Market Uptick?

In recent weeks, we have seen several sales in Provincetown at or above asking price indicating that there was more than one bidder on these properties. Just this week, there were two full price sales, and one over asking. (See this weeks sales: click here) This is good news for the market! From analysis of our office activity, the number of buyers in the market for this time of year is up notably over previous years, with many buyers looking to close by the end of the year.
Could this be the beginning of a turn-around or at least a leveling off? We’ll continue to monitor the sales and report back to you!

First Time Home-Buyer Tax Credit Extended

Yesterday saw unanimous support in Senate and overwhelming support in the House for an extension of the First Time Home Buyer Tax Credit. Here’s a quick summary of the bill that the President is expected to sign today:

• First time home buyers must have a sale agreement in hand by April 30 and close escrow by June 30, 2010 and would get the full $8,000
  
  
• NEW ADDITION: CURRENT HOMEOWNERS looking for a new home could also qualify for a $6,500 credit if they have lived in their existing PRIMARY residence for at least FIVE (5) YEARS
  
  
• CHANGE IN INCOME RESTRICTIONS: The home buyer's credit would be available to: individuals with earnings up to $125,000; or $225,000 for couples. This is up from $75,000 for individuals and $150,000 for couples under the current law
  
  
• EXCLUSIONS FROM THE TAX CREDIT: Homes that cost more than $800,000 are NOT eligible and the buyer must be over the age of 18 years old to claim the credit. Those who SELL their new home or STOP USING IT AS THEIR PRIMARY RESIDENCE within THREE (3) years would have to REPAY THE CREDIT

Extension is Likely for the First Time Home-Buyer Tax Credit

With the deadline on the First Time Home-Buyer Tax Credit program looming just one month away, the Obama administration is backing an extension from the original date of November 30, 2009 until April 30, 2010. The program, which has been helpful in stimulating the housing market, offers first time home buyers a straight $8000 credit on their taxes. (Previous credits were more of a loan that required the buyer to repay the government). More than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the homebuyer tax credits this year, according to the Treasury Department.

With so many buyers scrambling to close before November 30, many buyers face the possibility of losing out simply because underwriters are swamped and may not be able to deal with the demand in time. In addition, if a buyer has not yet begun the purchase process, it is unlikely they will make the deadline. The present discussion would extend the credit until April, but there are also new components up for review, like an addition credit of $6500 for home buyers who have lived in their prior homes for a minimum of 5 years and new increased income eligibility requirements, opening up the field of potential buyers considerably.

For more details about the current tax credit program, read our April 30, 2009 article (click here)

National Rebound in Existing Home Sales

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”

Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply2 at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Excerpted from Realtor.org
Big Rebound in Existing-Home Sales Shows First-Time Buyer Momentum

Third Quarter Activity Report

The summer real estate market picked up markedly beginning in June and July, resulting in many third quarter sales. Many buyers, who had been waiting out the market for the past few years, came off the sidelines this summer and decided to buy. Low interest rates and the first time homebuyer credit have also helped to spur activity. The general feeling is that the market has leveled off and is not expected to drop significantly further. Despite the increased summer activity, the number of sales in Provincetown and Truro are still down about 50% off of last year’s figures while Wellfleet held fairly even with last year’s sales (which had already suffered a large decrease over the previous year).

Check out the "Real Estate Blog" on our Web site for charts compare year-to-date sales figures for Provincetown, Truro and Wellfleet with the same period last year and report on the average Days on Market of the property that sold.

Provincetown

The most active segment of the condominium market has been in the $300K - $600K range, which is accounts for 36 of the 55 sales and comprises 16 of the 30 pending sales. In the single family market, most of the activity is in the $750K and under market, with 9 sales thus far in this category and 6 more pending.

Truro

Most of the activity in Truro is in lower priced single family homes. 8 of the 15 sales were under 600K. 3 Sales were between 600K-800K and 4 were over 1M. There have been no sales this year between 800K – 1M.

Wellfleet

In Wellfleet, interest in single family homes comprises most of the activity in this market. The heaviest concentration of sales has been between 300K-600K, with all of the sales being under 900K.

Mortgage Rates Fall

The 30-year, fixed-rate mortgage averaged 5.04 percent, with points averaging 0.7 for the week ended Sept. 17. That is down from previous week, when it averaged 5.07 percent, according to Freddie Mac.

Last year at this time, the 30-year, fixed-rate mortgage averaged 5.78 percent.
The 15-year, fixed-rate mortgage this week averaged 4.47 percent, with points averaging 0.6, down from the previous week, when it averaged 4.5 percent. A year ago at this time, the 15-year, fixed-rate mortgage averaged 5.35 percent. This is the lowest it has been since the McLean, Va.-based lender (NYSE: FRE) started tracking it in 1991.

“Interest rates for fixed-rate mortgages eased for the third consecutive week and remained at three-month lows,” said Frank Nothaft, Freddie Mac VP and chief economist, in a news release.

