market areas are up? According to an article in this week’s WSJ, some of the states with big sales increases from the depressed levels of a year before included Nevada (up 117%), California (up 81%) and Arizona (up 50%) and Florida (up 25%).

Here on Martha’s Vineyard, prices are down, Sellers are ready to deal, FHA guidelines are easier and first time home buyers who qualify are taking advantage of the remarkable $8000 tax credit opportunity that will sunset at the end of this year.

I’ve got to get back to rigging fishing tackle for my clients, but I tell you if you want to catch one of those big ones you have got to get your line in the water very soon. Cast away or sail away. This is your time, so please, don’t miss the season.

Is it Time To Go Real Estate Shopping on Martha's Vineyard?

During the last week I have been talking to other real estate agents and professionals in ancillary services about their market observations and workloads. The general consensus is clear; the Vineyard real estate market is rounding the corner, at least in the lower to mid-range.

Personally, I am seeing a lot more serious interest from consumers and clients. When I go to property showings with a client, the seller agents we meet say the same words right up front. “The seller is very motivated”. Normally, I think that is a silly thing to say because why else would anyone put their property on the market, and especially in a market like this. However, the truth is they are more than motivated; they are nervous as hell, and this is when deals are made.

I was looking at ‘Off Market’ low-end properties removed from the inventory around the first of the year and there really isn’t anything worth talking about that is not back on the market today. What is for sale is on the market and even though it may not be priced right, the sellers are ready to listen and work something out with buyers who are willing to put an offer on the table. The property inventory is saturated, rentals are soft and interest rates remain low. I think this is a perfect time to get into the market and see if you can get that dream home you have been wanting at a price that makes sense to you.

President Obama’s NEW Housing-Aid Plan – who WINS and who LOSES?

The new Housing-Aid Plan, according to the administration, is estimated to cover as many as nine million mortgage holders nationwide. It has two main components.

PART 1: Loan Modification
The first part supports borrowers who have kept up with their mortgage payments, but have lost so much value in their homes that they don’t have the equity necessary to refinance. Therefore, they are unable to take advantage of the present record low interest rates, which are hovering around 4%.

You WIN if you have payments of more than 31% of your pretax monthly income and you can prove hardship.

You WIN if you occupy a single-family home and can prove the home is your primary residence.

You WIN if you have an unpaid principal balance of $729,750 or less.

You WIN if you have a mortgage originated on or before January 1, 2009 and make all the modified payments over a trial period of three months or more.

You LOSE if you are not about to default.

You LOSE if you are an investor with a home that is not owner-occupied.

You LOSE if you have a home that is vacant of condemned.

You LOSE if you have an unpaid principal of more than $729,750.

You LOSE if your mortgage is packaged into securities whose rules explicitly forbid modification.

You LOSE if you have loan servicers who can’t be reached or are unwilling to consider modification.

PART 2: Loan Refinancing
The second part of the plan is geared toward borrowers who are already delinquent in their loan payments or are in eminent danger of default and aren’t able to refinance, perhaps due to a decrease in the value of their home.

You WIN if you have loans owned or guaranteed by Fannie Mae or Freddie Mac.

You WIN if you are current on your mortgage payments.

You WIN if you can prove the ability to afford the new mortgage debt.

You WIN if your mortgage balance is no more than 105% of your current estimated home value.

You LOSE if you have loans owned or guaranteed by a company other than Fannie Mae or Freddie Mac.

You LOSE if you have been more than 30 days late on a payment in the past 12 months.

You LOSE if you can’t afford the new mortgage debt.

You LOSE if your home price has fallen so that the loan is more than 105% of the market price.

Good Property Opportunities on Martha's Vineyard

BANK OWNED PROPERTY (REO): This property was officially listed for resale by the lender on January 26, 2008 at an asking price of $564,900. The price was just reduced to $555,000, and the current town assessment is $697,100. The fact that the price has been reduced is standard procedure for a lender after 30 days without substantial interest in the property. This is a good sign for prospective buyers. The property is located in a nice neighborhood equidistant to all down-Island towns and is a lot of house for the money.

Click here to view property > Edgartown - 6 Mockingbird Drive

Everything is Coming Up Roses, Or Are They Tea Bags?

Rick Santelli was reporting from the pit at the Chicago stock exchange the other day and got everyone stirred up with his suggestion of a Chicago Tea Party . I thought it was marvelous and right on.

