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.