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NEW - Tear It Down or Renovate It: A Growing Dilemma For Home Buyers.
May 8, 2007
For quite some time I’ve been chanting that it’s time to let go --- let go of the notion that a 70-year-old house has enough charm and redeeming factors to be worth saving.

With energy concerns becoming more prevalent and the cost of utilities continuing to escalate, we need to change our thinking here on Martha’s Vineyard. Charm is a relative term and there is nothing charming or attractive about a tiny 70-year-old house with little to no insulation, cramped bedrooms, one bathroom with leaky plumbing and a tiny kitchen that is inadequate by today’s standards on a crumbling wet foundation.

Circa 1900 near Campground, Oak Bluffs

I’d even go so far as to say there is nothing charming or redeeming about some of the houses built during the last 20 to 40 years. We allowed some real junk to be constructed during the 1980’s real estate boom, and a lot of the circa 1970 construction is ugly and functionally obsolete. Aside from the emphasis today on energy conservation, modern high-technology in new homes is also important and advancing at a breathtakingly rapid pace. Today’s upscale consumers want that technology, but they don’t want the kinds of subdivisions typical of suburban America. They want the charm of the Martha’s Vineyard lifestyle because that is what attracts them. But they want that charm to include all the bells and whistles they are used to at home; they want the best of both worlds. The psychographic profile of people moving to the Vineyard is changing and that will make modern in-home high-technology even more important. No longer are we just a summer retreat or retirement community. People come here for a gentler way of life while simultaneously carrying on their off-Island careers.

It might very well cost you more to renovate an older house than to build a new home. So, what’s the answer? I think the eco-conscientious solution is to scrape them, raze them, bulldoze and remove them from the land and start over. Some people call this “Bash and Build”. It may sound shocking, but it’s been happening in other parts of the country for quite a while now. One off-Island builder who has worked on numerous teardown projects in recent years says, “In my opinion, it’s the hottest trend in real estate.” So how do you get this old house off of your nice lot? You can either have the structure demolished, lifted off the foundation and removed in one piece or deconstructed. The latter method which entails reclaiming lumber and reusable building materials will cost you more money and more time than just driving a bulldozer through the front door. Another option is to donate the old structure to affordable housing. It would then be lifted off the foundation and removed in one piece. This sounds like a good idea, but there is a backlog of inventory right now. Let your eco-conscience be your guide. You might also be eligible for a substantial tax deduction if you can donate the structure or the salvaged reusable materials.

Speaking of costs and savings --- it could cost anywhere from $20,000 and up to demolish and cart away the old structure. That cost doesn’t include the foundation, but the foundation material can also be recycled. When the site is clean, you can start from scratch building a new and possibly bigger dream home on that nice lot. In the end you may be paying more “all in” for the finished product, but you will be in a location you want, instead of next door to yourself in a new subdivision without the landscaping intrinsic to older quintessential communities like big trees (to provide screening and privacy). Remember, most of the best locations on this Island are already developed or in conservation. Another factor to consider is financing. If you’re not paying cash, the best solution is to acquire a two-phase loan for a project like this. The first part will be a construction loan which historically will be at a higher rate --- perhaps one-half to one point above prime. You will need a construction contract and approved plans in order to get the loan, but the plans don’t have to be set in cement --- no pun intended. The second part is for the conventional home mortgage. If you’re unable to get your ducks in a row for this type of financing you will end up paying closing costs twice.

We already have a number of cookie cutter subdivisions on the Island, but there are a number of mature small and medium size communities in great locations on the Island where the houses range in size and style unlike the uniformity of modern subdivisions. In off-Island communities it has always been understood one should never to have the biggest home in the neighborhood. But on Martha’s Vineyard that is not a concern. The teardown trend is starting to become more accepted, and inadequate and smaller houses are being replaced with more substantial houses. I am not talking about “McMansions”, nor am I a proponent of them. I believe smart buyers who have identified and moved into the older communities by replacing dilapidated homes with new homes will create an environment for more buyers to come in and build new homes. This will fuel a renaissance in these communities. The land on this Island is just too precious to pretend patch-and-paint houses contribute to the value of the land.

New architect design reproduction near Sunset Lake, Oak Bluffs

I do think it is critical for neighborhoods to be vigilant and take responsibility for their future well-being. It will be important for residents of these communities to establish home owner associations if they don’t already have them. They need to create covenants to ensure there are safeguards to prevent someone from coming into the community and building an enormous A-Frame glass tent or Quonset hut that doesn’t fit the general character of the neighborhood. Variety is a good thing because it gives character to the community and ensures more expensive homes will blend in visually and economically. This is all part of preserving the future value of your investment and the value of this magical Island we all love to live on.

NEW - All Real Estate Is Local, but that has not been the perception?
April 23, 2007
In David Lereah’s new book, “All Real Estate Is Local”, he references the investment mistakes his Grandpa made by listening to the national news instead of paying attention to ”local influences and activity” He goes on to say, “Whatever the national trends are with regard to real estate – whether they are booming or busting – what really matters is what the market conditions are in your region, town, or neighborhood.” David Lereah is Senior Vice President and Chief Economist of the National Association of Realtors® (NAR).

Starting in 2001 real estate speculation began picking up steam in certain areas of the country that were growing in popularity. These areas were primarily coastal cities on the east and west coast. It would be five years before this trend would run its course. Investors were quick to jump on board with the hope of making a quick buck -- and they did. Properties were selling before a shovel touched dirt or a hammer struck a nail. We saw this in the 80’s here on Martha’s Vineyard when the construction and housing market was out of control, but we learned from that bad experience and won’t let it happen again.

When the press started reporting the news that the Boom was over, they did so by painting a national picture of doom and gloom with a broad brush. We all listened to the reports. Prospective buyers relished the thought of getting a good deal, “a steal”, and regaining control of what had been a so-called seller’s market that had all but shut out everyone except the well-healed from the Vineyard real estate market. Sellers, on the other hand, started to panic but refused to give up their position. They fervently resisted lowering what, in most cases, were overly inflated prices based upon subjective personal opinions instead of factual market price analysis provided by seller agents.

