Archive for the 'Marthas Vineyard' category

Memorial Day weekend is nearly here, if you are planning a trip to Martha's Vineyard  check out Travel and Leisure's Definitive Guide to Martha's Vineyard.   Click here to read the full article.

Fred was Quoted in Econoplay today:  (click on link for free trial)

By Gary Rosenberger

Existing Home Sales
Realtors: Boom Times Are Back as Demand Outruns Supply and   Prices Accelerate
 

•            It’s Hard to Recall a Rebound So Rapid

•           Sellers Wait in Wings But Buyers Are Waiting  As Well

•           (homes) Sat Two Years Ago Now Sell in Days

     “I would say the recovery has been dramatic from last year to this year,” said Fred Roven, owner of Martha’s Vineyard Buyer Agents in Massachusetts. “Inventory is tight, which makes it difficult to be a buyer’s agent. I’m seeing many instances of multiple offers and sellers are
adamant about their listing price.”
 
     Most...properties....in the $500,000 range, (are) about $60,000 over prior year. Also,days on the market are down from 360 days last year to 265 days in the first quarter –with properties currently under contract at just 222 days.

     “That is just astounding,” Roven said. If there are lots of sellers waiting in the wings when prices go even higher, no big deal. “The buyers are ready for them.”
 
     Also, if you’re looking to rent a vacation home on the Vineyard this summer, it’s probably too late. “All the best stuff was gone by February,” he said.


 

The American desire to own a second home as a vacation home is alive and well!

The National Association of Realtors analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes in the U.S. Their 2013 Investment and Vacation Home Buyers Survey shows vacation home sales improved in 2012.

NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales:

"We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw."

Investment purchases of residential real estate remained elevated for a second consecutive year, according to the National Association of Realtors (NAR) 2013 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2012.

NAR Chief Economist Lawrence Yun noted an ongoing investor presence:

"Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals. With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years."

You can find the key findings from the report at 2013 Investment and Vacation Home Buyers Survey

 

It's All a Write-offf!

By Rich Vetstein on Mar 30, 2013 03:27 am
 

One of my favorite Seinfeld episodes is the one where Kramer tries to explain to Jerry how tax write-offs work. “It’s all a write-off!” exclaims Kramer who, not surprisingly, had no idea what he was talking about. I’ve embedded the Youtube video below.

With the April 15 tax deadline quickly approaching, let’s talk about some of the taxes, deductions, and “write-offs” arising out of a Massachusetts residential real estate purchase and sale. (Disclaimer: I am neither a CPA nor tax attorney, so consult your own tax professional for specific questions).

Real Estate Property Taxes

Every Massachusetts municipality levies a real estate property tax on residential property. Indeed, the real estate tax is the primary revenue producer for most towns with a limited commercial tax base. The real estate tax rate is set by the local board of assessors and is keyed to the assessed value of your land and home, which is often less than the true market value.

Real estate taxes are generally tax deductible if you itemize your deductions on IRS Form 1040, Schedule A. At closing, the closing attorney will ensure that all real estate taxes are paid up and allocated between buyer and seller as of the closing date. If the end of the fiscal quarter is approaching, most lenders will require that the buyer pay the upcoming real estate tax bill in advance.

Most lenders these days require an escrow account for the payment of real estate taxes, and the mortgage company will actually send the payment to the assessor. However, the homeowner should check the actual property tax bill to calculate the exact amount of real estate taxes paid for the year.

Rich’s Advice: It’s very important to keep a copy of your HUD-1 Settlement Statement on file (and for your tax preparer). Also, get a copy of your loan amortization schedule for reasons I’ll discuss later.

Mortgage Interest Tax Deduction

The mortgage interest tax deduction is typically the largest tax deduction taken by a typical homeowner. The deduction applies to interest paid on a qualifying mortgage for both a principal residence and a second home. It also applies to home equity lines and second mortgages subject to some limitation, discussed below.

If you paid any points for getting a mortgage, they may also be tax deductible, either the year paid or over the life of the loan. This applies to both purchase loans and refinances. (Check your HUD-1 Settlement Statement). The same is true for PMI — mortgage insurance premiums. They remain tax deductible for 2012 and 2013 thanks to the Fiscal Cliff Bill.

Cash out refinances and equity lines have some special rules. If you use the money for a car, a vacation, college tuition, etc., then you can deduct your interest on loan amounts up to $100,000. If you borrow more than $100,000, the interest on the excess is not deductible. However, if you use the money to make improvements on your home, then the money is treated for tax purposes as though it’s part of your home mortgage … so you can deduct all the interest, along with your mortgage interest, as long as the total amount you’ve borrowed doesn’t exceed $1 million plus $100,000.

Consult IRS Publication 936 for more information on the mortgage interest deduction.

Rich’s Advice: At closing, I advise new buyers to speak to their accountant about whether they should recalculate their W-4 withholdings in light of their new mortgage and corresponding tax deductions. This is where that loan amortization schedule comes in very handy. New buyers often have substantially more tax deductions than before becoming homeowners, and thus, they can adjust their withholdings so they can keep more of their take home pay every week, instead of giving Uncle Sam an interest free loan!

Massachusetts Property Transfer Tax

Sometimes called deed stamps, transfer tax or excise tax, Massachusetts home sellers must pay a tax on selling their property. For every Massachusetts county except Barnstable and the Islands, the tax is $4.56 per thousand of the purchase price on the deed. So for a $500,000 sale, that’s a whopping $2,280 tax bill. There is considerable debate among tax professionals as to whether this tax is deductible on your federal and state return. It’s best to consult your tax preparer.

