Examining Your Portfolio

Record losses, depreciation and short sales. Sound like the real estate market? Well, it actually describes last week's activity in the stock market. Chicken Little went running and yes, the sky did fall.

Many of us were impacted the week of September 15th by the extreme volatility in the stock market. Reported losses didn't have anyone jumping out of windows as they did in 1929, but many people are examining their investment portfolios. Now money market accounts, traditionally viewed as safe investment tools, are in question. Money managers are mixed in their opinions about where to invest.

In our opinion (and Donald Trump’s if you saw him on Larry King Live this week), now is the time to invest in real estate. Yes, we've seen losses in the current market and no one knows when it will turn around. However, the current conditions present many opportunities for buyers. Prices are lower than they have been in years.

If you remember the most important aspect to real estate investment...location, location, location, you'll be a winner. If you find a property you deem to be a good investment, buy it and expect to hold it for a few years. We all know that real estate values are cyclical. By having a tangible investment, especially in resort towns like Provincetown, Truro and Wellfleet, you can expect some appreciation in the coming years. Also, there is the potential to generate extra income through rentals.

Considering how the mortgage industry has become stricter in qualifying buyers, if a lender is willing to finance a purchase in this market, then you know the property is worth it. If you are a cash buyer....you are king and queen once again.

The West End Racing Club

You may have strolled past the West End Racing Club during a recent visit to Provincetown and wondered what goes on there and how one becomes a member. Well for starters, you have to be a kid. You see, this gathering place, located on the beach at 87 Commercial Street, is one of Provincetown’s best kept secrets. The non-profit club was founded in 1950 by Flyer Santos with the mission to: Give kids in Provincetown an opportunity to learn how to sail and enrich their lives with nautical knowledge and experience. The local and summer kids, ages 8-16, pay $50 for the summer. Every day, they congregate at the club and, under the supervision of an adult instructor, the older kids teach the younger kids how to sail and swim. The kids are taught a sense of responsibility for each other and the club. Each year, they sell raffle tickets to support the club so that it can purchase new equipment (they can also reclaim their $50 registration fee if they hit a certain ticket goal). The kids are taught the very valuable lesson of ‘giving back’ to each other and the community. These refreshing, old fashioned values are alive and well and continue to thrive year after year. Feel free to stop by next summer to check out this unique place that is kept alive by tradition.

Fannie, Freddie and Foreclosures

It appears the Federal Government will be taking over Fannie Mae and Freddie Mac. What’s happening to these two pillars of the mortgage industry is indicative of the real estate market as a whole. Too many consumers who could not afford homes, bought them in the early 2000’s which created this situation.

Although Fannie Mae and Freddie Mac did not purchase high risk adjustable rate mortgage products, the overall impact of the sour real estate market is now taking its effect on them.
Foreclosure rates are still on the rise as well, meaning that more consumers will lose their homes and loans will go unpaid.

We’ll keep our eyes on the Federal bail out plan, which now, will include running Fannie Mae and Freddie Mac.

The only potential upside to a Federally operated Fannie Mae and Freddie Mac, is the potential for lower interest rates.

If interest rates drop below 6%, buying activity could be generated. However, sellers will have to keep their homes priced according to market conditions.

No one has a crystal ball and can predict when this slow cycle we are in will turn around.

Some say another year and perhaps all of 2009. Signs of a reversal will be more transactions, less inventory, price increases for active listings and less foreclosures.

One thing is for sure, the breaking of Freddie Mac and Fannie Mae is a clear sign that things need to change, and will. We’ll see how this impacts the industry in the coming weeks.

Season's End

It's Labor Day week and with it comes an end to the fast paced energy that our short season brings us here on the outer cape.

The resort town lifestyle resembles the real estate market performance, in a way. Amuse me if you will and let me explain.

The mad rush of buying, selling, refinancing and exponential appreciation from 2001-early 2005 fueled what can only be described as a frenzied real estate market, not unlike our summer from Memorial Day through Labor Day.

With the summer season officially over, we now enter fall, a quieter time, yet still a little busy with tourists. However, after New Years… we all know, its like hitting a brick wall of silence and isolation. Dinner parties and the occasional holiday weekend may pop up… but let’s face it, its pretty dead. That’s where we are right now in the real estate market. It’s the winter. We have seen pockets of activity and some large commercial transactions, but overall, we are not immune to the national trend.

Some experts are saying the market is starting to turn around. Others say it will still be another 9 months to one year.

With prices low, interest rates hovering in the mid 6’s, new federal and state laws created to stimulate the housing market, hopefully, we’ll see a new season begin shortly for real estate.

Even though we are most likely skidding along the bottom, until homebuyers truly believe this is where we are and start buying, activity will remain sluggish.

How far away is Memorial Day for real estate? No one really knows. Stay tuned.