We entered a buyer-seller standoff period where nothing was happening, except at the very top of the market. But even there activity slowed down and sales were few and far between. No one wants to overspend and appear foolish regardless of how much they are worth. The wave of panic continued to build while rolling from coast to coast, and everyone was talking about a “buyer’s market” whether the perception was true or not.

On the Vineyard, sellers continued throwing chum at the market week after week in the form of insignificant price reductions. So like any good bargain shopper, buyers continued to wait, wondering how low the market would go. Personally, from the beginning I saw this as an opportunity for a leveling of the market and never believed the negative hype as it pertained to Martha’s Vineyard. Water seeks its own level and it would just be a matter of time, I thought, before we reached that point.

All of a sudden, but not by surprise, there was a new specter looming on the horizon. Was the housing bubble about to burst? Buyers had been led to believe there was no end in sight for the hot market and prices would just continue climbing. They were drawn into a false sense of security and anticipation of assumed future gains. Greed and some very creative financing products also encouraged buyers to overextend themselves by committing to attractive short-term, low adjustable interest rate loans. This enabled them to get into the market with little or no money down. But in some areas of the country the market suddenly came to a halt and prices started to decline. Frantic buyers not wanting to lose money immediately started canceling new home sales contracts and in many cases forfeiting substantial deposits.

With prices now plummeting by double digit percentages in many popular cities, and adjustable mortgage rates going up as much as double at the first reset, many new home owners found it easier to simply walk away from their homes purchased with up to 100% financed loans they could no longer afford. This was the case in cities like Boston, Cape Cod, Phoenix, Las Vegas, Los Angeles and Ft. Lauderdale where there had been overly zealous growth, but it was not that way throughout the entire country.

On Martha’s Vineyard the rate of appreciation was above average but not even half of what it was in the 1980’s. There were only a handful of speculators here that might have been in jeopardy. The Vineyard has always been a pricey market and that is not by accident. People who “get the Vineyard” are passionate about wanting to live here and make emotional decisions; quite often paying a premium to be part of the unique Vineyard lifestyle.

It was not only the home buyer who was affected by the slowdown in the market. Existing home owners who were courted and vigorously encouraged to take equity out of their existing homes for that dream vacation to Hawaii or that slick new Escalade were finding themselves in an unexpected upside-down or negative amortization position. The news of a threatened foreclosure glut loomed heavily on the horizon --- but once again we should have remembered --- real estate is local.

When a homeowner cannot maintain their mortgage or sell their home to save themselves, the end result is usually foreclosure and over a million home owners in the US are facing that end today. The foreclosure process begins when a borrower is over 30 days late with a mortgage payment. The lender will usually send a letter of notice to the borrower along with notification to the state’s Land Court notifying them of an action to foreclose. This does not imply a fait accompli, as most borrowers are able to work out the loan with the lender before they lose their homes. With prices continuing to decline in some areas, options have become more limited. However, in Massachusetts, the number of foreclosures is not even close to what it was in 1992. Government leaders are now calling for state and federal assistance to subsidize aide to home owners threatened with foreclosure.

Although Martha’s Vineyard is a wonderful and very special place, like all good things, greed can play a major part in pushing the envelope. We experienced a period for many years where everyone thought they had the goose that laid the golden egg. Many properties came on the market for ridiculous prices, both at the very top and at the very bottom of the market. Still, we relied upon the market to have the last word, but the astounding reality was that there was always someone who would pay the price. Today this is changing to a great extent not only because of the perception of a more level playing field or buyer’s market, but also because buyers are choosing to have their own agency representation.

So where are we today? I believe we are at a tipping point in the Martha’s Vineyard real estate market, but it will not be without a little more pain. One of my pet peeves is there are too many substandard, poorly maintained buildings of no important historic significance for sale here that have outlived their economic and functional usefulness. There is an old real estate expression, “underneath it all is the land”, and in many cases that is where the value is --- not what sits on the land. I maintain that many of the 40, 50 and 70 year old structures should be removed and replaced with more attractive energy efficient “Green” construction. Sellers have to realize they can no longer expect to get $400,000 to $500,000 for a property with a dilapidated house or unheated shack, when the value of the land is almost half of that selling price. Buyers need to realize they are not going to be able to “steal” properties. They must have confidence that if they pay a fair price for a property, they will have a solid investment that will appreciate in time, but not overnight.

We have to come to the realization on Martha’s Vineyard that this is not a buyer’s market, but an opportunity for a balanced market. A market where properties are priced fairly and sellers have realistic expectations. However, the lower to middle-end of the market is distorted because we still have a number of sellers who are not realistic or serious about selling their properties; they’re just fishing. Their perception of what their property is worth, albeit uninformed or ill-advised, overrides the facts. There are three phrases I constantly hear that always make me smile: “The seller is motivated”; “The seller doesn’t have to sell”, and “The price is negotiable”. What the heck does all that mean? Does it mean the motivated seller will accept well below market value or the non-motivated seller is firm on the price or will only accept above market value? Does anyone in the market today assume that prices are not negotiable?

The pool of qualified pre-approved buyers at the lower end or entry level of the Martha’s Vineyard real estate market is drying up. Lenders are adopting much stricter guidelines for buyers with limited resources and marginal credit. If you were pre-approved for a loan last year you may not be eligible for that same amount today. A larger down payment may be required and you will most likely not get a loan approval without verifying your income. If you are contemplating a purchase this year, save yourself disappointment and wasted time for everyone by going to a lender and getting pre-approved for a mortgage. Believe me, you are better off knowing your pocketbook will match your expectations. Negotiations are difficult enough today and being pre-approved will strengthen your bargaining position.

I’m the owner of SplitRock Real Estate, an EXCLUSIVE BUYER AGENCY and to paraphrase a statement from a REALTOR® sponsored national ad campaign, real estate is my life. I know my business; I study it and I’m passionate about it. My perspective is unique because I view the market from the buyer’s vantage point, and my goal is always to arrive at a fair deal. I will do my best to protect my buyer clients and will look after their best interests. My task is to educate and counsel my buyer clients so they can make informed decisions they will be comfortable with. I encourage you to begin or continue your real estate education at www.SplitRockRE.com.

