Provincetown News for July 2009

This month's episode features an update on real estate sales in Provincetown for the first half of the year.

Provincetown real estate market report. Interest Rates Adjust.

Interest rates have adjusted in favor of the buyer this past week. The average 30 year product is in the low 5% range. 15 years products are even lower at an average 4.7%.

After reports of more job losses this past week and fears of inflations, the rates adjusted slightly down in order to try and create consumer activity.

After two months of historic lows, mortgage interest rates inched up over June. This created an increase in shopping activity but a stall in actual executions of contracts. Rates have not decreased to the levels they were a few months ago. The adjustment this week could motivate buyers to come back to the playing field and act before rates increase again.

Real estate brokers from primary markets are reporting strong first half sales volume in units, but selling prices are between $70,000-$130,000. In Provincetown, number of sales have not been as strong as previous periods during this slow down, however, the average selling price is $457,000.Please send your comments to Michael.dubour@century21.com.

Provincetown real estate: Second Quarter Recap and Year to Date Comparison 2008/2009

The second quarter 2009 closed with sales in Provincetown moving sluggishly forward as the first half of the year comes to an end.

22 properties closed from April 1st through June 30th. Closed activity is up 8 transactions from 14 sales in the first quarter.

Year to date, 36 properties have closed in Provincetown. A further dissection of this activity shows that in the first half of 2008, last year, 94 condominiums sold versus 23 year to date this year. In 2008, 30 single family homes sold compared to 6 this year.

The average number of days it takes to sell an accurately priced property has increased from 207 to 270.

Check out this week's Provincetown Real Estate Blog for year to date sales figures in Provincetown, Truro and Wellfleet for 2008 and 2009 (click here).

For more information or if you would like a detailed itemization report of sold properties in Provincetown, please email me at michael.dubour@century21.com.

Have a safe and Happy Independence Day.

Provincetown Real Estate Update

This week mortgage rates went up slightly yet again. Last week, the average interest rate for 30 year fixed products from four Outer Cape lenders was 5.5%. This week they inched up to 5.6%. This doesn’t seem like much but calculated into a mortgage it has an impact.

Buyers for second homes in Provincetown are not only kicking the tires but are actually buying property. However, it’s the deal shoppers who are acting. Local realtors report that buying activity has increased in the past few weeks.

Two properties were put under agreement in Provincetown this week. One is a single family home that is being sold as a short sale. The listed price is $619,000. Because it is a short sale, there are many obstacles to overcome before this closes. This house has been on the market for over two years. It may take up to six months before it reaches the closing table due to the delays and complications the short sale presents.

The other property is a 12 room guesthouse that has been on the market for five years. The listed price is just under $1.5 million. Guest house financing has been difficult but qualified buyers can move forward with 25-30% down. In addition, the numbers have to work for the bank.

A condominium did close last Friday for around $300,000.

Shoppers are coming to town and seeking out opportunity. There are offers being made and the ones that come together are taking extra diligence before actually closing. Property is moving but it is a new era in real estate sales.

With the optimistic news over the past month about low prices and rates, along with the slow increase in interest rates, sellers were motivated to list. Thirteen properties were put on the market this past week in Provincetown.

Questions or comments please email: Michael.dubour@century21.com

Upswing Underway for Provincetown Real Estate?

The past few weeks I’ve been reporting that there are indications we could be at the bottom of the real estate slow down. The signs kept coming this week as home prices in the Northeast increased .6% in May according to the Integrated Asset Services Index. The Boston Globe reported this week that housing starts in the Northeast were up 7%. Markets that were hard hit by the recession, such as Phoenix and Southern California, reported flat activity in May. This has typically been a pre-cursor for a turnaround in the past.

The low prices and interest rates have definitely prompted buyers to act. But the government borrowing has some experts feeling inflation could be triggered and that this will cause mortgage interest rates to increase quickly. Last week, the Bankers Trade Association reported that the average 30 year fixed rate increased from 5.25 to 5.6% in a matter of days. However, activity this week shows that inflation remains in check as the yield on the 10 year treasury notes fell from an 8 month high of 4.01 last week. The Boston Globe reported more encouraging news this morning that rates adjusted to 5.38% for a 30 year fixed product as represented by Freddie Mac. Check with your mortgage broker for more specific details on mortgage products. As mortgage information changes at a daily pace, opportunity is changing.

