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.

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.