Martha’s Vineyard is Living On The Edge
April 18, 2007
Living on Martha’s Vineyard we are all used to the threat of seasonal hurricanes and a steady flow of Nor’easters during the year. We take them pretty much in stride assuming that the weather forecasters are just creating drama and nothing much will happen. The last real storm damage anyone remembers was during Hurricane Bob and the Halloween Nor’easter in 1991. Actually the Halloween storm did more damage to the beaches and dunes than Bob did. Once again a Nor’easter has slowly crept across and up the eastern seaboard and has hovered over the Martha’s Vineyard shoreline for days. Although the body of the storm has moved out into the Atlantic, the effects of the storm are still lingering with rough seas and unusually high tides continuing an assault on our beaches and dunes. The report card for this storm is still being written but here is one report on the damage sustained to one of the most fragile and beautiful areas we lovingly covet and try to protect.

(Click here to view >) Norton Point Beach breached; crashing seas open channel

Should Second-homes be subjected to a Lodging Tax?
March 30, 2007
On February 15th I commented on a proposed Lodging Tax that would affect second-home rentals on Martha's Vineyard and Cape Cod. People who depend upon the rental income of their second homes to partially offset their carrying costs, would have to pass along the tax to their tenants in order to make their numbers work. The rental rates on Martha's Vineyard are already high. We have to ask ourselves, at what point will vacationers start to look elsewhere for better values? For people dreaming of owning a home on Martha's Vineyard and relying upon rental income as part of the purchase equation this tax would deliver a real blow to the process. Here is an update on the debate taken from an editorial at CapeBusiness.net:

"Should second-home rentals be taxed? Some things to consider as the debate intensifies over whether to tax summer rentals:

"Yes, it would level the playing field. Latest numbers show a waning occupancy rate for hotels and motels in the summer, surely a result of competition from summer home rentals.

"But what happens if second-home owners dependent on that income find themselves faced with as much as a 9 percent tax increase? For them, it is seeing their property tax almost double. This on top of rising energy costs, insurance coverage increases and a harder time renting their homes due to an oversupply of rentals. At what point will second-home owners decide to put their home on the market because the economics don’t work – especially since they no longer can expect double-digit price appreciation?

"And if those houses go on the market, what impact will that have on all house prices, including those owned by primary-home owners?

"Will municipalities worried about waning occupancy taxes find that scenario better?

"Now add the fact that second-home owners spend more on average than full-time residents – according to some studies, 1.6 times more. If they bail out in the face of rising overhead costs, what other businesses on the Cape – from furniture stores to restaurants – will suffer?

"The reality is that the tax issue transcends tourism and municipal budgets. It is very much a complex macroeconomic issue with many moving parts. Look at it one-dimensionally and we are sure to suffer unintended consequences."

Edgartown Adopts Strict BOH Regulations in hopes of Protecting Sengekontacket Pond
March 17, 2007
I spoke with Matt Poole the day before the Board of Health meeting regarding certain concerns I had about the proposed new health regulations governing Ocean Heights and Arbutus Park. Matt was actually working on completing the draft for the new regulation when I interrupted him. I told him I felt this could present a real hardship to current property owners who may not be able to afford the cost of possible mandatory waste water upgrades as outlined by the new regulation. Those with vacant lots may no longer be able to afford construction costs on their lots with the added expense of new utility systems. Matt said, in so many words, anyone who owns or purchases property in these areas should be able to afford the hookups. He may be right because there have been some pretty impressive houses going up in these communities lately.

Ultimately, this will be a good thing but I think it will be very interesting to see how the new regulations create a paradigm shift in Ocean Heights and Arbutus Park. I agree installing enhanced systems with the thought of evading the new hookup and as a permanent solution would be ill-advised because I believe the enhanced systems will have to be abandoned eventually. In my opinion enhanced systems are not attractive looking and I think they’re a band-aid for what has been and is increasingly becoming more and more a very serious problem -- the pollution of Sengekontacket Pond.

I think it’s unfortunate that Edgartown does not focus more on existing problems in developed neighborhoods before it allows major new construction projects in equally fragile areas like the Edgartown Great Pond. We need to control and limit density here, not increase it. This Island is already choking; we don’t want it to lose its vital signs.

Click here to follow link > Strict Regulations to Protect Sengekontacket Pond

On March 7th, I commented on this article.
Click here to follow link > Septic Ban Points to Pond Protection

The times they are a changing --- on Martha's Vineyard
March 07, 2007
Septic Ban Points to Pond Protection is the title of a recent article in the Vineyard Gazette that outlines a new regulation affecting vacant land owners in Ocean Heights and Arbutus Park.

Water pollution is the #1 factor that’s going to limit the density and development of the Vineyard in all geographic areas. We’ve known this for years, and you don’t have to be Nostradamus to have seen it coming.

Last year the town of Edgartown implemented a “Wastewater Department Bedroom Regulation” that stated simply (?) will limit the number of bedrooms as follows: “Existing and future lots shall be allowed four (4) bedrooms for the first ten thousand (10,000) square feet of lot area.” The regulation goes on to outline guidelines for additional bedrooms, but I think you get the idea.

Our aquifer is essentially one large interconnected underground lake that supplies the entire Island and our numerous tidal ponds are very fragile. It doesn’t take a genius to figure out we’re at a tipping point. All you have to do during the summer when driving along Island byways and passing any number of these ponds is hang your head out the window of your car and sniff the air. Every year the BOH closes certain ponds at one point during the summer for recorded high fecal levels. That’s scary.

Read this article and keep in mind that buying land is going to require more than just a promise and assumption that you can build what you want on the land, even if the current zoning bylaws say you can. Rules are changing every day and I bet you’re going to see a great many lots in the Ocean Heights area coming on the market at fire sale prices, or being purchased by one buyer, combined, engineered and offered for sale anew at premium prices. I know of one group of lots in that area right now, not in MLS, available for $750,000.

Click here to follow link > Septic Ban Points to Pond Protection

Lodging Tax will effect Martha’s Vineyard Vacation Rental Homes
February 15, 2007
I’m an exclusive buyer broker on Martha’s Vineyard, so I don’t list property for sale. I also don’t handle any rental properties. Recently I received emails from several of my clients and Island neighbors expressing their amazement and supreme displeasure with a proposed bill that would levy a 5% hotel/motel room tax on all private rentals and timeshares.