Other positive news that could be an indicator of a turn-around is a decrease in recorded foreclosures in Massachusetts. Also, employment in Massachusetts grew by 5,000 jobs in May. This is the biggest rise since January 2008 and could be a factor in homebuyer confidence returning.

Provincetown is seeing activity. This week, offers were accepted on three condominiums. The prices ranged from $225,000 to over $800,000. Three condominiums sold this week as well and were put on record. These prices ranged from $400,000 to $600,000.

It will be interesting to watch where the rates will go, how the market continues to act and how it will impact consumer performance. Speculation that rates are on the rise or have stopped increasing will either create buying activity or scare potential buyers to sit on their hands.

Provincetown Appraisals Weighing Down the Market

Four closings this week in Provincetown represent perhaps the best performance of the real estate market in months. Could this be a continuation of the expected turnaround?

Last weekend many realtors were busy showing property to prospective buyers. I consistently ran into competitors doing the same as I was showing clients around last week. Based on my own client traffic and other agents I spoke with, showing activity is considerably up. However, only one property was put under agreement this past weekend. Not good numbers for the amount of traffic we saw.

Extenuating factors may be coming into play as buyers, seeking to get financing, are encountering numerous obstacles when applying for mortgages. Appraisals remain the latest in challenges we are seeing that derail existing transactions. Most sellers act accordingly in pricing their homes today due to an adjustment of property values in Provincetown by 15-20%. However, in some cases appraised values are coming in less than an agreed upon sales prices. A property has always been considered worth what a buyer is willing to pay and owner willing to accept. However, banks are now relying on appraisals more than ever. Lenders are asking buyers and sellers to make up the difference between a discrepancy between the agreed upon sales price and appraised value. You can see how this adds a new level of negotiation to the mix.

This is important to consider if you are going to list your home for sale in today’s market. Now more than ever, there are no magic buyers and listed prices have to be based on fair market value. Most shoppers I’m working with right now are seeking to upgrade to a larger or waterfront property. This means selling their second home in Provincetown for most. The reality of their situation is that they may have to sell their Provincetown home for less than what they purchased it for.

If you are in this ambitious demographic you must price your home according to realistic market values for two reasons: One, you want the house to appraise once it sells. Two, you want to attract a buyer, liquidate your property and take advantage of the opportunity to upgrade. The silver lining in this cloud is to buy a property that has huge appreciation potential to eventually offset any loss.

If you sell your home for a loss and buy a superior property, you will benefit from the appreciation during the next upswing in the market. No one knows when that will be, but it is better to wait for the turnaround in a superior property better suited to your needs and having had taken advantage of historically low rates and low prices.

Cape Update on Possible Market Turn Around

This week The Boston Globe reported that there could be a potential turn around for the real estate market in the near future. This news comes after the amount of closed real estate transactions have increased in the Boston area.

How does this translate to Provincetown and the Outer Cape? It is too early to tell. The rate increase last week prompted some buyers to react by contacting their realtors in order to find a deal before rates increased even more. Up until the rate hikes, the media doom and gloom kept many buyers inactive as they waited for prices and rates to drop further. Last week, the combination of the rate increase and 15-20% adverse adjustment in property values, created the perception that this could be the start of the turn-around. Buyers afraid that they missed the bottom acted quickly and an increase in shopping activity was the result.

The media was quick to respond to news reports that this could be the turnaround with stories of another batch of adjustable mortgages coming due. This in addition to more layoffs will increase the historically high unemployment rate. The resulting foreclosures will create another reduction in interest rates. Mortgage brokers reported this week that there has been a decrease in refinance business after last week’s rates increase and news that additional restrictions will be placed on condominium purchases has cast a dark cloud over certain demographics.

It seems the housing market can’t win in the media’s eyes. The one certain factor is that rates are incredibly low and most property in Provincetown right now is priced to present opportunity that we have not seen in about six years.

Real Estate Market Showing Signs of Life

In the wake of Memorial Day Weekend, the official start of the summer season here, the real estate market is continuing to show signs of life.

However, the increase in shopping activity coincides with yet another jump in interest rates. Last week the interest rate for a 30 year fixed product was 4.82%, the average rate is now 4.91%. A year ago the rates were in the 6% range. However, rates appear to be on an upward climb. I reported a few weeks ago that rates had increased from historic lows. 

There is still the anticipation of more foreclosures and short sales as the jobless rate increases and more adjustable mortgages come due. These factors may keep rates low but there is no indicator they will. An increase in rates may slow down the excitement that’s hovering over the buying market and will definitely adversely impact the busy refi business. 