Here we are now with a $787 billion stimulus package that includes anemic elements like an $8000.00 tax credit for taxpayers buying a primary residence between Jan. 1 and Dec. 1, 2009. Single taxpayers making less than $75,000 are eligible. That tax credit doubles for married couples. Think about it, an 8k credit is just a drop in the bucket for a buyer in areas like Martha’s Vineyard, and no not everyone who lives here is rich. It’s just not enough. And what about the $75 billion mortgage relief plan the President announced. It’s not right. The Wall Street Journal says, "By investing in failure, the Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers." The New York Times says it is "a good start, but given the dire state of the economy, we fear it still may not be enough."

But what is enough and actually too much is the idea that people who did nothing wrong, the 92 percentile, are being asked to help the 8% that either had no business getting a loan in the first place or defrauded the banks intentionally out of sheer avarice. It’s the hard working people who are continuing to pay their bills even though they are suffering like everyone else today; they are really going to suffer.

Here’s a quick story I heard yesterday from a broker in Florida about one of those people you will be suffering for. This ‘investor’ accumulated no less than 20 properties through no-money down financing during the high time of the market. They did not and have not paid one cent toward an equity share on those properties; they had every intention of not owning the properties long term. The lenders began the foreclosure process about three years ago, but it takes time. In the meantime, this person is consistently making about $20,000 a month in rental income. There are hundreds of scenarios like this one. Why should we suffer for this kind of behavior? They should lose everything and go to jail. But if they go to jail, shouldn’t the enablers go with them? Yes, and that is why nothing will happen to them.

If you are wondering why the foreclosure machine is moving so slowly, let me give you a brief idea by way of another true story. This person is a first time home buyer who will most likely lose their home when their Alt-A loan resets. Mind you this is also in one of the areas where values have dropped by 50%. This person went through foreclosure prevention counseling and as instructed began the bureaucratic procedure with the lender for a loan modification. They spoke to a loss mitigation representative and complied with the instructions they were given. They supplied all the necessary documentation, both on line and via certified mail. They had the person’s name and extension number, but when they called to get a progress report after about two weeks, that person did not exist and both their cyber and paper trail no longer existed. They tried again filling out all the same information, etc. Again after a couple of weeks they contacted the LM department and that person did not exist. However, somehow they were finally able to track down the person that helped them. The representative told them, “You can jump up and down, get nasty and impatient but it will not do you any good. I have over 100 case files on my desk and you are just one of them in the pile. You’ll hear from us when we get to your case.” End of discussion. That’s just one person who has to deal with this enormous mess the government wants everyone to be responsible for.

Bringing it back home to the Cape and Martha’s Vineyard, here in Massachusetts the Warren Group reported the number of homes on Cape Cod that were actually foreclosed on last month was down 8.9 percent. This number is compared to January 2008. In exact numbers, there were 41 foreclosure deeds filed in January 2009 compared to 45 last year. In Dukes County, which is Martha’s Vineyard, the number of foreclosure deeds filed fell to 9 last month compared to 13 in January 2008. That is a difference of 30.8 percent. The experts are not sure what is causing this reduction in foreclosures, but it is a good sign as are the more realistic price reductions posted by the Martha’s Vineyard Information Network database. There are 467 single family homes currently on the market with a total inventory of 680 properties in all classifications. There are 72 single family homes that have been removed from the market since the first of the year. I can assure you everything is for sale, so if you want one of those properties just ask.

Good Property Opportunities on Martha's Vineyard

SHORT SALE: Located close to the hospital and 5 minutes from either Vineyard Haven or Oak Bluffs Harbor, this 2100 sf colonial style 3 bedroom 2.5 bath home on a quarter acre lot is being offered at the distress price of $450,000. The assessed value for 2009 is $576, 700 and it was purchased in 2006 for $612,000. Please note that this property may very well sell for more than the asking price and offer acceptance is subject to approval by the lender.

Click here to view property > Oak Bluffs - 3 Linton Avenue

Good Property Opportunities on Martha's Vineyard

This nicely constructed spec house was just completed. It started out priced at $750,000, but the price was just reduced to $599,000. This puts it at a number for which you would not be able to reproduce this new home. The lot alone is assessed at 258K.

Click here to view property > Oak Bluffs - 10 Eastville Avenue

Agency Disclosure Follow-up for Buyers Only on Martha’s Vineyard

In my recent Blog titled “For Buyers Only on Martha’s Vineyard” I spoke about Agency Disclosure. I want to revisit the subject and add some statistical numbers tabulated by the National Association of REALTORS® (NAR).