This seems to me like an outrageous idea, especially because Martha’s Vineyard has always been a vacation destination and not everyone can afford to own a home here. Most Island lovers that find a way to own their dream home on Martha’s Vineyard do so by offsetting their expenses by renting a portion of the year. Only a very small percentage uses their properties like “temporary hotels”. According to a recent article in the Cape Cod Times, “homes, apartments, condominiums and timeshares that are rented for 90 consecutive days or less” would be subject to the proposed tax. According to this legislative mindset, “private homeowners will simply pass the tax on to the visitors. And if the tax is applied equally across the state, visitors will not head to the Berkshires instead of the Cape.” That may all sound well and good, but when you take into consideration the average vacation stay is two weeks with weekly rates starting at about $2,500 with many rentals close to beaches and towns priced well over $4,500 a week, and even into the tens of thousands, this is going to be a very hefty tax. Rental agencies charge between 10% and 20% for their services and most of them really earn it. So, you have to add that into the mix.

The article puts forth the claim that “what’s particularly unfair is that the people who rent these private homes still demand all the services that residents deserve, such as beach and road maintenance and police and rescue, but are paying no taxes to support the local services”. But they don’t take into consideration that these people pay their taxes just like year round residences; however, they don’t occupy their homes for as long as six months out of the year.

Here’s the Cape Cod Times article being referenced along with Chapter 64G under Title IX. Taxation. The proposed amendment to this law reads as follows:

“SECTION 1: Chapter 64G shall be amended by adding the following section:

“Section 13. Any city or town which accepts or has accepted the provisions of section 3A of this chapter may, by a separate vote, accept the provisions of this section and expand the imposition of said room occupancy excise tax to include other transient accommodations.
Other transient accommodations is defined as any vacation or leisure accommodation, including but not limited to apartment, single or multiple family housing, cottage, condominium and timeshare unit, which is rented to occupants for a period of ninety consecutive days or less regardless of whether such use and possession is as a lessee, tenant, guest or licensee.

“For the purposes of this section, any definition in section 1 of this chapter, where the terms “room or rooms in a bed and breakfast establishment, hotel, lodging house or motel” are used shall be deemed to include the term, “other transient accommodations”

“In the case of transient accommodations, the owner of the apartment, single or multiple family housing, cottage, condominium or timeshare unit, shall be responsible for assessing, collecting, reporting, and paying over the tax and reporting as described for operators in sections 3, 4, 5, 6, and 7A, and shall be liable in the same manner as operators in section 7B.”

There’s no place like home, and no home is completely safe
February 05, 2007
Many of us own homes in areas considered to be living on the edge of ecological, topographical and geological hazards. Despite warnings based upon science and past history we keep flocking to these areas and paying the price because the view and lifestyle outweigh the risks. Martha’s Vineyard is one of those areas, hanging out in the Atlantic detached from the main land and in the flight path of hurricanes and Nor’easters. If you live in one of these so-called risk areas in time you will probably be touched by one of nature's phenomenas, but what about if you play it safe?

Some people are more cautious and look for what they hope will be a safe haven. There are no guarantees in life no matter how cautious you are or where you choose to call home. Two beliefs I try to live by are: You get what you most try to resist; make decisions coming from love not fear.

(Click here to follow link >) This was our Martha's Vineyard

The Housing Bank Bill -- If at first you don't succeed try again
January 30, 2007
The MV Times News In Brief section published an editorial regarding the controversial Housing Bank. This is not about a for-rent project; it is about affordable property ownership for lower income residents of Martha's Vineyard.

Housing bank bill is re-filed on Beacon Hill

“Hoping for success the second time around, backers of legislation designed to create a fund to be used to support the creation of affordable housing on Martha's Vineyard learned that Senator Robert O'Leary, a key supporter, filed the bill on Jan. 9.

“Senate Bill #781 would impose a one percent fee, paid by the seller, on real estate sales. The first $750,000 of each sale would be exempt. Modeled closely after the Land Bank, the bill would create a housing organization that would be self-funded and award money to a variety of housing initiatives.

“Last summer the legislation, which was combined with a similar effort to create a Nantucket housing bank, passed the Senate but went down to defeat in the House where it was opposed by real estate interests.

“The legislation filed this month no longer contains any reference to Nantucket. The Martha's Vineyard Community Housing Bank Coalition, a group created to push the bill through the legislature, is optimistic that separating the Vineyard from Nantucket will further its chances.

“A copy of the bill is available on the coalition's web site at www.mvchb.org.”

Morgan Woods affordable housing project on Martha's Vineyard nears completion
January 30, 2007
It’s been about nine years since the Pennywise Path affordable housing project was conceived and set into motion. As the construction progressed and is now nearing completion, the decision has been made to name the project Morgan Woods, appropriately after the former Edgartown affordable housing committee chairman, Fred B. “Ted” Morgan, who lead the project from the very beginning,. This community experiment has been and will be closely watched by all Island towns to gauge its long term success, because there has never been a rental community on the Island of this scale.

I found the following articles informative and thought I would bring them to your attention.

Morgan Woods, a whole new village of attractive homes

The Vineyard's first significant, municipally developed affordable rental housing for low and moderate income residents

Martha’s Vineyard Real Estate Property Tax Bills for all Towns are posted
January 9, 2007
Property values escalated in 2004 and 2005 to record levels having a direct effect on taxes paid by Martha’s Vineyard home owners in 2006. Requests for abatements flooded the assessor’s offices and the tax matter became contentious. There are still some heated disputes unsettled and many property owners are in arrears, because they simply weren’t prepared for the staggering increase in their taxes -- some more than 50% from the preceding year.

You can go to my website for an explanation of what is generally called the "MIL Rate" and how to compute your property tax, and you can also view the present and past five years of tax multipliers. Here is a recent MV Gazette article that discusses the 2007 Property Tax Bills.

Whether you are Buying or Selling, Owning Real Estate can save you Big Money on your Taxes
January 9, 2007
A new book " Real Estate Tax Secrets of the Rich" written by Sandy Botkin, CPA, Esq, an IRS insider, reveals the tax strategies you can use to increase your ROIs by as much as 20 percent-whether you're a home owner or a real estate investor. This accessible guide demystifies real estate taxes and shows how to achieve maximum benefit when buying, owning, selling, managing, repairing, and investing in properties.