On a recent trip off cape to the north shore of Boston, realtors told me that many buyers are acting and the combination of low prices and rates have fueled a mini boom. This is good news for the cape market.

The current market is a rollercoaster ride with interest rates, but they are still historically low. Banks on Cape Cod are offering 30 year fixed rate loans at 4.8% to 5%.

Most listed property right now in Provincetown is priced at levels we saw roughly 6 years ago.

This past week one property sold in Provincetown bringing the number of year to date closed transactions to 26. 

Last year, Provincetown had 77 closed transactions during this same period.

There is electricity in the air as many buyers are scratching their heads, wondering, is this the right time? We’ll see how an increase in rates affects this momentum. 

New Season Brings Tourists. How About Rentals?

Happy Memorial Day weekend and thus another tourist season is about to kick off here on Cape Cod.

We all know how the real estate sales market is performing, but how about rentals?

A month ago, The Boston Globe reported that vacation rentals on the entire cape were down. The slow pace was motivating homeowners to make deals in order to fill vacant weeks.

The only town that was not experiencing slow rental activity was and is Provincetown. This past week, I spoke with three rental agents who told me that both seasonal and weekly rentals have increased and that this may be the busiest summer in quite a few years. In normal rental market performance, either the weekly or the seasonal market is strong than the other, but never the same as in this year.

The consistent demographic for the weekly rentals seems to be twenty something’s grouping together. This means entry level professionals coming town to shop and blow off steam. 

This past week The Boston Globe reported that elsewhere on the cape, weeks are now filling up quickly. In the majority of cases, the discounts that homeowners made, generated renters that booked numerous weeks,

This is welcome news for our local economy. It means that consumers, tired from a recession have saved enough money to vacation. Now let’s see what they spend it on.

Primary Markets vs. Resort Towns

I’m on vacation this week and away from our little sandbar by the bay. However, I couldn’t help but question the native realtors about their demographic and get their perspectives.

Primary markets are very different from the resort towns of Truro and Provincetown. My suit and tie wearing counterparts provided some interesting information for me to take home.

The three main sources of business these days are short sales, foreclosures and young married couples buying their first homes. Apparently, many have saved for years just waiting to pounce on the deals this market is providing. Although the short sale and foreclosure may produce a buyer, the home in many cases is destroyed inside by the previous owner who lost their property.

The first time homebuyer tax credit is incentive enough to make buyers take that leap in the markets of Western Massachusetts and Northern Maine.

Mortgage Rates in Provincetown

It appears spring flowers aren’t the only things inching up this time of year. Mortgage interest rates for 30 year products increased slightly the past few days after reaching record lows last week.

The national average mortgage rate is now 4.84%, this is up from 4.78% last week as reported by Freddie Mac. The rates have been hovering in the high 4’s for two months straight and all eyes are watching this movement. The low rates have created a flood of business for banks and mortgage brokers catering to consumers seeking to refinance and save thousands a year in monthly payments. The latest increases in rates may push even more consumers to act.

The 30 year rates were impacted positively in March when the Federal Reserve announced that it would purchase $1.2 trillion in mortgage backed securities and $300 billion in government debt. 15 year mortgages have also been affected. The rates for these less traditional mortgages are around 4.5% according to The Boston Globe.

Local banks are offering 30 year products at or around 5% with no points. A local branch of a large national lender is offering a rate in the high 4’s with points attached.

Here’s a note of caution. Be careful when shopping for a new mortgage. Although the days of teaser products are gone, read the fine print and make sure all fees, including points are disclosed up front. You don’t want the illusion of paying a 5% interest rate and find out that it adds up to 6% when all is said and done.

First Time Home Buyer Tax Credit

The clock is ticking on one of the most enticing features of the American Recovery and Reinvestment Act of 2009: the first time home buyer tax credit. The act authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence between January 1, 2009 and December 1, 2009.

Before you stop reading this because you have owned a home in the past, note that the definition of ‘First time home buyer’ is a buyer who has not owned a principal residence during the three-year period prior to the purchase. So even if you have owned a home in the past, but have been renting for the past three years, you would qualify!

What does the credit really mean? Plain and simple, it is cash back to you from the government. It is a dollar for dollar reduction in what you owe. If you owe $8000 in taxes for 2009, the credit would be applied and you will owe nothing. If your tax liability is only $1000, then you will receive a check for $7000.