Making the decision to be an Exclusive Buyer Agent is one that many real estate practitioners feel limits their potential for maximum income, because you can only walk on one side of the street --- the BUYER’s side. There is no double dipping or switching hats to suit the occasion. Exclusive Buyer Agents have to have a passion for protecting the buying public.

According to a recent essay published in NAEBAhood News written by John Sullivan of Buyer’s Edge in Bethesda, MD, “The abrogation of the common law of agency promulgated by NAR and instituted individually by state legislatures throughout the country … resulted in eliminating the fiduciary duties of obedience, loyalty, confidentiality, and reasonable care.” On my website, I painstakingly put together information outlining the differences and explaining what are the duties of a Fiduciary to a Principal/Client?

Sadly, I have personally witnessed buyer confusion as a result of the foreclosures we are experiencing here on Martha’s Vineyard. A distressed home owner told me the other day that he blamed his agent and the lender for giving him a loan they had no business approving. He will most likely lose his home because he will not be allowed to work it out since he still has no documentation to verify his income. Lenders have much stricter requirements today, as they should have had all along, and those requirements seem to be changing on a daily basis. Sure, the buyer should have known better (caveat emptor), but when he had three so-called professionals who he believed were on his side, he trusted that he was doing the right thing. In most cases, the real estate agents, mortgage brokers and even the attorneys that participated in the purchase sale transactions had no compunction about what they were doing, even though in their hearts they knew it was unlikely the buyer could fulfill their obligation according to the terms of the loan(s).

Much of the confusion comes from the fact that consumers are not informed of the real estate agent’s role in the transaction. According to NAR’s own study, only 30% of homebuyers were presented with the Mandatory Agency Disclosure Form at the first face-to-face meeting to discuss a specific property. Only 28% received the disclosure form when the purchase contract was written, and 22% never received it at all. 20% of the homebuyers could not even remember a discussion about the fiduciary responsibility of the agent or the options available to them. First time homebuyers were the most neglected with only 23% receiving the agency disclosure at the first meeting to discuss property. Those numbers are pathetic. No wonder consumers don’t trust real estate agents.

Massachusetts implemented their Mandatory Agency Disclosure in 2005, but I believe the state has done very little to enforce the law or properly educate consumers, or practitioners.

NAR’s only option for what they call Exclusive Buyer Agency provides a mechanism stated as “with consent to dual agency”. To me that is an oxymoron and the word “Exclusive” should be removed from the NAR Right To Represent Buyer Agreement. Here is the wording some brokers are using. See if it makes you, as a consumer, comfortable and confident that you will receive the maximum care and guidance you want.

Consent to Dual Agency. The BUYER understands that BROKER also represents seller and that if BROKER shows BUYER a property listed by a seller-client a “dual agency” will be created. The BROKER may act as a dual agent who represents both prospective BUYER and SELLER with their informed written consent. A dual agent is authorized to assist the BUYER and SELLER in a transaction, but shall be neutral with regard to any conflicting interest of the BUYER and SELLER. Consequently, a dual agent will not have the ability to satisfy fully the duties of loyalty, full disclosure, reasonable care and obedience to lawful instruction, but shall still owe the duty of confidentiality of material information and the duty to account for funds. The BUYER understands that material information received from either client that is confidential may not be disclosed by a dual agent, except: (1) if disclosure is expressly authorized; (2) if such disclosure is required by law; (3) if such disclosure is intended to prevent illegal conduct; or (4) if such disclosure is necessary to prosecute a claim against a person represented or to defend a claim against the broker or salesperson. This duty of confidentiality shall continue after termination of the brokerage relationship. By signing the agreement, BUYER authorizes BROKER to act as a dual agent and consents to dual agency. If dual agency occurs in a transaction, a notice of dual agency will be given.

Exclusive Buyer Agency is a commitment members of the National Association of Exclusive Buyer Agents (NAEBA) make to consumers. This is a black and white cut and dry commitment; there are no gray areas and it takes passion and dedication to subscribe to this business model. For 100% representation 100% of the time, insist upon working with an Exclusive Buyer Agent when you are purchasing real estate of any kind.

Good Property Opportunities on Martha's Vineyard

There are two properties that I want to bring to your attention. I know they are on opposite ends of the price spectrum but they are both worthy of comment.