• Features numerous forms, charts, sample documents, and other valuable tax-saving tools
• Gives you the basics on real estate taxes and shows how to take full advantage of tax loopholes

Taken from the Back Cover…
When it comes to building wealth through real estate, the rich have one important secret: SLASH YOUR TAXES
It's simple: Less tax means more money in your pocket, and more return on your investments. Real Estate Tax Secrets of the Rich, written by a longtime tax expert and IRS consultant, shows you how to use your home and investment properties as money-saving and income-generating tax shelters.

Organized in easy to understand, bite size chapters that clearly explain the strategies, this book also includes charts and flow charts for ease of understanding. Each tip in this book includes a notation from the IRS tax code, showing exactly why it works - and how it's totally, 100 percent legal.

• Pocket thousands of extra dollars when buying and selling your primary home or investment property
• Use new mortgage and tax rules to your advantage
• Make targeted repairs and improvements on your home designed to boost tax deductions
• Protect and reduce your home's "tax basis" to maximize profit
• Make yourself bullet proof from any IRS audit

Did you know you can deduct PMI?
January 5, 2007
President Bush has signed a new tax legislation change that makes private mortgage insurance deductible for low and moderate income buyers who don't have the standard 20% downpayment necessary to purchase homes this year.

Home buyers who have annual household incomes of $100,000 or less, purchasing homes in 2007 will be able to get a low down payment mortgage and deduct the full cost of their mortgage insurance premiums on their federal tax returns. The deduction is set to expire at the end of 2007, unless Congress opts to extend it. This is in addition to the mortgage interest tax deduction they already take.

A recent National Association of Realtors® survey concluded there are more than 140,000 REALTORS® currently working in resort and second-home markets, and the numbers keep growing at a time when investment property and vacation homes make up a significant portion of the overall housing market, accounting for more than one-third of residential transactions.

Savvy buyers increasingly demand the expertise of a real estate professional with proven knowledge of resort and second-home market conditions, because 36 percent of second home purchases are more than 100 miles away from the buyer’s primary residence.

Sales of new homes are up, prices of used homes are starting to inch up again and the bloated inventory is starting to deflate, albeit very slowly. In a recent article in the Vineyard Gazette several friends of mine were interviewed for an article titled “Median Home Prices Fall on Vineyard as Real Estate Market Begins to Stall”. I find the title laughable as we have been stalled for quite some time and only within the last few months has activity begun to pickup again as we appear to have reached a floor in the market, shaky as it may be. The media continues to hype the housing bubble giving most buyers uncertain pause as they don’t want to be foolish and enter the market prematurely. Everyone is waiting for that magic sign from above that will say, “Start your engines”.

I think the important points are prices have finally come down slightly and the inventory is up despite the fact that those numbers are going to be confusing and will require thoughtful interpretation. The middle range that Ms Purdy is discussing has always been the softest area in the market, regardless of how strong or weak the market has been. I still maintain that this is an excellent time to buy if you’re prepared to be patient and negotiate strategically. If sellers believe nothing is going to happen for another 6 to 8 months, don’t you think they will be more receptive to negotiation than if they knew better days were only weeks away? More inventory means more competition and more choices for buyers, and that’s a good thing. Furthermore, if we accept the idea that potential buyers are going to rent until they are comfortable enough to purchase, this creates a strong opportunity now for anyone buying an income property. Normally I don’t recommend factoring income potential into financing a property. However, at this time it appears all signs point toward a very strong rental market for 2007. When clients ask me if I think they could rent the property they’re interested in I tell them, “You can rent a tool shed here for $600.00 a week”.

Another important point to make note of is home prices are not out of line comparing other areas on the Cape, the North Shore and South Boston area; it’s the wages that are out of line related to the cost of living on Martha’s Vineyard. If you compare the same jobs on-Island and off-Island, the wages are lower here and that’s driving a majority of the year-round labor force away. We’re returning to more of a second home and retirement market, the way we were back in the 1960’s.

Finally, if you are wondering about foreclosure opportunities, as Chris Wells said, the delinquency rate has not increased. A mortgagor usually has to be 90 days out before a bank considers starting a procedure. All our local banks are pleased to say they have nothing currently on their radar. I also look at foreclosure reports and the properties I see usually work out. Banks are very eager to do business and are introducing products to help prospective buyers. One such product regaining favor with buyers who cannot afford the average down payment is the PMI (Private Mortgage Insurance) mortgage. This will replace the ARM piggyback loans that were so popular when interest rates were historically low and stabile. Ask your banker.

(Click here to view >) Land Bank buys Aquinnah beach, Chilmark field

(Click here to view>) Mortgage applications hit one-year high

Today, resourceful Vineyarders are getting around the tightening restrictions if they're not allowed to legally create a functioning apartment or build a guest house, by finishing the area above a garage with what is loosely called a detached bedroom. It appears we’re ahead of the curve because (Click here to view >) The Apartment Atop the Garage Is Back in Vogue.

Click here to view > Luxury Real Estate Snapshot: Vermont

Electric heating costs went through the roof in the 80’s while ComElectric became one of the most profitable utility companies, according to the stock dividends they paid. Today with the price of fuel oil and natural gas at record highs, the price of electricity hasn’t seemed out of line, however, NStar has decided Rates will go up on Martha’s Vineyard, while they go down for Boston Edison customers.

Now that Thanksgiving, Black Friday and Cyber Monday are behind us and life goes on, we look ahead toward the winter holidays and the end of the year. But what about life for the unsuccessful real estate seller who’s been marketing their property for the past year, doing everything they can to entice buyers only to realize they aren’t moving as quickly to purchase real estate as they were a year ago.

On a historical basis, the fall real estate market has technically ended, so now the dilemma is what to do. Do you leave your property on the market hoping that the right buyer will come along during the winter months? Or do you remove it from the market in an attempt to erase its shop worn memory from the consumer’s mind and put it back on the market next spring as a “New Listing”?

I’ll admit the inventory is pretty fat right now. According to the Martha’s Vineyard Listing Information Network (LINK), there are about 500 homes and condos on the market, that’s up about 25% since this time last year. The Multiple Listing Service (MLS) Property Information Network puts the number of unsold condos and homes in Massachusetts at about 44,817. That’s a 15% increase over last year. The statistics go on to point out that only 19.5% of all properties sold in 2005 went under agreement from December through February 2006. The period between March and May was much stronger with 31.8% of properties going under agreement, but that’s always been the general scenario. Let’s face it, with all the holiday shopping, parties and winter vacation planning, who has time to think about trekking around looking at houses.