What types of properties qualify? Any property that you will use a primary residence will qualify, including but not limited to single family homes, and condominiums. You will even qualify if you build a new home and occupy it before December 1.

Only 7 months remain in which to take advantage of this credit. Don’t miss out.

Source for this article and for more information: www.federalhousingtaxcredit.com/2009

Has the Market Bottomed Out?

This week brought some peculiar behavior in the real estate market which led to conflicting reports and opinions as to whether we’ve reached a turning point.

Last Saturday was alive and buzzing with real estate shoppers. Realtors from Provincetown to Orleans reported that the combination of scheduled showings, walk in inquiries and busy open houses, were reminiscent of a stronger market. The weather cooperated as well.

Mortgage brokers reported that although the majority of their traffic is refinance business, the number of buyers seeking pre-approval letters, are increasing.

As a result of the recent activity, this week brought a number of offers from buyers still seeking to get a steal, not a deal, on the outer cape. Most fell flat and only one condominium priced under $300,000 was put under agreement.

The Boston Globe reported this morning that home values slipped an average of 15% in Massachusetts since the market peak in 2005 compared to other states which saw a 50-60% decrease in value.

It’s hard to predict when the curve will turn upwards, but here are some significant signs that momentum is building for something to happen:

1. Pre-approved buyers are shopping. Getting a mortgage these days is not an easy thing and going through the process shows commitment to buy.
   
2. The interest rates remain historically low.
   
3. Low prices are creating extreme opportunity.
   
4. Closed sales in the hardest hit markets of Phoenix and South Florida have already increased three months in a row due to the purchase of foreclosed properties and short sales.
   
5. The Housing stimulus package is helping sellers keep their homes and avoid slipping into foreclosure or listing their homes at fire sale prices.

Stability may be returning and although there is a long road ahead, it appears flat and clear with the writing on the wall as to where this is going.

Activity This Week

The performance of the real estate market was a bit static this past week.

The optimism in the air created by the combination of low interest rates and low listing prices had generated some sales activity in Provincetown for the first quarter. Although the quarterly comparison to last year was dismal in regards to number of sales, dollar volume had increased. There was one sale this week, a $349,000 condominium. Another condominium, new construction, went pending. The property is listed for $399,000. 

Easter brought many shoppers to town looking at single family homes and condominiums. Traffic volume for shoppers was high on Friday and Saturday. Easter Sunday was very slow, as most realtors observe the holiday and do not work.

Open house traffic for Friday and Saturday of Easter Weekend was also up a bit. As spring proceeds, more open houses will pop with the advent of warmer weather.

The activity over the holiday weekend included numerous second and third showings. These usually lead to offers. However, the interest rates inched up earlier this week causing a ripple effect amongst homebuyers who want to be sure they get the lowest rate possible. 

Compare the real estate market to a Wal*Mart. The store is full of shoppers but only a few are at the register.

Is Mortgage Insurance the Latest Incentive to Attract Buyers?

Sold: January 1- March 31, 2009

Provincetown

• Homes = 5
• Condominiums = 8
• Avg Days on Market = 324
• Avg Sales Price = $531,664

Truro

• Homes = 4
• Condominiums = 2
• Avg Days on Market = 177
• Avg Sales Price = $466,767

Wellfeet

• Homes = 8
• Condominiums = 1
• Avg Days on Market = 139
• Avg Sales Price = $420,333
  

Sold: January 1- March 31, 2008

Provincetown

• Homes = 5
• Condominiums = 31
• Avg Days on Market = 193
• Avg Sales Price = $424,344

Truro

• Homes = 4
• Condominiums = 4
• Avg Days on Market = 237
• Avg Sales Price = $515,713

Wellfeet

• Homes = 8
• Condominiums = 2
• Avg Days on Market = 300
• Avg Sales Price = $600,250

Sunshine in Sight?

April showers bring May flowers. Can it be possible that the rain on the housing market will turn into brighter months ahead?

President Obama announced this week from the G20 Summit that the recession has turned a corner. With rescue packages in place for struggling homeowners, interest rates as low as they’ve been in years and the stock market performing favorably, we are hoping he is right. A little spring sunshine in our economy may be just around the corner.

However, with the jobless rate the lowest it has been in 26 years, consumers are not motivated to buy a home out of fear of losing their jobs. Builders have identified this as the number one issue in selling new construction. Not having the resources to pay a mortgage due to a lay off ranks among the top anxieties in the United States today. Developers have stepped up to the plate and are now offering targeted incentives to overcome this obstacle.