On Wednesday, the Mortgage Bankers Association reported that loan applications fell by a seasonally adjusted 8.6 percent, the result of the Labor Day holiday.

Reprinted from Los Angeles Business from bizjournals – Sept. 17, 2009

Uptrend Continues in Pending Home Sales Nationwide

Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak, according to the National Association of Realtors®.

The Pending Home Sales Index, 1 a forward-looking indicator based on contracts signed in June, rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May, and is 6.7 percent above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was in July 2003.

Lawrence Yun, NAR chief economist, said a combination of positive market factors is fueling the gains. “Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines. Activity has been consistently much stronger for lower priced homes,” he said. “Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by November 30.”

The Pending Home Sales Index in the Northeast rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago. In the Midwest the index increased 0.8 percent to 89.9 and is 11.6 percent above June 2008. The index in the South jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago. In the West the index rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.

Reprinted from Realtor.org

Mid Summer Activity Report

Summer is heating up and so is activity in the Provincetown real estate market. Showings have increased significantly since the early months of this year and so have the figures for residential properties that have sold or gone into contract. You can see the surge of activity in the fact that there are almost as many properties pending as the total that have sold for the entire year.

For figures of year-to-date sales, current inventory and pending sales for Provincetown, Truro and Wellfleet, check out the Atlantic Bay Sotheby's International Realty Web Site.

The Impact of Interest Rates

Some potential homebuyers are sitting on the sidelines waiting for housing prices to hit bottom. It makes sense to buy a house at the lowest price possible but there are other critical considerations to keep in mind. Trying to time the bottom of any market is always difficult. Also, interest rates are at historic lows, and many homebuyers fail to consider the savings that come with low interest rates, particularly over the life of the loan, or even the partial life of the loan.

Mortgage rates are low because of the recession and foreclosures. In addition, the Federal Reserve has moved aggressively to push down mortgage rates by buying as much as $1.75 trillion of housing debt and Treasuries this year. This policy has been successful. Rates on 15-year and 30-year fixed-rate mortgages are hovering at historic lows.

What does this mean for you? On a 30-year fixed-rate loan amount of $200,000 at 5%, the interest paid over the life of the loan is $186,512. That brings the total loan payments to $386,512. At 6%, the amount of interest paid rises to $231,676, a 24% increase. At 7%, it’s $279,018, a 49% increase. The lesson here: Keep in mind, what might be gained from a further drop in housing prices could easily be lost by a rise in interest rates.

With regards to the market, let’s review some recent indicators. Pending home sales, a forward-looking indicator based on signed contracts, rose 6.7% in April, the biggest monthly jump since October 2001. Existing home sales rose 2.4% in May with some homes, once again, receiving multiple offers. And the most recent Standard & Poor’s/Case-Shiller 20-city housing price index shows the month-to-month decline in housing prices has stalled from 2.8% in January to February, 2.2% in February to March and 0.6% in March to April. This has led many industry experts to anticipate that soon the decline in housing prices will bottom out.

If you have a house in mind, this might be a great opportunity to purchase a second home or investment property.

This article was reprinted with permission from David Bolton, Loan Officer, Prospect Mortgage.

Market Activity First Two Quarters 2009

A look at the market activity for the first two quarters reveals some ups and downs in the market. First the downs: the charts below report that sales volume is down 65-66% in Truro and Provincetown for the first half of this year over last, while Wellfleet is down 35% from last year. The nation’s economic crisis this past Fall and Winter caused many buyers to pause and put on the brakes.

The good news is, the market started to loosen up this Spring, when mortgage rates dropped into the high 4’s. Even though 30 year fixed rates have risen some and are now in the range of 5.4%, buyers are leaving the sidelines and stepping back into the market. Offer activity has soared over the past few weeks, and as of this writing, almost 30 properties are pending in Provincetown, 8 are pending in Truro and 12 are pending in Wellfleet.

Check out this week's Real Estate Blog on Atlantic Bay Sotheby's International Realty Web Site for sales figures in Provincetown, Truro and Wellfleet for the first two quarters (click here).

The Economy is Looking Up!

On Monday, June 1, the Commerce Department reported total construction spending unexpectedly rose 0.8% in April. Economists had expected a 1.2% decline. It was the biggest gain since August 2008 and marked the second straight month that construction spending has risen after a 0.4% increase in March.

The Institute for Supply Management reported the monthly index of manufacturing activity rose in May to 42.8 from 40.1 in April. Though any reading below 50 signals contraction, it was the fifth consecutive monthly increase from a record low of 32.9 in December. Most importantly, the index of new orders rose to 51.1. This is the first expansion since November 2007, one month before the recession began.

The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 6.7% to 90.3 in April from 84.6 in March. It was the biggest monthly jump since October 2001 and the third consecutive monthly increase after the index hit a record low in January. The reading is 3.2% above the April 2008 level.

The Commerce Department reported factory orders rose 0.7% in April, after a revised 0.9% drop in March. The report reflected increased demand for automobiles, electrical equipment and construction machinery.