The first one is a simple extended Cape that has just been reduced in price to $495,000. The 2009 assessment is 533K.

Click here to view property > Vineyard Haven - 81 Hazelwood Avenue

The second property is an architect designed contemporary in the West Chop area. This is in my opinion a beautifully designed home with a very good address.

Click here to view property > Vineyard Haven - 97 Golf Club Road

For Buyers Only on Martha’s Vineyard

In an article titled ‘AGENCY, Know Your Facts’ published in the January 2009 Newsletter by the Cape Cod & Islands Association of Realtors®, Inc the following points were made under the topic heading “ The Law”. There were many other facts discussed, but I thought these two would be of particular interest to consumers.

• “Designated Agency is a process where the broker of record, with the consent of the consumer, designates one or more agents to represent a Seller and designates one or more agents to represent a Buyer in the same transaction. The relationship with the consumer begins and ends with the designated agent and does not extend to the other agents in the office. In a designated agency firm, the broker is a dual agent and retains all legal and ethical responsibility for the transaction.”

Although there is a definition of Designated Agency on the Mandatory Disclosure form, I do not discuss it as part of my consumer education process because traditional real estate agencies on Martha’s Vineyard only practice Disclosed Dual Agency. The concept of Dual Agency in itself is difficult enough for consumers to wrap their minds around. I have a lot of information on agency representation on my website FOR BUYERS ONLY.

The main reason Designated Agency is not a consumer service offered on Martha’s Vineyard is because the offices are not large enough, and because the principal brokers realize this is much to frothy a concept for them to handle comfortably. But come on folks, read the definition again and see if it does not totally blow your mind. We all know that business is primarily all about the money, and with guidelines like these and human nature such as it is --- I mean really!

The next topic discussed in the newsletter was Agency Disclosure.

• “The Agency Disclosure requirement stipulates that at the first personal meeting to discuss a specific property, prospective Buyers and Sellers be notified of the agency relationship using the state disclosure form, which must be signed by the Buyer or Seller and retained on record by the broker for a minimum of three years.”

In Massachusetts, as stated above, the Agency Disclosure form is a Mandatory requirement. It is not a contract and therefore does not bind the consumer in any way to the agent they are working with. It is an effort to avoid misunderstanding and litigation by providing full disclosure. However, many agents do not present the Agency Disclosure form to the consumer at all. Perhaps they are fearful it will be off-putting or, in reality, it is because they themselves do not understand it and don’t realize it is the law. Also, many agents present the mandatory disclosure to consumers with the implied assumption that it binds the consumer to them as a ‘client’. This misrepresentation and use of the Agency Disclosure form is critical to any relationship actual or implied.

When an agent presents a mandatory agency disclosure form to a Seller and the agent selects that he/she represents a Seller, you can rest assured it is because that Seller has entered into a contractual relationship with the agent who is now the Seller’s fiduciary. The agent has an ‘Exclusive Listing Agreement’ with the Seller. If the agent selects that he/she represents the Buyer, legally that agent can only do so with written authorization and consideration from the Buyer. These are the elements that define a contract (“An agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration”).

Establishing Buyer Representation must be a two-pronged conversation. “Mr and Mrs Buyer, I am required by law to present you with this Agency Disclosure form mandated by Massachusetts Law, which I must ask you to sign before we can discuss any properties you are interested in. I want to be your Exclusive Buyer Agent, but unless we also execute an Exclusive Right To Represent Agreement, I will not be able to advocate in your best interests as your fiduciary.”

If a written contract is not executed establishing a fiduciary relationship with a Buyer, the agent is actually a Facilitator and represents neither the Buyer nor the Seller. Just remember that the Seller will have 100% representation and you the Buyer can also have 100% representation, but only if you enter into an Exclusive Right To Represent Agreement without consent to Dual Agency.

Another Huge Opportunity for Home Buyers

As part of the new Economic Stimulus Bill being thrashed around in the senate, and on top of the Tax Credit proposed for all home buyers allowing them a tax credit at the rate of 10% of the sales price up to a limit of $15,000, there now is Amendment 353.

Amendment 353, proposed by Senator John Ensign, Republican Senator from Nevada, would provide 30 year fixed rate financing at about 4%, for anyone purchasing a primary residence. If this passes the House and if there is more sensitivity by lenders in handling those threatened by foreclosure, we could really be on our way to recovery in the housing market.

You Want a Great Deal, But Do You Really Want a Foreclosure?