Free upgrades like granite countertops, swimming pools and finished landscaping are a nice touch, but seem to have no impact on a buyer’s decision. These finishes are practically expected in today’s market and major developers recognize this.

Major builders are offering mortgage unemployment insurance as an added amenity to overcome the buyer’s fear of losing a job. The way this works is the developer pays for a mortgage insurance policy for the buyer. Typically, this policy is valid in case the homeowner loses his or her job within the first two years of the purchase date. Up to six months worth of payments can be made while the buyer looks for a new job. In some cases, the builder has included the cost of the insurance, which is estimated to be $450 to $900 per customer, into the listed price.

Right now, the insurance is limited to only those buyers who finance with the development company directly.

This is definitely a bold marketing move and numerous builders are adopting this strategy daily. As with any sales promotion, time will tell how effective this program will be. 

Refinancing is not Impossible

Homeowners are refinancing at numbers that we haven’t seen since 2004. Home purchases have also increased due to these low rates.

But, what if you can’t refinance due to job loss, poor credit or low property value?

Some homeowners find themselves on the outside of this new refi bubble and continue to struggle to pay mortgages with no help from their banks. Remember, banks will only start to modify a mortgage if the homeowner is 90 days delinquent. This is a double edged sword of course; the homeowner in this position has sacrificed his or her good credit after being 30 days late and has even less motivation to stop a foreclosure at 90 days. Acceptance of their dire financial situation may have already set in and they are less eager to do anything to stop the process.

If you are a homeowner who is making your mortgage payment, about to fall behind and could use a little assistance with a refinance, here’s some information that you may find useful. Part of President Obama’s housing plan is directed at you. If your house has decreased in value or your interest rate is high, the government is now enticing lenders to offer a rate as low as 2% in order to make your monthly payment affordable, within 31% of your monthly income. The lender will benefit by a government payment. If that does not work, then 40 year mortgages are now being set up. Help is here.

If you find yourself in this situation call the institution that services your loan and ask them what your options are. This is the company who you send your payment to. Also, call HUD at 888-995-4673. The government has set up a Web site: www.makinghomeaffordable.gov)

The Tale of the Incredible Shrinking Rate

Yesterday, mortgage interest rates significantly dropped below 5%.

The rate decrease came after The Federal Reserve purchased $750 billion in mortgage related securities. This was done in order to bring the rates under 5% and stimulate activity in the home purchase and refinance segments of the housing market. This action may even cause rates to decrease further as mortgage rates adjust in response to action in the bond market. Mortgage Tracker HSH Associates expect rates to level off at 4.9% and not decrease further.

30 year fixed mortgage products are now being offered by both local banks and national lenders in the 4.6% to 4.75% range with no points. There is so much refinance and new loan business that some banks are not reducing interest rates since they cannot handle the demand. Rates were already in the mid to low 5% range and many homeowners were already in the refinance process.

Mortgage brokers are indeed now reporting an overwhelming increase in just one day for refinance and purchase loans according to The Boston Globe.

There is an important side note: Homebuyers will, in most cases, have to put down at least 25% to benefit from these low rates. Also, jumbo loan rates remain around 6%. Jumbo loans start at $523,750 in the Greater Boston and Barnstable County areas.

Next week, it will be interesting to see what the rates are doing.

Friday the 13th ... Again

So, its another Friday the 13th second month in a row. This is indeed a rarity and it hasn’t happened in quite awhile. Do you suppose the fact that Friday the 13th has fallen two months in a row has anything to do with the state of the economy and poor housing market? Probably not, there are, however, plenty of nervous people trying superstitious things to stabilize their finances and stay afloat. It will be interesting to see what today brings with the recent three day rally of the stock market.

This week, since it is the 13th, we’ll veer away from the normal real estate news and talk about superstitious things people are doing to sell their homes.

I scoured the blogs and found some interesting ideas to use.

Saint Joseph is king, or should I say, saint of selling your home. One thing is certain, whoever makes these little statues probably doesn’t use the word recession a lot these days.

But what do you exactly do with this luck charm?

Dig a hole near your For Sale sign by the street approximately 3 inches deeper than the statue. If you have no yard, use a large plant pot.



Place the St. Joseph statue facing the street in the hole, upside down. Another site, says to face the statue west, another states face it away from your front door.



When covering the statue, prayers should be said. They are very often included in the packaging. These are simple Christian based prayers.