The Institute for Supply Management reported the monthly index of non-manufacturing activity rose in May to 44 from 43.7 in April. Economists had expected a reading of 42. Figures below 50 indicate contraction.

Initial claims for unemployment benefits fell by 4,000 to 621,000 in the week ending May 30 from a revised figure of 625,000 in the previous week. The number of people continuing to claim jobless benefits in the week ending May 23 fell to 6.74 million. It was the first decrease in almost five months of uninterrupted weekly gains.

All good news….any movement in the upward direction, however small, is the right direction. Things are looking up!

This article was reprinted with permission from David Bolton, Loan Officer, Prospect Mortgage.

Why Rates Change

How often have you heard of the Federal Reserve cutting rates only to find that mortgage rates haven’t moved? One common mortgage industry misconception is the correlation between the Federal Reserve Board's announcements to raise or lower interest rates and the direct effect on fixed mortgage rates. While the two are connected, they don't always go hand-in-hand.

Kinds of Rates
To better understand why mortgage rates change, we must first look at why interest rates change. First, it is important to realize that there is not just one interest rate, but many:

Prime Rate: The rate offered to a bank's best customers and subject to change monthly.

Treasury Bill Rates: Treasury Bills are short-term debt instruments used by the U.S. Government to finance their debt. Commonly know as T-Bills, they come in denominations of 3 months, 6 months and 1 year. Each Treasury bill has a corresponding interest rate (i.e. 3-month T-bill rate, 1-year T-bill rate).

Treasury Notes: Intermediate-term debt instruments used by the U.S. Government to finance their debt. They come in denominations of 2 years, 5 years and 10 years.

Treasury Bonds: Long-debt instruments used by the U.S. Government to finance its debt.

Federal Funds Rate: Rates that banks charge each other for overnight loans.

Federal Discount Rate: Rate that the Federal Reserve charges to member banks.

LIBOR: London Interbank Offered Rates. Average London Eurodollar rates.

6-month CD Rate: The average rate that you get when you invest in a 6-month Certificate of Deposit.

11th District Cost of Funds: Rate determined by averaging a composite of depository rates at Savings & Loan institutions in the Western United States.

Fannie Mae-Backed Security Rates: Fannie Mae pools large quantities of mortgages, creates securities with them, and sells them as Fannie Mae-backed securities. The rates on these securities strongly influence mortgage rates.

Ginnie Mae-Backed Security Rates: Ginnie Mae pools large quantities of mortgages, secures them and sells them as Ginnie Mae-backed securities. The rates on these securities influence mortgage rates on FHA and VA loans.

Mortgage Rates Refresher
Fixed interest-rate fluctuations are based on the concept of supply and demand. If demand for credit (loans) increases, so do interest rates. More buyers mean sellers can command a better price (i.e., higher rates). If demand for credit reduces, then so do interest rates. This is because there are more sellers, so buyers can command a lower better price (i.e., lower rates). When the economy expands, there is higher demand for credit, so rates increase. When the economy slows, the demand for credit decreases and so do rates.

Effects of Inflation
A major factor driving interest rates is inflation. Higher inflation is associated with a growing economy. When the economy grows too strongly, the Federal Reserve increases interest rates to slow the economy down and reduce inflationary risk. Inflation results from prices of goods and services increasing. When the economy is strong, there is more demand for goods and services, so the producers of those goods and services can increase prices. A strong economy therefore results in higher mortgage rates.

Mortgage Rates vs. Interest Rates
Fixed mortgage rates tend to move in the same direction as interest rates. However, actual mortgage rates are also based on supply and demand for mortgages. The supply/demand equation for mortgage rates may be different from the supply/demand equation for interest rates. This may result in mortgage rates moving somewhat differently from other rates.

Significance of Bond Prices
There is an inverse relationship between bond prices and bond yields. This can be confusing. When bond prices move up, interest rates move down and vice versa. This is because bonds tend to have a fixed price at maturity--typically $1000. If the price of the bond is currently $900 with 10 years left until maturity, and interest rates start moving higher, the price of the bond starts dropping. The higher interest rates accumulate over the next five years, meaning that a lower price (e.g. $880) will result in the same maturity price, i.e. $1000.

This article was reprinted with permission from David Bolton, Loan Officer, Prospect Mortgage.

June on the Outer Cape

June has long been a well-kept secret of outer Cape residents, but word is getting out! The gardens are in bloom. All of the businesses are open and in full swing. But because the full summer crowds have not quite arrived in full, the beaches, bike trails, shops, shows and restaurants are all very accessible this month. And most years, the weather cooperates! Don’t miss out on these special festivals, or come just for a weekend get-away to eat out and see a show.

June 4-7
Women of Color and Friends Weekend: Join hundreds of women of color, their friends, families, & supporters in Provincetown for the third annual gathering! Click Here

June 17-21
Provincetown International Film Festival: Celebrating 11 years of cutting edge, independent filmmaking on the edge. Enjoy 5-days of films, panels and parties Click Here

June 25-28
Provincetown Portuguese Festival & Blessing of the Fleet: Music, great food and parade festivities! Click Here


The 2009 Theatre schedules have been set. Don’t miss these great performances.