Foreclosures represent a mammoth portion of today’s housing inventory. In RealtyTrac’s recently released 2008 Foreclosure Market Report, they showed a total of 3,157,806 foreclosure filings. The number of default notices, auction sale notices and bank repossessions reached 2,330,483 properties.

Up until now most people were of the opinion they could save huge sums of money buying a foreclosure property. However, more people are shying away from that process, and if they are willing to engage at all, they are demanding steep discounts averaging 25% from the listing price, and many are expecting to pay 50% less than for a non-foreclosed home. According to a recent Moody's Economy.com report, since the peak of the market several years ago home prices fell in 70% of all metro areas. Although the decline in most metro areas was modest, prices did decline by 5% in 116 metro areas and more than 20% in about 50 metro areas. In the most depressed markets, a buyer insisting upon a 25% discount doesn’t seem like that much for a distressed property. But this all depends upon how realistic the listing price is.

Banks are still requiring BPO’s as part of their preparation for marketing foreclosures, but the problem with that approach is they are looking back at the market for values, and in declining markets they need to look forward when pricing properties. The result in most cases is banks overestimate the listing price. All they know is what they are owed and that is all they care about. So what happens is properties sit on the market for long periods of time suffering from accelerated deterioration or vandalism. Someone will have to pay for the repairs and the bank does not want to assume any responsibility.

In December, Trulia and RealtyTrac published a survey indicating that in the seven months prior to the study the number of people interested in foreclosures dropped by seven percent to 47%. The first study reported in April 2008 by these market tracking companies recorded 69% of the buyers polled had a negative opinion of foreclosures. Since then the number has risen to 80%. On Martha’s Vineyard there are very few foreclosures and I continue to maintain that buyers can do better negotiating on a non-foreclosure property.

Senate Moves to Expand Tax Credit as High as $15,000

This could be an excellent incentive for some home buyers on Martha’s Vineyard who can qualify. Currently, the maximum tax credit is $7500 and that is only for first time home buyers, but if this new amendment approved by the Democratic Senate passes the House and goes into effect, buyers who are purchasing a home as their primary residence, regardless of whether they are first time buyers or not, will receive a $15000 tax credit or 10% of the home purchase price, depending upon whichever is less. The tax credit will be in effect for one year.

All Real Estate Is Local?

The National Association of Realtors has been working diligently through national ads for several years to educate consumers that all real estate is local. They don’t think what is happening in one area of the country is happening everywhere. I absolutely agree but it is like second hand smoke, everyone is affected to one degree or another.

With the ever deepening economic crisis crawling into every aspect of our lives and the reality that this is a global crisis of unprecedented proportion, I would rephrase the slogan and say all real estate is the same, but different.

I was reading an article about the effects of what is now an epidemic real estate crisis in the UK, effecting one of the wealthiest resort areas in the world. Fortunes have been lost and high rollers living in $7,000,000 homes are now living in apartments above retail shops. Playgrounds around the world are all affected by the hubris that brought the market down, from Hollywood to Dubai and Monte Carlo.

I am going to paraphrase part of a commentary that expresses a sentiment that rang a bell for me with regard to Martha’s Vineyard. However, it was written about a seaside luxury resort area in the UK. I will leave out the location specific parts so you can fill in the blanks.

“I’M not surprised the credit crunch has hit (blank). … Why should it be immune?”

“(Blank) is a very, very beautiful place. If prices coming down makes it more accessible to ordinary people, that is a good thing.”

“Locals were becoming very concerned about the way the place was changing.”

“(Blank) is a quintessentially English place and should remain so.”

“Prices … were way too high. The fact they are coming down is good.”

“It makes (blank) more affordable and attracts the right kind of person for the area.”

“Hopefully more local people will be able to afford to move there and it will remain as beautiful as it is.”

All those who feel this way about Martha’s Vineyard raise your hands.

Martha's Vineyard Real Estate --Then and Now

I was thinking about how this recession compares to the last one. The unemployment rate in Massachusetts was 9% in the early 90’s, and today it is about 6%. We also had about three times as many properties on the market here on the Vineyard.

If you are sitting on the fence, knowing in your heart that this is your chance of a lifetime to own property here but reluctant to get into the game because you think the market will go down more, you may be right. But you may regret it. If this is really your dream, do yourself a favor. Calculate exactly what your savings would be if you bought that perfect property you’ve been watching now, versus perhaps waiting until the market drops another point and you have to settle for something else. We all know the old saying, 'don't let life pass you by'.