Once you have sold you home, remove the statue and place it in a prominent location in your new home. Most sites instruct cleaning the statue, others state leaving the dirt on it.





If St. Joseph doesn’t work then try a little energy balancing.

This includes putting a mirror in the hallway.
Put crystals and or colored stones in a clear brandy glass with some scented water and a flower. Scents can range from rose oil to any fragrant oil.
Add a single seasonal flower.

If that doesn’t work… try this:

Buy a small scented candle, the size of a votive, and a very large glass. Put the ice in the bottom of the glass and balance the candle on top. Light the candle and change ice daily. When the candle burns, the melted wax drips on the ice. This represents the elements of fire, ice and water and brings the luck of nature into your home.

If that doesn’t work… try this:

Put candles around your bathtub and fill the tub with water and ice. This way, the three elements are represented on a larger scale and will add to great energy.
If Saint Joseph, along with these energy inducing rituals don’t produce a buyer, one blogger shares this successful tip:

Stand in front of your house and wave your hands at your house and chant "mojo, mojo" Then wave at your neighbor’s house and say "double whammy double whammy."

Of course, if these don’t work, you can price your home properly, stage it for sale and be realistic. That can be all the luck you need in this market. Happy Friday the 13th.

Details of Obama's Housing Plan

This week, the finer details of the Obama Housing plan have been released.

If you are seeking to refinance or find yourself teetering on the edge of going under financially, waste no time in seeing if this plan can help you.

$75 billion will fund this strategy to keep 9 million homeowners out of foreclosure. Here’s who it will help:

Primary homeowners who are having a hard time paying their mortgages and homeowners who have not been able to refinance due to decreased property values.

If your loan is owned by Fannie Mae or Freddie Mac, you will be potentially able to refinance at current interest rate levels regardless of equity position. This will lower your monthly payment and hopefully provide relief. In order to refinance, homeowners must be current on their existing loans.
To find out if you are eligible for refinance contact:

- Fannie Mae at 1-800-7FANNIE , online at (www.Fanniemae.com)
- Freddie Mac at 1-800-FREDDIE, online at (www.freddiemac.com)


Also, please call your mortgage service provider to get more details as they pertain to you.

For more information on what you can do to modify or refinance and are not sure how Fannie Mae or Freddie Mac pertain to your loan, please visit www.financialstability.gov), that’s www.financialstability.gov).

New Stimulus Law and Outer Cape Cod Real Estate

The long awaited stimulus package is now law. But how will this impact our local housing market here in Provincetown, Truro and Wellfleet? Although the finer details of the housing plan will not be released until March 4th, there are definite components of this law that may help our local housing market.

Up to four million homeowners nationwide who have mortgages owned by Fannie Mae and Freddie Mac will be able to refinance to a mortgage product in the 5% range. This is directed at homeowners who are in negative equity situations and have not been able to refinance due to current strict qualifying criteria and low appraisals. There are homeowners on the Outer Cape who find themselves in this position. The double benefit here will be helping struggling homeowners keep their homes from foreclosure, thus protecting home values. The other plus is the potential extra monthly cash that may be spent at our local businesses.

The government will also step in to prevent foreclosures on millions of homeowners. There will be a potential modification of monthly payments for seriously delinquent homeowners to an estimated 31-38% of their income. Lenders who cooperate with this plan will receive a co-payment from the federal government. An additional incentive for homeowners to stay current and Lenders to participate is a potential yearly bonus set in place for five years of up to $1,000 per annually. This will serve our community by preventing foreclosures and preserving home values.

Fannie Mae and Freddie Mac will each receive $200 billion from the government. The US Treasury will continue to purchase their mortgage backed securities in order to keep rates low. This is good for the resort market. Low mortgage rates combined with low prices and the potential of vacation rental income make a second home purchase in Provincetown, Truro or Wellfleet palatable for many seeking an alternative investment to the faltering stock market.

There is a tax credit of $8,000 for first time homebuyers purchasing a primary residence. This isn’t as pertinent on the Outer Cape. However, for those of us who live here year round, you can qualify for this tax credit if you haven’t owned a home in three years. The definition of first time homebuyer has been adapted.

The next few weeks will be telltale and should provide a clearer picture of how all this will ultimately impact the real estate market. The true test will be in the months ahead.

Why Sell in this Market?

As a real estate broker I get the following same question asked at nearly every social function I go to these days. “Why would anyone want to sell their home in this market?”