Wellfleet Harbor Actors Theatre Click Here

Provincetown Players Click Here

Mortgage Rate Update

It appears spring flowers aren’t the only things inching up this time of year. Mortgage interest rates for 30 year products have been slowly increasing after reaching record lows in late April.

The national average mortgage rate is now 4.84%, this is up from 4.78% a few weeks ago 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.

Going Green means Saving Green!

Are you considering any renovations to your property this year? If you make energy efficient choices, you may be eligible for significant tax credits. The American Recovery and Reinvestment Act of 2009 encourages homeowners to help the nation reduce its great dependence on energy by making green choices.

New energy efficient windows, doors, insulation, roofs, HVAC systems, water heaters and biomass stoves will bring a credit to you of up to 30% of the cost, with a cap at $1500. But more heavy duty systems, like solar panels, solar water heaters, geothermal heat pumps, small wind energy systems and fuel cells, will bring a credit of 30% of the cost with no upper limit and you can benefit from these credits through the end of 2016!

If you are not planning any major work, there are still some relatively easy things you can do to live greener and save energy along the way.

• Install low flow toilets and showerheads in your bathrooms.
  
• Update your thermostats for maximum efficiency.
  
• Insulate your attic.
  
• Seal air leaks.
  
• Use energy efficient light bulbs.
  
• Unplug your chargers when they are not in use.

For more information on Federal Tax Credits for Energy Efficiency, click here.

Lets be Optimistic about Real Estate

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.

The past few Saturdays have been 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.

The Boston Globe reports that home values slipped an average of 15% in Massachusetts since the market peak in 2005. This is not a tremendous slip compared to other states which saw a 50-60% decrease in value. Outer Cape property is in line with the rest of the state experienced an average 10-20% adverse adjustment in value. The Globe also reported that sales have consistently increased over the past three months, although by a small margin.

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 to the real estate market. Although there is a long road ahead, it appears that there is change on the horizon.

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

Spring Into Lawn Care

It is late April and spring lawn care is important for lush, thick grass.

If you have a lawn, here are some quick tips you may want to follow:

1. Rake the lawn to remove all dead leaves that the blustery winds of winter blew onto your lawn. If there are no leaves, rake the lawn thoroughly to remove dead grass. Raking removes thatch, a build up of dead leaves and grass which prevents the proper growth of individual blades of grass.
   
2. If you have mossy type plants growing in your lawn, you may want to apply lime to ensure the soil acidity is proper for grass. Not every lawn needs lime so exercise caution and read instructions.
   
3. Seed the lawn. If you have bare spots that need to be seeded or a part of the lawn is worn after being used as a walkway during the winter, get out the rake again. Pay special attention to these areas with the rake to make sure all thatch is removed. Then, use a garden rake to create grooves for the seed. Spread the grass seed. Ask your garden center expert about which seed is best for your location.
   
4. Once the lawn is raked and seed planted, buy a multi step fertilizer and weed killer. Spread this over the entire lawn. Follow the instructions and make sure you don’t over apply. If you use too much fertilizer, it will burn the grass causing more harm than good. Make sure your fertilizer is a cool season fertilizer depending on where you live.

A typical time to start spring lawn care is now if you have warm weather. You can wait as until late April providing the weather is cool. Temperature for spring lawn care should be consistently in the 50’s.

Once you follow these simple steps, you too, can enjoy tall glasses of cool lemonade while standing.

Staging to Sell

Spring selling season is upon us and it’s time for a refresher on staging tips. With inventory still high, and so many properties competing with yours, you will want to do everything you can to help your property stand out from the others.

Real estate expert Barbara Corcoran said recently during an interview that a buyer decides if he or she has interest in a property within 8 seconds of walking through the door. That doesn’t leave much time to make a good impression! Use every second wisely by considering some of the following suggestions.

1. Curb appeal is important. When a buyer approaches your house, he or she makes the first judgment. Make sure your house is nicely painted. Repair that broken screen door. Tidy the front yard and plant some flowers. The buyer should feel drawn into the house and made to feel welcome by a warm and inviting entry hall.
   
   
2. Clear your house of clutter and personal belongings and scrub the house to within an inch of its life. Since your goal is to move out of the house, start packing today. Eliminate as many knick knacks as possible. Pack away any collections and replace photos of friends and family with neutral artwork. As far as cleanliness, everything should sparkle.
   
   
3. Straighten your closets and cabinets. Expect that buyers will open every door and cabinet. If your closets are packed to the gills, it will leave the buyer with the impression that the house does not have enough storage space.
   