Dear Islander, I Envy You

2008 was a very tough year. I think we all felt, or should have felt the pain by now. My business is real estate. Much of the focus nationally as well as locally has been on what has happened to the real estate market. Most of the talk is negative as are immediate future predictions. Negative thinking is easy.

In my latest SplitRock Real Estate e-Newsletter, I directed my readers to an article that appeared in the MV Times, “The Reality of the Martha’s Vineyard Real Estate Market”. My clients and readers know that I have been giving them the same information for quite some time now, but it is nice to hear it from another real estate professional and to look at it in terms of bar graphs. More importantly, it is important to be reminded that this is merely a cycle we must go through, as we have done many times before. As the author said, real estate markets go through regular cycles of (3)5 years down and (7)10 years up. Even the stock market goes through cycles, and theirs are usually 20 to 25 years. I’ll admit we are in a real pickle right now because it is not just the United States that is suffering; this is a global meltdown and the ripple effect is affecting everyone which will result in a prolonged overall recovery. What I found most interesting about the MV Times article was one of the reader comments. Here are some excerpts of that reader’s rather harsh perspective:

“As tragic as this downturn is for the local economy, and as much as it may usher in a different era ahead, I feel a bit glad and relieved about it all.
“I have come to believe that economic progress is actually opposite of quality of life.
“I am someone who first feel in love with the Vineyard in the 1960's. It has not improved since then. In fact, as we get richer by material standards. It actually gets poorer. Material progress has simply been ruining the place. We just adjust to the incremental changes and are, therfore, less likely to notice.
“It is barely distinguishable from the places we came here to escape.
“The growth has diminished the Vineyard's most precious jewels....what we get for free. We have simply over-exploited it.
“Economic ruination would be the Island's salvation, in non-material terms. Now, there's an alien concept, indeed.
“Ruin is rebirth.
“It's of little matter to me, though. I have already moved off-island to another place that reminds me of the love I had for the Vineyard so long ago. I come back to visit now and again, and am, frankly, quite happy to leave.”

I remember when I first came to the Vineyard in the ‘60’s with my parents; they no longer enjoyed summering in ‘the Hamptons’. Martha’s Vineyard was a very quiet place and not too many people knew about it. The ‘Natives’ were typical New Englanders, and not very forthcoming or welcoming, but once they accepted you they were the best. I think one of the circumstances hindering population growth on the Vineyard was transportation, and that factor more than anything isolated the Vineyard from America, but that is irrelevant at this point.

I find it curious that the MV Times reader moved away from the Vineyard, but yet he still follows Island news. His acrid comment above reminded me of a developer who ran through the Vineyard in the ‘80’s like a swarm of locust, and then abruptly left for greener pastures. He was asked by a news reporter in his new location why he left. He said, ‘The Vineyard is like an old lady who has lost her charm’. Sure the Vineyard has become more crowded and sure we have once again seen carpetbaggers come and go. But the Vineyard has really not changed that much --- honest! I know people who have lived all over the world and in crowded urban areas who swear this is where their soul is at home, and this is where they will come to recharge themselves, bond with family and loved ones, and where they will live out their days when they retire --- or before.

The Martha’s Vineyard Gazette published a wonderful commentary in their print paper, but unfortunately they did not put it on-line. The article was written by the late CBS correspondent, Don Hollenbeck, who sadly committed suicide in 1954, possibly caused by the effects of Malaria. It is not clear when he wrote his article, but it was most likely at least 50 years ago. I think the article demonstrates the colorful fabric that those who really know and understand the Vineyard realize is still very much in tact. The title of the Gazette commentary was taken from the last line of Hollenbeck’s article, ‘there are no Islands anymore’, and that line was actually the title of a poem by Edna St. Vincent Millay, written in 1940. Keeping in mind the time line of these writings, I want to preface Hollenbeck’s reflection with a couple of paragraphs extracted from Millay’s work:

Dear Islander, I envy you:
I'm very fond of islands, too;
And few the pleasures I have known
Which equalled being left alone.
Yet matters from without intrude
At times upon my solitude:
A forest fire, a dog run mad,
A neighbour stripped of all he had
By swindlers, or the shrieking plea
For help, of stabbed Democracy.

We live upon a shrinking sphere—
Like it or not, our home is here;
Brave heart, uncompromising brain
Could make it seem like home again.