Good question. There are three groups of sellers who have their properties on the market right now.

The first is one who has a large amount of equity in their home. They have identified a larger home, smaller home, waterfront, waterview, better location or whatever the reason, they want to move. Based on their equity position, they price the property right and sell it. 

The second seller is the homeowner who is in trouble and needs to sell. Let’s face it, the recession has claimed it’s victims and once you lose your job, your savings dwindle and you can’t make a mortgage payment, the options slim down. As loan modification is being worked on, some homeowner just want out. In most cases these days, the home is worth less than what the seller paid. Some sellers are facing foreclosure and are motivated to work a short sale or entertain any realistic offer. This is where the true opportunity is in today’s marketplace. 

The third seller is usually someone who just puts the house on the market in hopes of selling at an inflated, unrealistic list price. These homes practically never sell and become stale. You’ve seen them.

Ultimately, a seller sells when they need to. Whether it is financial, spiritual or life circumstances when a homeowner is ready to leave, the "for sale" sign goes up.

The Number 13

Oh my its Friday the 13th. Feeling superstitious?

In real estate the number 13 has been an interesting one to avoid by developers and realtors alike.

Next time you enter a building with more than 12 floors, check the elevator panel. Some developers avoid the 13th floor and create a 12A or go directly to the 14th floor. Even if the landlord or developer is not superstitious themselves, they realize that the value of square footage can be adversely impacted by a superstitious tenant. So, do you think this is all crazy tomfoolery and a bunch of hullabaloo? Are you loudly stating out loud or to yourself right now that every building you’ve been in has a 13th floor? Well, based on an internal study by Otis Elevators (click here), an estimated 85% of buildings surveyed with elevators did not have a 13th floor named the 13th floor. Hmmm, makes you think.

Realtors have also been known to move closing dates one day earlier or later than the 13th of the month. Especially in this market where deals are dying at the closing table, every bit of luck for the buyer and seller is needed.

On a brighter note, tomorrow is Valentines Day! So why not buy 12 roses today on the 13th and present them to your lover on the 14th.

Good News from Wells Fargo

Good news coming from Wells Fargo Home Mortgage this week.

No, it’s not that the President’s Club, a group of wealthy top producing Wells Fargo mortgage brokers are going to Las Vegas after all, that all expense trip has been cancelled.

There is more important information. It has been really difficult for homebuyers to make a purchase based on the tighter lending requirements. Those guidelines are mainly good credit and a strong debt to income ratio. Where opportunity now exists is with the down payment. As of early last year, 90 to 95% financing was all but dead and relegated to first time homebuyers, if even them. Well according to Brian Farley with Wells Fargo Home Mortgage, homebuyers of primary residences are now able to make a purchase with 10% down. The drawback is that there will be PMI, that nasty item called private mortgage insurance.

This is something we in the industry have not had to deal with in quite awhile. Mortgage insurers are just as critical in analyzing applicants as the actual underwriter for the loan. So it still is not an easy road. Applicants still need to be qualified. PMI can cost around $175 per month for a loan amount of $325,000. Creative ways for a buyer to make the monthly payment more financially palatable is to roll the PMI into the interest rate. This creates a higher payment, but with rates as low as they are, it can be negligible. Another choice is to ask the seller to pay the PMI. This of course, may not go over too well, but you never know in this market.

It seems as though creative financing is available to make certain purchases. Let’s see if rates go down as Republicans are pushing a 4% across the board interest rate. If this happens, we may see a plethora of creative purchases.

Market Performance in January

Happy Friday as we wrap up not only this week but the first full month of 2009.

So how did the real estate market perform Provincetown through Eastham in January?

Lets take a look at pending sales.

In Provincetown there are 15 pending sales.

In Truro there are 14 pending sales.

In Wellfleet there are 9 pending sales.

In Eastham there are 12 pending sales.

What has sold? At the time of this reporting, the information I obtained for sold transactions is provided from the Multiple Listing Service. There is the possibility that a pending sale could have closed after this posting, but will not be recorded until Monday. I’ll let you know next week if that is the case, but for now,

Provincetown had 3 sales reported, last January there were 7 sales.

Truro had 1 sale, there were 3 sales last January.

Wellfleet had 2 sales this month, January of 08 there were 5 sales.

Eastham had 4 sales, last January there were 12.