   
4. Take the packing a step further and put extra furniture in storage. A sparse and simple approach to furnishings will make your rooms appear larger. Define a use for each room and furnish it accordingly. If you have a bedroom that has become a ‘junk room,’ pack the junk away and make the bed with inviting linens. It is important to show the buyer how the space can be used. When rearranging furniture, pull pieces away from the walls and keep in mind that you want to have a clear walking path between rooms.
   
   
5. A fresh coat of paint is inexpensive and goes a long way to making your home feel clean and fresh. Keep the colors earthy and neutral to appeal to the broadest audience. If you have a brightly colored room, consider re-painting it.
   
   
6. Shed some light on the subject. Open the blinds and turn on all the lights for showings. Bright spaces appear larger and overall create a positive impression. If you have heavy or dark drapes, consider replacing them with light colored window treatments.
   
   
7. Remove evidence of pets. When you are expecting a showing, pack up the pets and take a drive. That includes stowing away dog beds, crates and food dishes.
   
   
8. Make sure the house smells nice. Baking cookies before a showing makes the house smell yummy and inviting. This bit of advice is an oldie but goodie.
   

The common thread behind all of these suggestions is to present your home in as neutral a manner as possible so that the potential buyer can envision him or herself living in the property. While it is possible to achieve these goals on your own with very little expense, don’t rule out calling a professional stager to assist you if you are feeling overwhelmed. Being a proactive seller will ensure that you have done everything possible to help your property rise above its competition.

First Quarter Recap on Cape Cod

Here's information on properties sold, under agreement and for sale in Provincetown, Truro and Wellfleet ...


Property Sold: January 1- March 31, 2009

Provincetown

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

Truro

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

Wellfleet

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

Property Sold: January 1- March 31, 2008

Provincetown

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

Truro

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

Wellfleet

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

Property Under Agreement as of April 8, 2009

Provincetown

• Homes = 4
• Condominiums = 11
• Ave Days on Market = 241
• Ave Sales Price = $527,920

Truro

• Homes = 1
• Condominiums = 12
• Ave Days on Market = 149
• Ave Sales Price = $448,954

Wellfleet

• Homes = 4
• Condominiums = 0
• Ave Days on Market = 288
• Ave Sales Price = $609,475
  

Property On the Market for Sale as of April 8, 2009

Provincetown

• Homes = 74
• Condominiums = 162
• Ave Days on Market = 274
• Ave Sales Price = $685,532

Truro

• Homes = 80
• Condominiums = 56
• Ave Days on Market = 334
• Ave Sales Price = $878,063

Wellfleet

• Homes = 85
• Condominiums = 23
• Ave Days on Market = 290
• Ave Sales Price = $763,135

Is Mortgage Insurance the Latest Incentive to Attract Buyers?

President Obama announced last 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 to pay for the buyer’s mortgage unemployment insurance as an added amenity to overcome the buyer’s fear of losing a job. 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. The estimated cost of the insurance is around $450 to $900 per customer. 

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.

Calculating your Cost Basis

As tax time approaches, those who sold property in 2008 are faced with figuring out their capital gains or losses incurred. The task is less daunting than it seems. In order to calculate your profit or loss, you must subtract your cost basis from the sale price. The formula for calculating your cost basis is as follows:

Purchase price
+ Costs associated with purchase (attorney’s fees, title fees, escrow fees, real estate agent commissions …if you paid a Buyer’s Agent, etc.)
+ Improvements (Capital improvements like replacing the roof or furnace, etc. Interior painting, for example, does not qualify)
+ Costs associated with selling (attorney’s fees, real estate agent commissions, etc.)
- Accumulated depreciation (for example, if you ever took the office in the home deduction)
= Cost Basis

Then, if you subtract the cost basis from your sale price, you arrive at your taxable gain or loss incurred.

Don’t forget, the Taxpayer Relief Act of 1997 outlines a huge deduction available to individuals and couples in the sale of their primary residences. It states that if you lived in the property you sold for 2 of the past 5 years, individuals are entitled to deduct $250,000, and couples are entitled to deduct $500,000, from the total taxable gain. This tax break is a huge benefit for homeowners. (There are some exceptions to the 2 out of 5 rule based upon health concerns or other unforeseen circumstances. Seek professional guidance in these cases).

Two bits of advice: 1- Always consult your accountant and your attorney before buying or selling real estate to understand all of the tax ramifications. 2 - Keep good records of all of your capital improvements in order to assist your accountant with the task of determining your cost basis when it’s time to sell.

The Tale of the Incredible Shrinking Rate

As we reported last week, mortgage rates decreased 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. You may want to read the small print as points may be added.

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 experiencing an overwhelming increase in just one week of refinance and purchase loans according to The Boston Globe. Consumers who are refinancing today are saving thousands of dollars a year in monthly payments. Buyers who take advantage of low prices and low fixed rates will be in the incredible situation of having more “house” at a lower carrying cost. 

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. Congress has defined a new segment of loans between $417,000 and the jumbo starting point to be a class similar to jumbo but partially conforming. Lenders have not embraced this area of financing as of yet, however, it will definitely be pertinent to our market in Provincetown and Truro. We’ll keep you updated. 

