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.

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’.

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.

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.

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.