Martha’s Vineyard Real Estate Market News

Martha's Vineyard Real Estate Market Update is a service offererd by Tea Lane Associates. Tea Lane Associates updates Martha's Vineyard real estate sales transactions on a weekly basis and posts quarterly reports and charts for your review including all homes and land sales on the island. Please let us know if you have any questions or would like more detailed analysis for properties in a specific town or price range. We have much more information to share with you on the Martha's Vineyard Real Estate market.

Barron's reports uptrend is firmly in place for vacation homes.

Barron’s Online reported in March 2011 that the bottom of the market for expensive second homes hit “just about a year ago” and that “though the rebound has been lumpy, the general uptrend looks to be firmly in place”. Barron’s ranked Martha’s Vineyard #5 in their pick of the 15 best places in the U.S. for second homes, based on beauty, comfort, convenience, a range of lifestyles and, the “paramount criterion”, value.

Martha’s Vineyard 2010 Real Estate Market Review

The real estate market on Martha’s Vineyard grew in 2010 from 2009 with the number of properties sold and the average price rising 29% and 10% respectively. Total dollar volume increased 43% from 2009 to 2010. This was welcome news for both buyers and sellers. Buyers took advantage of prices which remained well below 2005-2007 levels and the number of transactions increased. This Vineyard news is consistent with a nationwide trend reported in a recent Wall Street Journal article "Market for Vacation Homes Is on the Rise" (January 10, 2011).

The jury is still out on this mild recovery however. We believe that a realistic prediction for the coming year is continued slow growth in the island real estate market, building on the gains of 2010 but not recovering to the levels of 2005-2007. Should the national/international economy falter, even the gains of 2010 may not be sustainable.

While the above statistics include all transactions and are island wide, individual towns and market segments performed somewhat differently in 2010. Martha’s Vineyard is an island with six towns, each with its own character and specific market conditions. Within each town, there are different niches as well…waterfront, water view, high-end, mid-range, entry level and commercial properties. Because each of these market segments can be, on its own, very small, generalizing trends or making broad statements is difficult.

2010 gains were demonstrated by an increased number of sales up-island. The combined number of sales (houses and land) in West Tisbury, Chilmark and Aquinnah rose from 61 in 2009 to 91 in 2010, an increase of 49%. Average price in the three towns combined rose from $1,189,000 in 2009 to $1,363,000 in 2010, a 15% increase. Median price rose from $735,000 in 2009 to $846,000 in 2010, also a 15% increase. Looking at individual towns: average and median prices rose in both Chilmark and Aquinnah, and average price dropped slightly in West Tisbury while the median price rose slightly.

Down-island also saw an increased number of sales (single family, multi-family, condos and land) although the overall rate was lower than up-island…a 15% increase in 2010 over 2009. Breaking this down by town: Tisbury (Vineyard Haven) sales rose 72% from 57 in 2009 to 98 in 2010, Edgartown sales rose 32% from 108 in 2009 to 143 in 2010, and Oak Bluffs sales were flat from 81 in 2009 to 82 in 2010.

All market segments declined over the past three years when compared to the heights of 2005-2007. This includes the high-end (over $5mm) which dropped 51% in volume (from a total of 49 sales in 2005-2007 to a total of 24 sales in 2008-2010) and almost 20% in average price from the three years of 2005-2007 versus 2008-2010. This decline in price and volume resulted in a 65% drop in the total dollar volume of this segment over this same period. Waterfront did not provide protection from the downturn since many of the sales $5mm or over were desirable waterfront properties.

Entering the Martha’s Vineyard real estate market became easier in 2010. There were more sales under $1mm in 2010 than in any year since 2005. Looking at this lower end of the market between 2008-2010, there were 13 Chilmark home sales under a million with an average price of $711,000 compared to eight sales with an average price of $882,500 between 2005-2007.

Foreclosures most likely played a role in pushing down prices in the lower end of the market. Foreclosures were rare on Martha’s Vineyard prior to 2008 but from 2008 – 2010, we estimate there were 59 foreclosures* and an undetermined number of other properties taken over by banks. Almost all of these properties were under $1mm. This segment’s decline was hard on sellers but represented an opportunity for buyers who began to take advantage of these lower prices in 2010.