Since I’m an Exclusive Buyer Agent most seller agents will disagree with me. I believe a seller should leave their property on the market, because regardless of whether you are attracting a low-ball buyer or someone who really loves your home, a buyer is a buyer and by removing your property from the market you may miss that buyer. During a buyer’s market one of the first things a buyer wants to know is, “How long has the property been on the market?” Buyers have been trained to wait. Why? Because the longer a property has been on the market, the more opportunity there may be for negotiation. Buyers can find out how long a property has been on the market and how many price reductions there have been. I don’t believe leaving a property on the market during the winter months implies the seller is desperate. For gosh sake, why would a seller put their property on the market during a buyer’s market if they were not motivated. Trolling for buyers with over priced ego listings makes no sense in a market like this. I love the seller line, “We don’t have to sell.” Okay, but if I bring an offer, am I holding a gun to the seller’s head? The worst a seller can tell my buyer is no thank you. Or better yet, perhaps my offer could inspire a dialog and begin a creative negotiation process. Isn’t that better than hosting a lot of Looky Lou’s who you never hear another word from?

Here is my advice for the serious Martha’s Vineyard real estate home seller who will stay the course and keep their property on the market during the winter:

1) First and foremost, PRICE YOUR PROPERTY ACCURATELY. You can either be ahead of the curve or chase the market.

2) It is the holiday season so let your home reflect the holiday spirit.

3) Keep the interior light and bright. After all, the winter months tend to be grey and gloomy so lighten up.

4) One of the biggest hurtles for a prospective buyer to get over is envisioning interior spaces when each room is piled high with the seller’s prize possessions like the last 10 years of Field & Stream magazine, your Star Wars collection, or the 1200 piece collection of Depression Glass you’ve been collecting since you were first married. Hide the junk!

5) Keep your interior looking fresh and cheery with cut flowers, bowls of fruit --- anything that is remindful of the warmer weather to come.

6) No one will be able to see how nice your property looks with 12” of snow on the ground so keep a photo album available to show prospective buyers what your prize gardens and outside areas look like during the other three months of the year.

On Martha’s Vineyard, prior to transferring a property to a new owner, it is mandatory that an underground oil tank be replaced with an above ground storage tank, preferably installed in a basement, shed or garage. Massachusetts DEP and DPS do not require abandoned oil tanks to be replaced if they are not leaking.  However, Martha’s Vineyard local governments require that all abandoned oil tanks be removed.  The procedure begins by notifying the fuel oil provider who in turn contacts the local fire department for a Permit to remove an Underground Heating Oil Tank. 

About 15 years ago I represented the seller of a summer home close to the water. The home was heated with oil and there were two 275 gallon oil tanks in tandem above ground behind the house. The house was not occupied and they did not have a caretaker.  One day when I was about to show the property I smelled a strong odor. I discovered that one of the 275 gallon oil tanks had sprung a leak. If that wasn’t bad enough, as it was emptying it siphoned out the contents of the other 275 gallon oil tank. To make a long story somewhat shorter, I can tell you that it cost over $20,000 to remediate the effects of the oil spill. The insurance company would not cover one dime of the cleanup because the house was not occupied and there was no caretaker.  When I was investigating the cause and having new tanks installed, I learned that the fuel oil supplier had purchased inferior tanks from off shore sources. Because of inconsistencies in the wall thickness, the tank rusted through prematurely.  I think you will find the following article very interesting because if you heat with oil, aging oil tanks can pose costly risks.

SRRE Editorial: Boston Globe article on Vineyard modular home 'boom'
February 20, 2006
I read an article in the Real Estate Section of the New York Times back in January 1999 that peaked my interest in Modular Homes. It reported on the new wave of modular homes filtering in to some of the most affluent upscale communities in the Northeast. The article described an 8900sf 23-box modular home construction in Greenwich, Connecticut of all places. Another large modular home was being put together in Armonk, New York. Up to this point my understanding of modular homes was limited to what was called a "double-wide", those ugly little ranch houses that look like trailer conversions or two trailers tied together up on blocks. I was soon to learn this was no longer true. I went to visit one of the companies named in the article, Westchester Modular Homes in Patterson, New York. I inspected their model homes and spoke with a friendly factory representative. Westchester Modular Homes has their factory in Wingdale, New York, so I went over there and took a tour. The factory is like a huge football stadium and everything is done indoors in a controlled environment. It was amazing. Some of the other manufacturers interviewed for that New York Times article were Excel Homes in Liverpool, Pennsylvania, Homeworks Modular Homes in Ronkonkoma, New York, New Era Building Systems in Strattanville, Pennsylvania and New England Homes in Greenland, New Hampshire. I learned that when considering a modular home, it is the dozens of available upgrades that will drive up the price. The final finish work after the boxes are installed on your site is what defines the visual quality of the final product and we have many excellent finish carpenters on Martha's Vineyard who are real craftsmen.

Ever since my experience at Westchester Homes in 1999, I have been a great believer in modular home construction. My appreciation is partly due to seeing the level of quality, or lack of quality, produced during the 80's when anyone who could hold a hammer came to Martha's Vineyard to cash in on the boom. Unless you are fortunate enough to engage one of the top builders, many of whom are committed to projects 6 to 24 months in advance, you may be at the mercy of poorly managed construction crews that create inferior products with numerous inconsistencies. It has been my observation that quite often workers spend more time running back and forth for nails and coffee than time on the job, or they disappear for no apparent reason not to return for many days. Excavators, framers, masons, electricians and plumbers work in weather that even the seagulls would seek shelter from, but in many cases it is not their fault. Stick-built construction takes a lot more time and most clients want everything yesterday. If you are going to have your home stick-built, you have got to be patient.