Fed Invests Another $750B In Mortgage Backed Securities

Good news for buyers and homeowners! In a move designed to lower interest rates and make credit more widely available, the Fed has committed to buy another $750B in Mortgage Backed Securities. 

There are speculations that this action will push mortgage rates down close to 4%. That remains to be seen. However, the present rates are at near historic lows. Wells Fargo is posting 4.625% today on a 30-year fixed conforming loan!

With prices near or at bottom, and rates at extraordinary lows, the time is right for purchasing or refinancing. Call your mortgage broker today and explore your options.

Obama Housing plan

The finer details of the Obama Housing Policy have been released. What does this overly complex plan entail and who will benefit from it? 

Firstly, primary homeowners who are having a hard time paying their mortgages can now work with their lender to modify their mortgages. $75 billion in incentives will be offered to help prevent foreclosures. Mortgage servicers will be able to take advantage of financial benefits if they work to modify loans. Adjusted monthly payments are prohibited from being in excess of up to 38% of the homeowner’s income. The government will subsidize part of if not all the difference and ensure that not more than 31% of the borrower’s monthly income is tied up in a mortgage payment.

Secondly, homeowners who have not been able to refinance due to decreased property values and have a mortgage higher than their home’s worth, may be able to take advantage of loan modification and refinance. $200 billion has been slated to help these homeowners refinance. The administration estimates there are 5 million homeowners in need of this assistance. However, the current mortgage must be at most 5% higher than the value of their home. Mortgages must be owned by Fannie Mae or Freddie Mac and homeowners must be current on their existing loans. 

There is speculation that refinanced and modified mortgages may have interest rates as low as 2% for five years. That, however, is not a reality as of yet, and it is not easy for all lenders to arbitrarily modify mortgage products. The investors behind the mortgages will have the final say. If a lender takes bailout money then the law requires them to modify mortgages that are in danger of defaulting. This can cause conflict between the bank and the investor behind the product.

The plan is very complex and full of details. For more information on President Obama’s Housing Plan, please visit www.financialstability.gov.

If you are not sure how Fannie Mae, Freddie Mac or the housing plan pertains to you or pertains to your loan situation, please call your mortgage service provider or bank.

If you are interested in more information about Fannie Mae or Freddie Mac, please click on one of the following links.

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

Creative Thinking

Getting creative just may be the answer to working out a vacation home purchase or sale in today’s economic environment. Buyers and sellers are thinking outside the box to bring deals together for win-win situations. Whether buying or selling, your success will improve if you open yourself up to broader and more creative solutions.

Consider these options:

Lease purchase: Back in the height of the seller’s market, it was rare for a property owner to consider an offer that proposed renting with an option to buy. In today’s market, this is one way to creatively bring a negotiation together. Sellers benefit by receiving income from the property and by having a commitment from the tenant to move toward purchase, and the buyer/tenant benefits by having longer period in which to gather financing while beginning to build equity in the property by having a portion of their rent applied toward the purchase. For more details about how lease purchase agreements work, click here.

Seller Financing: Owner financing was also more of a rarity in the boom markets of the early 2000’s, but more buyers are asking for it today, and more owners are accepting these offers. With the lending markets tightening their restrictions, many well-qualified borrowers are being turned away from traditional financing. Owner financing offers a win-win solution in many cases. Owners who don’t have an immediate need for the proceeds stand to make more in the end by adding interest payments to their bottom line and buyers who otherwise couldn’t get financing are able to move toward their dream of owning an investment property or second home. For more details about seller financing, click here.

Sharing a Purchase: Many experts espouse that the time is now for buyers to make a move, but due to the daily negative reports on the credit and housing markets, some buyers are being held back by fear. Consider sharing the risk with a friend by investing in a property together. When you invest in a property in Provincetown, Truro or Wellfleet, you have the opportunity to offset many of your expenses with rental income. If you are sharing the cost burden with a partner, you enjoy all the benefits, while feeling more secure with less at stake. Investing with a friend or partner is another path to realizing your dream of owning a vacation home on Cape Cod.

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.

Certifying Your Rental Property

The time of year for summer planning is upon us. Many property owners are considering how much use they will get out of their property this coming summer and the question of whether or not to rent the property arises. If you decide to list your property for weekly or seasonal rental (under 90 days), be aware that the town of Provincetown has a by-law requiring property owners to obtain a Certificate to Rent from the town licensing department. 

The town will send a building inspector and the health inspector to the property who will be looking for the following:

Building Inspector:

1. street number on your building or unit
2. the electrical panel/circuit breaker panel must be labeled
3. you must have a carbon monoxide detector on each floor (plug-in with battery back-up is acceptable)
4. a certified fired extinguisher must be mounted on the wall no more than 5 feet from the floor, with a current yellow tag certification
5. working emergency lights (if applicable)

Health Inspector:

6. total occupancy for unit will be determined
7. sanitation overview
8. overall condition of the property will be assessed

Certificates cost $140 each year and must be prominently posted in your property during rentals. For more information about the rental certification process, visit the licensing department’s Web site. If you would like assistance with this process or if you would like to list your property with our rental department, please contact us info@provincetownrealestatenow.com.

