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