Capital Gains On Sale

If you sell your home for more than you paid for it, you have a capital gain, and in theory you have to pay capital gains tax. However, in most cases, you don’t have to pay taxes on the first $500,000 of capital gain on a home (or $250,000 if you’re married and filing separately). To get this special treatment, you have to have owned the home and lived in it as your primary residence for two years out of the last five years prior to the sale. Even if you didn’t own and live in the home for two full years, you might still be able to exclude some or all of your capital gain; you just won’t be eligible for the full $500,000 exception.

Other Closing Costs

Unfortunately, most of the typical real estate closing costs are not tax deductible. This includes lender origination fees, credit report, flood certification, homeowner’s insurance, appraisals, attorney fees, title abstract, title insurance, county recording fees, and real estate commissions.

__________________________________________

I was struck the last few weeks with the amount of financial press coverage of the growth of real estate markets in general and most particularly the luxury real estate market around the world.
Global consultancy firm Knight Frank has just released its new Wealth Report, listing the top 20 most expensive luxury real estate markets in the world. FirstPost went on to report "...demand for luxury property was returning following the global financial crisis and a desire to invest in locations considered to be safe havens."
The search for "safe havens" is understandable but at what price. With Monaco ending 2012 at an average cost per square foot of $5,500; Hong Kong-$5,000/SF; Geneva-$3,000/SF and Shanghai at $2,000/SF Martha’s Vineyard seems like a virtual bargain. The average price of all waterview properties the past 12 months was $1,000/SF and all luxury Martha’s Vineyard sales the past 12 months averaged out at $4,500 per square foot.
You have probably noticed I am more than a bit partial to Martha’s Vineyard yet for ease of access, breathtaking panoramas and the easy pace of life, Martha’s Vineyard luxury real estate seems like the wise choice for anyone on either side of the Atlantic or Pacific.
Currently US luxury real estate markets are being held in check by low appraisal values. eWallstreeter and The New York Times report ” Even though sales are picking up, appraisals for many luxury properties are reflecting depressed values because many comparable deals occurred when houses were still selling at rock-bottom prices.” With borrowing rates low, even cash-rich buyers are likely to finance part of their purchase, thereby prompting an appraisal by the lender. A low appraisal is more likely a result of an appraiser’s ignorance about a market than of scarce comparable sales.
As this scenario changes I would expect to see homes in the luxury market will begin their rise in value just as we are seeing with the market in general. Read more about market values at Appraising High-End Homes

Butler's Cove, Edgartown, Martha's Vineyard

I came across an interesting article on life123.com written by Irene Lynn that would be very helpful for anyone considering buying a vacation home in a beach community like Martha's Vineyard

.  Some of the topics covered:

• Evaluating the location
• Renting your beach vacation home
• The pros of owning a beach vacation home
• The cons of owning a beach vacation home
• Should you rent your beach vacation home?

Entire article is at Choosing Your Dream Beach Vacation Home

Every day I am receiving news of the real estate market nationwide, particularly about the second home and luxury vacation homes, our specialty.  Many of the national news is focused on Case-Shiller and returnng to normal.

As part of an appraisal process, I had the opportunity to look into the value of an average sale compared to sales of waterview and waterfront sales. The slides this month show outstanding examples of those current listings. I was quite surprised by what I discovered. All sales in 2012 show an average price of $490. per SF of house size. Waterview and waterfront properties were at $921. For those of you who must see the statistics and review my findings, I have posted them at

Water Value Report

Econoplay newsletter interviews me regularly regarding current market conditions and this month's interview fits right in with the current subject.

1. How is 2013 looking so far, and what are your expectations for the spring market and 2013 as a whole?

2012 ended with a real flurry particularly in high end of market. The total number of closings the past 90 days compared to a year ago is flat but average and median prices (after removing foreclosures) are both up to $1,485,246 and $902,000 respectively. Some of that can be attributed to an unusually high number for very high end sales (but not a bad thing!) With a fast paced winter business compared to many years and many appointments already scheduled for the next 6 months, I have high expectations of a strong 2013.

2. Did you see any hiccups from that fiscal cliff debate or any other form of government dysfunction or are people just tuning out all that noise?

There seemed to be a slight hiccup in December for some small segment of the market but high end properties that had been stalled for years in some cases sold the end of 2012 and beginning of 2013.

3. What are you seeing in terms of home prices? How fast or slow are they rising, if at all? Home prices are up significantly from an unexpected dip and recovery in 2011. The number of sales climbed from 2008 on while average price dropped 25%. Although 2012 average price is up 9% over 2011. I expect an average increase of 4-5% getting us back to 2005 prices in 4 or 5 years

4. What's selling and what isn't these days? Is the high end still slow?

High end seems particularly active. In the last 90 days we have had sales and sales contracts on 12 properties priced over $2.5M that had an average DOM of 580. Definitely some significant movement compared to several years back.

5. Who are your customers? Move-up? Empty nesters? Investors? First timers? All of the above?

The large number of First timers we saw during a time of many foreclosures is dwindling. Many investor and second home buyers seem to be actively returning to the market. By actively, I mean being very pro-active, advising us of new found intention, making multiple winter trips to a summer community from around the globe to buy this year after sitting on the sidelines the past 5 years.

Real Estate on Martha's Vineyard is following a nationwide pattern.

Posted: 04 Feb 2013 04:00 AM PST

Courtesy of the Vineyard Gazette: by Sara Brown,Thursday, January 31, 2013