Pricing, Pricing, Pricing

A well-known mantra for homebuyers has long been summed up in three words: location, location, location. We are now offering three critical words for home sellers: pricing, pricing, pricing.

The transition from sellers marketto buyers market began on the Outer Cape in the fall of 2005. The emotional transition has proven difficult for many sellers, who lived through the meteoric rise in home values in the early 2000’s. During those years, it was very common for sellers to list their property over the suggested value with a fair amount of success. That nudging upward of prices was contagious and pricing became a game of ‘let’s give it shot.’ This was all possible in an environment where credit was easy to come by and personal wealth was on the upswing.

The climate couldn’t be more different these days. Buying a second home has fallen in priority on many peoples’ TO-DO lists, making the field of buyers much smaller. For those who really want to sell, making your property stand out in the competing inventory boils down to one simple principle: pricing.

Consider that approximately 85% of homebuyers begin their search for a property on the Internet. The first criterion (after location) that a buyer enters on a site like trullia.com or realtor.com is a price range. If your property is not priced correctly, you risk being excluded from the search results of your potential future buyer. Your home will not even be considered.

Many buyers in our area are working with Buyers Agents who are sending them automatic email updates about new listings. What drives the selection of these properties? You guessed it, price.

The “sweet spot” for marketing a property is the first 30 days. It is during this period that the greatest numbers of showings typically occur. This is when the property first appears in advertisements and on real estate websites and excitement is generated for buyers closely monitoring the market. Today’s buyers are very savvy and they are using the Internet to study home values. They recognize when a property is priced right. Capitalize on this momentum by positioning your property so that it attracts a bonafide buyer during this period.

Here is the good news: there are buyers out there! During the past few months, we have seen flurries of activity around well-priced properties, with several of them generating bidding wars. There are buyers waiting on the sidelines for that next good deal to come along. Price your property correctly and yours could be the one they are waiting for!

New Features: MLS Property Finder and Messenger

This week we stray from the typical real estate topic to inform you about our latest attraction on the blog. In case you haven’t noticed, we’ve added two exciting new features called “MLS Property Finder” and “MLS Property Messenger.”

The “MLS Property Finder” lets you surf all properties in Provincetown, Truro and Wellfleet that are actively listed on the Cape Cod and Islands Multiple Listing Service. You are in control to choose the town, category of property and so much more. It is very easy to do. Choose property type, town, price range and hit search. You can click on “custom search” for more specialized results. It is easy to do, fun and free. Now all the information we see as Realtors is just a click away for you.

The “MLS Property Messenger” is designed to send you automated emails with property listings that meet your customized criteria. It is free to you and signing up has never been easier. It is a quick two step process. Step one is an input of your contact information, which will be kept private. Step two instructs you to complete a search criteria page. Before you know it, you will be receiving emails containing newly listed homes, price changes and more directly from the system. You are in control of what you receive. Check in anytime, anywhere to see what's going on with the market as you will be assigned a username and password. A special amenity to “MLS Property Messenger,” is an icon alert system. You can download an icon to your desktop that will issue an alert whenever a property within your search parameters is listed or any change to existing properties occurs.

We hope you enjoy these new features. Call or email us if you have any questions. Happy house hunting and please let us know if there is anything that catches your eye.

Loan Modification Will Protect Home Values

This week we’ve decided to write about an issue that has many of us scratching our heads. When it comes to the real estate market right now one thing is very true, low prices and low interest rates have never made it a better time to buy. Some markets have actually started to turn around. Phoenix, AZ and South Florida, have reported a significant increase in sales. 

Many of these sales are most likely due to the high foreclosure rate which continues to saturate our market with inventory, thus bringing prices down. If foreclosures were to stall and loan modification mandated by the government, then we may have a chance to move more property and preserve home values.

Massachusetts Attorney General Martha Coakley has filed legislation to require lendors to work with struggling homeowners who are current, modify their loans and prevent foreclosure. This law would apply only to homeowners who need to modify their risky interest only, adjustable mortgages or teaser rate mortgages. Homeowners would modify their loans to a more financially palatable product, thus preventing an unnecessary foreclosure.

In 2008, 12,430 homeowners lost their properties due to foreclosure. This was a 62% increase from 2007.

But how do banks feel about loan modification? We called two large lendors to find out what their policy is for homeowners who are struggling, yet current on their loans.

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.

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 in order 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.

Attorney General Coakley adds that "Loan modifications stabilize the marketplace, stop the escalation of foreclosures, and ensure cash flow so that mortgage and mortgage-backed investments can again be valued,"

With refinancing difficult for some consumers, modification may be their only choice. It is just good business to work with loan modification when the average foreclosure costs a bank roughly $50,000. 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. 