Today we see more and more modular homes being constructed on Martha's Vineyard as the harbor and roads are choked by these monsters being maneuvered to their final resting place. I do not necessarily agree with some of the statements made in the following article published in the February 19, 2006 Real Estate Section of the Boston Globe, because I have been told by manufacturers that prices for stick-built and modular are about the same if you compare them apples-for-apples. I do not agree that the construction price on the Island starts at around $200 per square foot. We have not seen that number in a few years; it is more like $350 per square foot today and ranges up to $550 per square foot at the high end. However, the article is interesting, so I offer it for your edification. Home delivery - A boom in modular boxes is barging into the Martha's Vineyard real estate market.

New Year Brings Little Change in Mortgage Rates
Realty Times - January 4, 2006
Read the entire article here: Mortgage Rates for 2006.

Owning a piece of Martha's Vineyard real estate is not the easiest thing to do --- it is expensive. So, those who are passionate about being here occasionally look for collaborative ways of making a purchase. - Peter
Can Co-Owners Get a Break On Taxes When Uses Differ?
By Jane Hodges for MarketWatch - October 10, 2005
Question: My brother and I are thinking about purchasing a house in Martha's Vineyard, Mass. He would use it as a primary residence. I rent an apartment in New York. The house would be the only home I own, but I only would be there on weekends in the summer. We are considering setting up an LLC in our names. We both would take out a mortgage and would own the house 50/50. Would my mortgage be fully tax deductible as a primary residence? -- Nate, New York City
Get Jane's answer here.

Bubble? Froth? Fermenting opportunities for the Buyer!
by Peter Fyler, October 7, 2005

"That's right, I said it: Frothy!"

Even though this article focuses on the second home market in the northern NE states of Vermont and Maine, I believe it has relevance to our little Martha's Vineyard Island. - Peter
Real estate market foundation rests on second home boom
Boston.com July 30, 2005 Millions of people have had bad experiences with the Internet stock bubble. They began buying real estate as a safer investment, pushing second homeownership to unprecedented levels. A National Association of Realtors report found that 2.82 million homes sold last year were purchased as second homes for owners' vacations or as an investment. More than a third of all home sales in 2004 involved second homes.
Nowhere in the country is that emerging trend more profound than in the rural mountains of northern New England. Maine has the highest percentage of second homes in the country, followed by Vermont. The region's attraction is driven by the millions in metropolitan Boston and New York who can easily escape to the mountains, leaving behind careers and concerns about terrorism. They find much more affordable real estate that they can buy more easily by using equity they've built up in their primary home in the past decade or so.
Full article here.

Report Predicts Housing Price Decline for Coastal Areas
Realty Times Online August 1, 2005 The Economic and Real Estate Trends report recently released by PMI Group, identifies six housing markets as having a more than 50% chance of a housing price decline in the next two years. The top 10 states at risk of a housing price decline in the next two years, according to the PMI Group report, are: California, Minnesota, Michigan, New York, New Jersey, New Hampshire, Massachusetts, Rhode Island, Connecticut, and Maryland.
Full article here.

For $415,000, and going up, you get the key to a Vineyard oasis (Boston.com, 6/18/05)
There's no towel service, no cabana boy, and you'll have to bring your own sunscreen. But for $415,000, you, too, can spread out on what some say is one of the most exclusive beaches around.
Full article here.

Donald Cronig - thoroughly on the job

Inspector Gadget:
Donald Cronig Makes Realtors Quake in Boots
(MV Gazette.com, 6/17/05)
In the frenzied world known as the Vineyard real estate market where a dilapidated ranch house now fetches upwards of a half-million dollars, Donald Cronig plays the dispassionate role, free of emotion, hype and sales pitches. He is the home inspector, one of only two licensed inspectors on the Island and the guy some prospective homebuyers call for a dose of truth before they plunk down all their cash for a house on Martha's Vineyard. Full article here.

Peter's comment on the above article: "As a buyer, you should take comfort in knowing not only do you have SplitRock Real Estate as your Martha's Vineyard real estate advocate, you also have Beacon Home Inspections as the other half of your Island eyes and ears. I have known Donald Cronig for over 17 years and whenever possible I suggest to my buyers that they hire him for their Home Inspection. If you have read my Profile "About Peter", you know I had a bad experience with the first home I purchased. That's why I am super sensitive about this issue. I would rather lose the sale than have an unhappy client. It's been my experience to observe some seller's agents discomfort when they found out Donald Cronig was going to inspect their seller's property. Donald is thorough to a fault. Matter-of-fact, some agents have nicknamed him "The Deal Breaker" because if something stinks, he will smell it out. Mind you, nobody is perfect and he might miss something on occasion, but for my money there is no one better than Beacon Home Inspections."

Real Estate Sales Show Signs of Slowdown (MV Gazette.com, 6/3/05)
Real estate sales on Martha's Vineyard are falling against a backdrop of increasing inventory and rising transaction prices. For the first three months of the year, the number of residential, commercial and condominium sales on the Vineyard dropped 28% to 82, while listings in those categories rose 30% to 387, according to LINK, a real estate information business based in Vineyard Haven.
Full article here.

Modular homes shake off stigma, gain popularity (MV Times.com, 5/19/05)
While modular homes were once smallish, boxy, unoriginal structures, modern materials and engineering developments have made prefabricated homes a cost-effective option that is growing in popularity. A look at building projects across the Island shows modular homes going up from bustling Oak Bluffs to sparsely populated Chilmark, where dwellings are typically more expensive and often labeled "trophy houses." Some of the newest prefab projects are simple, modest designs, but others are sprawling homes on some of the Island's most coveted real estate.
Full article here.

Car Ferry coming from Long Island? (MV Gazette.com, 5/20/05)
Owners of a Montauk, N.Y., ferry company have launched a federal lawsuit that could open the way for car ferry and fast ferry service between Long Island and Martha's Vineyard.
Full article here.

Summer Rental Market Bounces Back (MV Gazette.com, 5/13/05)
After a long, cold winter, Vineyard property owners are getting some welcome news: people are still willing to pay thousands of dollars a week to rent homes on the Island in summer. Vineyard rental agents report that property owners have been able to ask for and get the same rents that they were charging last summer.
Full article here.

Idea of Housing Bank goes to Beacon Hill (MV Gazette.com, 5/13/05)
This week, the idea took a giant step closer to reality when Aquinnah became the sixth town to support the creation of a housing bank, modeled after the Martha's Vineyard Land Bank.
Full article here.

