End of the Boom

So more evidence of the change in the Vineyard’s real estate market is emerging, with Island banks reporting brisk refinancing activity that brings good and bad news for banks, homeowners and our towns.

The worldwide financial overreach that hit crisis point last fall is making itself felt here. Many Islanders, startled by the fragile state of those global banks that had lured so many buyers to overextend themselves, are choosing to move their money closer to home; as a result business is strong at the Vineyard-owned banks. There’s renewed appreciation of the good sense of banking locally, of knowing who holds your money (and where). More than ever, people want bankers who understand the circumstances of Island life and who will be here to answer their customers’ questions, rather than dodging questions in Washington.

Keen to take advantage of the lower interest rates available, homeowners are asking those bankers about refinancing their mortgages. So business is booming for appraisers, then, but they are bearing stark tidings: Island property values are dropping, in some cases plummeting. It may not come as a surprise, but that makes the news of falling home values no easier to swallow, especially when it means that consumers cannot capitalize on the better bank terms available. A vast majority of Vineyard homeowners trying to refinance discovered their home is worth considerably less than a few years ago. It hurts to feel poorer, even if it’s only on paper.

In time, these homeowners will likely have the benefit of lower property tax bills. On the flip side, these latest bank reports now stand as a warning to towns that assessments, and town revenue from property taxes, will be shrinking. There will be little relief from hard choices about town spending any time soon, so creative and strategic thinking can’t come too soon.

Vineyarders have been riding on a real estate boom for decades. This true and possibly overdue correction is good news for anyone who can afford to buy, with prices becoming more attainable and more to choose from on the market. The Gazette’s front page news story today bears careful analysis for anyone considering how to plan for their financial future, at home or in our home towns.