It will be interesting to see what the outcome will be of the Attorney General’s efforts.

The Year in Review Part 3: Wellfleet

This week, we review Wellfleet’s final sales figures from MLS along with a comparative analysis of this year in relation to the prior two years. Our data comes from the Multiple Listing Service and does not include private sales. The vast majority of sales that occur in this market are MLS sales.

There were 60 properties sold in Wellfleet in 2008 with a total sales volume of $31,733,802. 
There were 93 properties sold in Wellfleet in 2007 with a total sales volume of $55,814,425.
There were 74 properties sold in Wellfleet in 2006 with a total sales volume of $42,099,750.

See the SIR Web site's "Real Estate News" Blog (click here) for tables on the following: Number of Properties Sold with Median Sale prices in Wellfleet, Average Days on Market of Sold Properties in Wellfleet and Percentage of Sale Price to List Price in Wellfleet.

Highs and Lows

The lowest priced condominium property to sell this year was a 2BR cottage located at 420 Chequessett Neck Road which sold for $244,000. The unit, located at Chequessett Village Condo, is 3-season and has 352 SF. The lowest priced single family was located at 80 Pleasant Point Road and sold for $255,000. It is a 1BR/1BA home located on a 3/4 acre lot in South Wellfleet.

The highest priced condominium to sell was a year round waterfront unit located at the Sea Shells Complex with a private association beach. The 900 SF free standing unit with 3BR/2BA sold for $644,000. The highest priced single family home to sell was a contemporary home built in 1996 and located at 60 D Street on Lieutenant’s Island. The property consists of 5 BR, 3.5 BA, with 3238 SF and is a quick walk to a sandy beach.

Market Trends

Wellfleet appeared to be hardest hit by the market down turn in 2008, with sales volume down 44% over the prior year. The slow down is also reflected in the increased Days on Market figure for single family homes which is averaging 249 days. The market has seen some activity of late however. There are currently 84 Single Family homes for sale, with 7 properties under agreement. There are 23 condos on the market with 1 unit under agreement.

The Year In Review Part 2: Truro

This week, we review Truro’s final sales figures from MLS along with a comparative analysis of this year in relation to the prior two years. Our data comes from the Multiple Listing Service and does not include private sales. The vast majority of sales that occur in this market are MLS sales.

There were 74 properties sold in Truro in 2008 with a total sales volume of $42,903,850. 
There were 61 properties sold in Truro in 2007 with a total sales volume of $36,974,833.
There were 56 properties sold in Truro in 2006 with a total sales volume of $37,325,075.


See the SIR Web site's "Real Estate News" Blog (click here) for tables on the following: Number of Properties Sold with Median Sale prices in Truro, Average Days on Market of Sold Properties in Truro and Percentage of Sale Price to List Price in Truro.

Highs and Lows

The lowest priced condominium property to sell this year was a unit located at 82 Shore Road which sold for $126,000. The unit, located at Salt Air Condominiums, is seasonal and has 806 SF. The lowest priced single family was located at 9 Highland Road and sold for $360,000. It is a 3BR/2BA home with approximately 1500 SF and an in-ground pool.

The highest priced condominium to sell was a seasonal cottage located at Roseville Condo on Corn Hill Beach. The 820 SF cottage with 3BR/1BA sold for $425,000. The highest priced single family home to sell was a contemporary home located high on a bluff at 20 Great Hills Road. The property consists of 4 BR, 3.5 BA, with 4650 SF and has panoramic water views.

The Year in Review Part 1: Provincetown

The year-end numbers are in. Over the next three weeks, we will review the final sales figures from MLS along with a comparative analysis of this year in relation to the prior two years. We’ll start with Provincetown this week, and we’ll look at Truro and Wellfleet in the coming weeks. 

Our data comes from the Multiple Listing Service and does not include private sales. The vast majority of sales that occur in this market are MLS sales.

There were 151 properties sold in Provincetown in 2008 with a total sales volume of $88,098,251.* 
There were 165 properties sold in Provincetown in 2007 with a total sales volume of $85,902,800.
There were 158 properties sold in Provincetown in 2006 with a total sales volume of $82,653,453.

* Sales figures exclude timeshare properties.


See the SIR Web site's "Real Estate News" Blog (click here) for tables on the following: Number of Properties sold with Median Sale prices in Provincetown, Average Days on Market of Sold Properties in Provincetown and Percentage of Sale Price to List Price in Provincetown.

Highs and Lows

The lowest priced residential property to sell this year was a studio condominium located at 962 Commercial Street at the Last Unicorn Condominiums in the East End. The unit has 190 SF and sold for $130,000. 

The highest priced property to sell was the Murchison Estate located at 2 Commercial Street in the West End. The property is a landmark in Provincetown, with the main residence having been developed under the supervision of Walter Gropius and associates and completed in 1957. The estate consists of 3 buildings and a pool on 3.5 acres. It sold for $6,550,000. As of this writing, the word is that the new owners have plans to develop the property into 9 building lots.