Is the Martha’s Vineyard Housing Market really that Bad? I Don’t Think So
Looking at the overall picture of the housing crisis, perspective and understanding has been lost as a result of what is essentially a localized crisis in 4 states: California, Nevada, Florida, and Arizona. According to statistics from City-Data.com, 54 of the 101 cities with the largest population increase from 2000 - 2006 are located inside California, Nevada, Florida, and Arizona - the four states most affected by sharply decreasing home values. These four states saw the largest population influx between 2000 and 2006 triggering the need for more housing supply and with that demand, prices started to go up at 15% or more annually.
Anyone who has been in the real estate investment business knows that what goes up must come down. Many mortgage lenders bolstered by the above average appreciation rate year after year irresponsibly let their guard down, lowering lending standards and granting all sorts of exotic loans they should have known could not be repaid. Opportunity and greed propelled builders, real estate licensees, lenders and investors to push the envelope until the bubble burst. Today there are 15 states struggling to correct themselves; that is 30% of the country with 37% of the population and approximately 4 million problem mortgages. That breaks down to 7 percent of all mortgages owned in the U.S. Sure, you hear numbers reported by RealtyTrac, a foreclosure reporting service, stating one in every 464 U.S. households were served with a foreclosure filing in July --- 272,171 households, but the deepest concentration of those foreclosures are in California, Nevada, Florida, and Arizona. In Cape Coral-Fort Meyers, Florida alone, one in every 64 households received a foreclosure notice in July. On Martha’s Vineyard, RealtyTrac is reporting only 34 properties in Pre-foreclosure, Foreclosure or REO status. There are approximately 14,000 households on Martha’s Vineyard. The current inventory of properties for sale is less than 800 properties. Does anyone remember the early nineties? This is nothing compared to back then, but business is so much more difficult today because everyone is afraid of doing the wrong thing. Most of the public continues to believe the media, and the media continues to fuel the fear factor because, “misery sells newspapers”.
Not having a clear picture of the market has resulted in a lack of movement stalling the market, except for those buyers who ignore the media negativity and know how to read the numbers. I believe we are about to see a significant paradigm shift being expressed in two ways. Frustrated sellers are finally taking a hard look at their pricing realizing that their past strategy has not worked and has done them more harm than good. They are listening to their seller agents and cutting prices to the bone, well below assessed value in many cases. Sellers who have refused to price their properties realistically for today’s market and were never really sincere about selling, are taking their properties off the market. They think the market is about to turn around and prices will start to inch back up within the next 4 to 9 months. They can wait. I think this will paint a clear uncluttered picture for consumers who have been anxiously waiting with pent-up desire to get into this market but have been unsure and confused. They will finally realize now is the time to buy. They want to buy!
This fall, mortgage rates are forecasted to go up as much as a quarter percentage point according to Jim Vogel, an analyst at FTN Financial Capital Markets. This prediction is a result of Fannie Mae reporting a second-quarter loss of $2.3 billion and their prediction of more heavy losses resulting from the home-mortgage defaults and price declines centered primarily in California
(-28%), Florida (-17%), Nevada and Arizona. Fannie Mae has already said they will stop buying alt-A loans by the end of 2008. Fannie Mae and Freddie Mac are going to be limited in their ability to buy and guarantee home loans, and they will increase fees to borrowers seeking LTVs of 75-80 percent. Increases in the cost of borrowing will reduce the pool of homebuyers with the expected result that buyers with strong liquidity and solid credit will be in the catbird seat. As of today, mortgage rates are still very attractive. Martha’s Vineyard local Island banks understand our market and are excellent at helping qualified buyers to create a loan package that suits their needs. Now is the best time to buy, waiting will only create memories of what could have been your dream come true.
Anyone who has been in the real estate investment business knows that what goes up must come down. Many mortgage lenders bolstered by the above average appreciation rate year after year irresponsibly let their guard down, lowering lending standards and granting all sorts of exotic loans they should have known could not be repaid. Opportunity and greed propelled builders, real estate licensees, lenders and investors to push the envelope until the bubble burst. Today there are 15 states struggling to correct themselves; that is 30% of the country with 37% of the population and approximately 4 million problem mortgages. That breaks down to 7 percent of all mortgages owned in the U.S. Sure, you hear numbers reported by RealtyTrac, a foreclosure reporting service, stating one in every 464 U.S. households were served with a foreclosure filing in July --- 272,171 households, but the deepest concentration of those foreclosures are in California, Nevada, Florida, and Arizona. In Cape Coral-Fort Meyers, Florida alone, one in every 64 households received a foreclosure notice in July. On Martha’s Vineyard, RealtyTrac is reporting only 34 properties in Pre-foreclosure, Foreclosure or REO status. There are approximately 14,000 households on Martha’s Vineyard. The current inventory of properties for sale is less than 800 properties. Does anyone remember the early nineties? This is nothing compared to back then, but business is so much more difficult today because everyone is afraid of doing the wrong thing. Most of the public continues to believe the media, and the media continues to fuel the fear factor because, “misery sells newspapers”.
Not having a clear picture of the market has resulted in a lack of movement stalling the market, except for those buyers who ignore the media negativity and know how to read the numbers. I believe we are about to see a significant paradigm shift being expressed in two ways. Frustrated sellers are finally taking a hard look at their pricing realizing that their past strategy has not worked and has done them more harm than good. They are listening to their seller agents and cutting prices to the bone, well below assessed value in many cases. Sellers who have refused to price their properties realistically for today’s market and were never really sincere about selling, are taking their properties off the market. They think the market is about to turn around and prices will start to inch back up within the next 4 to 9 months. They can wait. I think this will paint a clear uncluttered picture for consumers who have been anxiously waiting with pent-up desire to get into this market but have been unsure and confused. They will finally realize now is the time to buy. They want to buy!
This fall, mortgage rates are forecasted to go up as much as a quarter percentage point according to Jim Vogel, an analyst at FTN Financial Capital Markets. This prediction is a result of Fannie Mae reporting a second-quarter loss of $2.3 billion and their prediction of more heavy losses resulting from the home-mortgage defaults and price declines centered primarily in California
(-28%), Florida (-17%), Nevada and Arizona. Fannie Mae has already said they will stop buying alt-A loans by the end of 2008. Fannie Mae and Freddie Mac are going to be limited in their ability to buy and guarantee home loans, and they will increase fees to borrowers seeking LTVs of 75-80 percent. Increases in the cost of borrowing will reduce the pool of homebuyers with the expected result that buyers with strong liquidity and solid credit will be in the catbird seat. As of today, mortgage rates are still very attractive. Martha’s Vineyard local Island banks understand our market and are excellent at helping qualified buyers to create a loan package that suits their needs. Now is the best time to buy, waiting will only create memories of what could have been your dream come true.
Labels: Buying Martha's Vineyard Real Estate, housing bubble, Martha's Vineyard foreclosures, Martha's Vineyard home buyer, Martha's Vineyard REO, Martha's Vineyard Short Sales
posted by Peter C. Fyler, SplitRock Real Estate LLC at 4:26 PM
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