(There are no islands any more.
The tide that mounts our drowsy shore
Is boats and men,—there is no place
For waves in such a crowded space.)

I hope you enjoy the warm spots in Hollenbeck’s article as much as I did. Please rest assured, what was great about this Island 50 years ago still exists, you just have to slow down and look a little harder.

There are No Islands Anymore, Only a Certain State of Mind
Editor's Note: Don Hollenbeck was a CBS correspondent and journalist who produced a radio show in the late 1940s during the Edward R. Murrow era, titled CBS Views the Press. He was also a summer visitor to the Vineyard and was interviewed in the Gazette in 1949. Mr. Hollenbeck, who committed suicide in 1954, is the subject of a recently published biography authored by Loren Ghiglione (CBS's Don Hollenbeck, Columbia University Press). A distinguished journalist in his own right and professor at Northwestern University's Medill School of Journalism, Mr. Ghiglione is also a longtime Vineyard visitor. In researching his book, Mr. Ghiglione came across this undated piece about the Vineyard which was written by Mr. Hollenbeck. It is published here with permission.

By Don Hollenbeck, date unknown

"This is out of the world, but this is America: This is our country. Picture an Island of triangular shape, a hundred miles in area, lying seven miles off the southeast coast of Massachusetts; an Island which is all things to men. This Martha’s Vineyard described as a place of old towns, new cottages, high cliffs, white sails, green fairway, salt water, wildfowl, and the steady pull of an ocean breeze.

"This is a land of contrasts: from the brazen honky-tonks of the town known as Oak Bluffs, with its jukeboxes, its gaudy post cards, its bus drivers hawking for business and its revival season, to the well-bred quiet of Edgartown, with a social air twice as rarefied-as that of Newport, to the view from Indian Hill, 260 feet high.

"There one stands and views the prospect: to south and east stretches a level plain of dwarf forest top without a sign of civilization. To the west, there are rocky outcrops and tree-filled ravines, and to the north, the cerulean blue of Vineyard Sound. Of this world and yet out of it might apply of all places to Martha's Vineyard; it meets perfectly the need so often felt for a retreat; for a quiet time of contemplation, when, as in this springtime, one may leave the noise of the jukeboxes at Oak Bluffs, and listen only to the sound of the frogs the Islanders know as pinkletinks.

"This is the land Leif Ericson may have visited in the eleventh century - on a tiny island eight miles off-shore - and island called Noman's Land, you may view a boulder, and on if, if your imagination is cooperative, you may see dimly scratched the numbers 1004.That date is accepted by some devout Islanders as good enough evidence that this is the land Leif Ericson found and named Vinland; indeed, the wild grapes grow in profusion on the Island, which in area only may be compared to Manhattan island, 150 miles away, and which is, in a different sense, all things to all men . . ..But the contemplative man finds on Martha's Vineyard other things to think about than he does on Manhattan island, now that spring is coming.

"A pink and white mayflower is blooming h the office of Miss Mary Nunes, the Oak Bluffs tax collector; a weather-wise Islander has reported the arrival of the first red-winged blackbird. Islanders know that the red-winged blackbird has advance and inside information about the weather; spring cannot be very far behind.

"We live with the sea here on Martha's Vineyard; the sea is our fortunes and our fate: what the sea gives us is our livelihood. We See signs of spring on the sea, too, in a fishing boat. Now the wind breezes from the south'ard; the sea which can be cold and hostile through the winter seems more friendly now - it is blue under the warmer sun instead of icy-gray: and in" the beach pools, there are flocks of ducks and coots squawking.

"The sparrows, too, seem to have inside information on the springtimes, and are busy picking up straws for their nests. It is impossible for a man to get too downcast when the sun shines on the blue water around Martha's Vineyard at this time of year when the wind has veered to the south'ard: light airs they are indeed, fragrant with the promise of the season.

"Soon it will be the time when a man can go out and get enough sassafras bark to brew a pungent cup of tea: this is the decoction which in New England seems to clear away the miasma of winter, and which gives one the proper feeling of springtime.

"There seems to be a sort of greenish mist around the bare branches of the trees now; at any time, the lilac hedges will burst into aromatic color, complementing perfectly the silvery, weather-worn look of the shingles and the wood in the sea-salt laden air of this Island so close to, and yet so far from, the rest of the world.