A couple weeks ago, we discussed loan modification on The Closing Table. As an update, it appears that some in our government share our feeling that loan modification is needed to prevent foreclosures and protect home values from further depreciation. Massachusetts Attorney General Martha Coakley introduced legislation that will mandate lendors to modify risky mortgage products for struggling homeowners who are current, yet on the edge of falling behind. This is a common sense treatment for both the real estate market and economy and I’m surprised this hasn’t already come up. The Attorney General should be commended. Lets see how this plays out.

A New Administration: Do You Notice A Change Yet?

Happy Friday after what seemed like a short week with the Marin Luther King JR holiday and Inauguration Tuesday.

The new administration is four days young. Do you notice a change yet? With the interest rates as low as they are… and prices equally low, common sense says that buyers will snatch up property and with the potential that Obama will freeze foreclosures, value may stay constant.

There are now conflicting opinions as to when the real estate market will turn around. There is still hesitancy amongst buyers as an uncertain economy persists and strict mortgage requirements make it difficult for financing. The predicted extremes I’m aware of are that we will not see an increase in home sales until quarter 4 2010. On the other end, folks feel that the optimism generated by the administration will create activity this first quarter 2009. The reality may be in the middle somewhere.
If the economy shows signs of slight recovery, this could instill the confidence buyers need to let them know values will not decline further. 

In Provincetown, a market that seems unlike any other, we’ve seen an increase in shopping activity and right now there are 15 pending sales. 

On Monday, prior to the inauguration, we did see more inventory hit the market in Provincetown. Most of these were homes that were previously for sale in 2008. After Tuesday, there was one condo listed for sale and this was not previously listed. Although many sellers re-listed their homes, others continue to keep their homes off the market, either refusing to take a 10-20% decrease in value or are renting their homes to help prevent foreclosure. Right now there are 45 single family homes and 157 condos on the market for sale in Provincetown.

If there is a change in the positive direction, it will be slow, akin to a large ocean liner making a complete u-turn…wide and slow.

In the next few weeks we’ll keep tabs on how many new properties are listed for sale. If prices and inventory stay low… this could aid in any turn around.

Preventing Foreclosures

When it comes to preventing foreclosures and helping homeowner’s keep their properties, a little bit of common sense and compassion needs to be injected into the real estate mortgage industry.

Let’s take Countrywide Home Mortgage and Indymac Bank. Giants in the industry, who were saved from demise themselves last year, have it in their control to save homeowners from going under.
I’m a real estate professional and that makes for interesting conversation at dinner parties these days. People are talking about the difficulty they have encountered when trying to modify their mortgages to save their good credit rating.

I decided to see what is happening first hand. I called Countrywide and Indymac to find out what their policies are in regards to helping struggling homeowners, who are current, stay afloat. Both banks have the following plan: Don’t pay your mortgage for three months then they’ll talk to you. Until then, they won’t work with you, period. Indymac does have an online form that can be completed to put you on a waiting list, just in case you default.

Here’s the problem. Honest, hardworking mortgagors, who are now victims of the recession, are trying to make good. The inability of these banks to effectively address this large demographic, will only lead to more foreclosures and further deterioration of the real estate market and will ultimately further impact the failed economy.

I may be overly dramatic here, but with all the bailouts happening, what about the government directing these banks to prevent loans from even starting the foreclosure process and be proactive, rather than chasing fires as homeowners become delinquent. With the average cost of a foreclosure around $50,000 per bank, it just makes good business to work with loan modification. When a consumer’s credit is already negatively impacted, their level of motivation to work with a bank and prevent foreclosure is dramatically different than when they have something to save. 

Year End Review for Provincetown, Truro, Wellfleet and Eastham

All eyes are on the real estate market as it enters its fourth year of challenge, uncertain interest rates, low prices and a worldwide recession. Buyers are looking and there has been an increase in shopping activity, Provincetown through Eastham. But buyers are reporting they are waiting to pull the trigger until after the inauguration in two weeks. There is speculation that mortgage interest rates will drop to 4.5% across the board. This will mean huge opportunity and has generated many inquiries regarding active properties.

How did the market perform in 2008 compared to the previous three years?

I’ll break down the numbers for you right here. These numbers include all categories of real estate sold.

See my Web Site's Real Estate Blog (click here) for 2008 dollar volume and units sold figures for Provincetown, Truro, Wellfleet and Eastham.

2009 promises to be a year of change for many aspects of the real estate market on the Outer Cape. Check back here weekly on Friday morning for updates.

Call me at 508-789-1107 or email me mike@atlanticbaysir.com if you have questions or would like to post an entry.