And in marine news, islanders mate... (CNN.com, 4/15/05)
Call her a wholphin -- the only whale-dolphin mix in captivity has given birth to a playful female calf, officials at Sea Life Park Hawaii said Thursday. The mother is a mix of a false killer whale and an Atlantic bottlenose dolphin, strange bedfellows indeed.
Full article here.

Fiscal pragmatism vs social idealism stirs Island Voters (MVGazette.com, 4/1/05)
No joke! In April, voters in four Vineyard towns take action on a proposal to adopt the state Community Preservation Act (CPA), which would fund affordable housing, historic preservation and open space projects through a property surtax and matching funds from the commonwealth.
Full article here.

Messy traffic situation in Tisbury may get relief (MVGazette.com, 3/24/05)
An innovative proposal to revitalize the upper State Road business district and relieve congestion along the main artery in Vineyard Haven was warmly received this week by residents, merchants and town officials. The new road system would cut across town-owned land between Edgartown-Vineyard Haven Road and State Road.
Full article here.

On that 'other' island, homeowner's cling to shoreline (Boston.com, 3/14/05)
Erosion is stripping away the cliffs along Nantucket's southeast coast and endangering pricey real estate there, a process hastened by winter's parade of battering storms. Residents seek to rebuild the beach by dredging 3 million cubic yards of sand from the ocean floor and pumping it onshore. The effort would be the most ambitious beach rebuilding in Massachusetts to date, eclipsing "beach-nourishment" efforts in Barnstable and Orleans, and the cost is $15 million, to be paid for with private money.
Full article here.

Tax Revolt in Edgartown! (Boston.com, 3/9/05)
Property values in this town of beachfront mansions and manicured summer escapes have been on a relentless ascent, and a recent revaluation that sent hundreds of assessments skyward has spurred what some declare a tax revolt.
Full article here.

Restaurants Closed, but Real Estate Keeps Humming (Gazette, 1/21/05)
A good article on the current island economy and how it appears to be busy, and although a mixed bag for some businesses, Martha's Vineyard real estate investment is very strong.
Full article here.

Whale found on South Beach

A large finback whale was found dead on Martha's Vineyard's south shore this week. Biologists are shown working to determine the cause of death. Local reports marveled at the sheer size of the animal --- more than 50 feet long. The last finback whale to wash ashore at Norton Point Beach was 16 years ago according to local recollection.

Valuations Go Up in All Towns (Gazette, 12/17/04)
A strong Martha's Vineyard real estate market sent property values across the Vineyard skyrocketing this year, as four Island towns saw total valuations rise by more than 25 per cent.
Full article here.

Vineyard Brokers Report Sales Up Across the Market (MV Gazette, October 1) With the turn of the season from summer to fall there are signs that the Vineyard real estate market has turned also, picking up the pace as it rounds the corner after a slow stretch. (Full Article here)

EXCITING NEWS for first time real estate home buyers on Martha's Vineyard
The six towns voted in their respective town meetings to raise the Martha's Vineyard Land Bank "m" exemption from $100,000.00 to $300,000.00. The revised "m" exemption will allow first time home buyers the opportunity to purchase real estate on Martha's Vineyard with the first $300,000.00 exempt from the 2% land bank fee.

The bill to enact the towns' votes is pending at the State Legislature. In the meantime, the Land Bank Commission has voted to permit first-time purchaser to avail themselves of the new threshold, via a revised lien.

Effective September 1, 2004, "m" exemption purchasers may claim a $300,000.00 exemption. Once the legislature approves the amendment, no further monies will be due. In the unlikely event that the legislature disapproves the amendment, the increment will become due, and the Land Bank will then seek to arrange payment plans.

"Home Owner Associations"
HOA's on Martha's Vineyard are becoming more common as communities establish their own identity and insulate themselves from neighboring communities. Annual dues can range from $100.00 to $750.00 and above. I think that some degree of control can be useful to protect our home investment, but the universal harmony of an association depends upon the level of knowledge and objectivity of the elected members. So, make sure that you are familiar with the contents of the Association docs if you are buying into a community that has a HOA. (Full Article)

Gangbusters real estate in September 2004
More than $65 million in Martha's Vineyard real estate changed hands in September of this year, double the comparable figure for September 2003. And the average price of a September 2004 transaction more than doubled as well. Article from MV Times here.

Quiddick the sea turtle rescued on Chappy
A 17-pound live green sea turtle found on Chappaquiddick more than a week ago is recovering at the New England Aquarium. The turtle, nicknamed Quiddick by a Vineyard veterinarian who first treated it, is the first endangered green turtle recovered live from the Vineyard. Article from MV Times here.

July extends the long real estate sales boom
For the third year in a row, real estate prices have jumped to record levels, spurred on by favorable mortgage rates and continued fascination with this tiny island just two and one half hours south of Boston. Article from MV Times here.

Big News on Martha's Vineyard Land Bank exemption levels (8/25/04)
The big news today is that the six towns voted in their respective town meetings to raise the Martha's Vineyard Land Bank "m" exemption from $100,000.00 to $300,000.00.

The revised "m" exemption will allow first time homebuyers the opportunity to purchase real estate on Martha's Vineyard with the first $300,000.00 exempt from the 2% land bank fee.

In my opinion, this is long overdue because, lets face it, what can you buy here for $100,000.00? In most cases, young people and first time homebuyers are hindered in their ability to purchase a home because of the added burden the 2% Land Bank fee imposes upon the transaction.

The bill to enact the towns' votes is pending at the State Legislature. In the meantime, the Land Bank Commission has voted to permit first-time purchaser to avail themselves of the new threshold, via a revised lien.

Effective September 1, 2004, "m" exemption purchasers may claim a $300,000.00 exemption. Once the legislature approves the amendment, no further monies will be due. In the unlikely event that the legislature disapproves the amendment, the increment will become due, and the Land Bank will then seek to arrange payment plans.

Martha's Vineyard Island Economy (Vineyard Gazette, 7/28/04)
Here is a recent article on the changing face of the Island economy written by Nis Kildegaard, the news editor of the Gazette.

Martha's Vineyard Land Bank Acquisition (Vineyard Gazette, 7/28/04)
If you have ever wondered what the Land Bank does with its share of the take (2% Fee) from property sales, here is their latest acquisition.