"Soon the chestnut tree over the smithy in Edgartown will be showing signs of transfiguration, and Orin Norton, the blacksmith, can open doors of his forge, and beat up the sparks to the admiration of the children - they would never think Longfellow's poem over-sentimental or shopworn: the village blacksmith is a real person to the children of Edgartown. Now, in the fire-lit gloom of the forge, Orin Norton talks to you about the six-hundred pound anchor which he has just completed. He says, "it's such a darned good one that I figure I ought to charge a little less for it than usual." "Now why in the world why?" you ask in real astonishment at this paradox. "Well," Orin says,"it's like this. I think the man who ordered it will be perfectly satisfied. In that case, he won't be coming around here finding fault, and taking up my valuable time, so I’ll be the gainer if I knock 'something off."

"This is the-spirit you find repeated again and again on Martha's Vineyard where the tempo of the world seems to have slowed down in the winds that veers from the mainland to the sea and back again. You find it in the case of Carl Reid, who runs the general store in the town of Menemsha -this is the fishing town where the air is almost always full of the aroma of lobster bait, drying in the sun. You may ask Mr. Reid for fish hooks, only to be told that he isn't carrying them this season. "People bothered me too much about 'em -had to fuss too much," Mr. Reid says. It would please him if there were only one brand of everything, from cigarettes to molasses, and the people couldn't pester him, fretting about labels, and so on.. . .When you come to Martha's Vineyard, you must note expect the usual standards to apply, to repeat, it is of this world, and yet out of it. It has its own standards of conduct and department, and off-Islanders, as the permanent population calls the summer vacationers, sometimes have difficulty in understanding this.

"The steady population of Martha's Vineyard is about six hundred; in the summer, it is nearly seven times that figure. You may go there year after year, and become friendly to a point with the regular inhabitants, but if you are an off-Islander, you are never quite accepted . . . Oscar Flanders, who drives a truck, may call you by your first name, but it may be two years or more before you feel sufficiently at ease to call him by his first name, and then you are self-conscious about it: there is a delicate point of etiquette involved here which you must understand instinctively and emotionally, rather than logically . . . . Not long ago, a general of our Army was spending a holiday on the Vineyard, relaxing thoroughly in civilian clothes. He was well known to the steady population; he had been a summer person for several seasons.

"Almost anywhere in the world, a general of an Army, even in mufti, seems to get special consideration; he is usually exempt from small trials and tribulations which beset the rest of us. Our age-old awe of, and respect for, the soldier, force us into a deference which may be difficult to rationalize, but which nevertheless exists.

"One day the general, perhaps preoccupied with a matter of logistics concerning the purchase of a pack of cigarettes, drove his automobile through a stop light in Edgartown – a flagrant violation of a traffic ordinance. Almost anywhere else, the traffic officer recognizing him would probably have let him off with a courteous and deferential reminder, but not on Martha's Vineyard.

"The general got a ticket, and as the policeman said, he considered the general entitled to special consideration only when he - the general - was on duty. And he wasn't on duty on Martha's Vineyard . . . .

"But there have been soldiers on duty on Martha's Vineyard in recent years, and their presence simply emphasized the far-away-and-long-ago quality of the Island. Although these soldiers were only seven miles over the Sound from the Commonwealth of Massachusetts, they were considered to be on duty outside the continental limits of the United States; they drew correspondingly bigger pay, and they were entitled to wear the Atlantic ribbon . . . .

"But nowhere could one find more vividly exemplified the spirit of Martha's Vineyard than in another reference to the Flanders family - the truck driver whom you hesitate to call by his first name. The Flanders have a son, and some years ago, before the world was set afire, young Flanders as a public school student, was assigned the task of writing an essay on Mussolini. At that time, the late dictator was arousing a certain amount of admiration for making the trains in Italy run on time. But young Flanders saw him in a rather different light: his essay began with these words: "Mussolini is an off-Islander . . . ."

"But there have been changes in the world, and again, the case of young Flanders shows what they have done to Martha's Vineyard. Mussolini became something other than an efficient administrator and train operator; others of his sort came to power, and young Flanders growing up, found himself a member of the United States Army Air Force in the Pacific.

"He was off-Island at last, and he gave a good account of himself: he won the Distinguished Flying Cross. And as he moved from island to island in the Pacific - islands like and yet unlike his own home, he must have come to the realization that many others of his generation have come to in the past few years: there are no islands anymore, not even Martha's Vineyard. "

Well, that's it. Now I ask you, what's your state of mind?