There were 10 commercial sales island-wide in 2009 and 14 in 2010. The average price of a commercial transaction was $1,840,000 in the years 2005-2008. This declined to $843,000 in 2009 and 2010. The median price of a commercial transaction was $767,000 in the years 2005-2008 and this declined to $625,000 in 2009 and 2010. Clearly, commercial real estate was also affected by the economic downturn. Feel free to call us for a more in-depth analysis.

Martha’s Vineyard is an island in location only. As a sought after destination with a limited number of properties, the market has, in the past, bounced back more quickly than many other real estate markets. However, we are inextricably connected to the world around us. The modest improvement of the Vineyard will continue if the national economy continues to grow. If the broad economy falters, the Vineyard will have difficulty sustaining its recent recovery.

* Note: estimate based on deed transfers reported by Massachusetts Land Records where the seller is a bank or mortgage lender.

Source: LINK and  www.masslandrecords.com Dukes County division

Martha's Vineyard Real Estate Transactions - Average Price in Blue & Total Volume (000) in Green by Year

Number of Transactions (green) and Property Inventory (orange) by Year

Charts include all arms-length residential, commercial and land transactions; does not include time shares or partial purchases. Note: 2006 numbers do not include the $42million hotel sale that occurred in December 2006.

The number of properties sold each year on the Vineyard has declined almost continuously since 2000 but rising prices offset this decline, resulting in an increase in the total dollar volume, during most of this period until 2008. Since 2008, the lower number of sales and lower prices resulted in a large drop in the total dollar volume, falling 50% from 2005 to 2009. Prices and activity picked up in 2010 producing a more than 43% increase in total dollar volume this year.  (source: LINK)

Note:  for "Inventory of Properties for Sale", year-end inventory total was used.

In 2010, there were more sales under $1mm than in any year since 2005, an indication of buyers taking advantage of the lower prices. The number of sales over $1mm also increased from 2009, most of this increase being in the $1-3mm range. The very high end (over $10mm) remained slow. (source: LINK)

Martha’s Vineyard real estate outperformed the stock market indices during the last decade. Vineyard prices rose 136% and 117% from the ten-year lows in 2000 and 2002 to the peak in 2007. Stocks only rose 23% and 65% from 2000 and 2002 to 2007. Since 2007, Vineyard prices fell 34% to the lows of 2009 while stocks fell 23% during the same period. Overall, from 2000 to 2010, Vineyard real estate rose 71% while stock prices showed a negligible 1% return during the same period.

BUYERS DILEMMA IN A BUYERS MARKET

Weak real estate markets can wreak havoc on sellers as they wrestle with proper pricing during an economic downturn.   Ironically, buyers struggle too but in a different way.  Falling prices are usually accompanied by rising inventory as seen on Martha's Vineyard by the 36% increase in average number of listings from the three year periods of 2005-2007 to 2008-2010.  Price declines and a surge in inventory create opportunities but may also create indecision as buyers struggle to navigate the new terrain cluttered with excess and often mispriced inventory.  Additionally, an increase in inventory does not necessarily mean an increase in the particular type of property you are looking for...certain properties are rare.

"How do I recognize real value with all the inventory to choose from?" "Is it the right time to buy or should I wait?" "I've seen many properties but not the RIGHT property."  We hear these comments often. There are excellent opportunities for buyers in the current Martha's Vineyard real estate market.  We are highly skilled at helping buyers discover different part of the island and assessing the current trends to identify the best values in this complicated secondary home market.

FOR SELLERS IN A BUYERS MARKET

As simple as it sounds, correctly setting the asking price for your home is the key factor to success in this market.  Currently active buyers are looking for real value and they usually have a number of properties to choose from.  The properties that are selling are typically the best values in their price range, area, and/or category.  Put yourself in the buyer’s shoes and look at the different offerings in your market segment.  Assessing the properties you need to compete against is essential to understanding the pricing of your property based on real market data.  While a few "special" properties are unique enough to command a slight premium, most buyers in this marketplace are value driven and premiums are few and far between.

In 2010 we saw the number of properties sold on Martha's Vineyard rise when compared to 2009.  While this is encouraging it is still a very challenging market.  The overall number of homes sold last year is still dramatically down from pre-2005 numbers.  In addition to fewer sales transactions, the inventory of homes on the market for sale has risen 36% over the past few years. This has naturally caused a rise in the average "days-on-market" for almost all properties.  With less demand coupled with more properties to compete against, the importance of correctly pricing your property in the current market is essential.

In addition to price there are many other important considerations when preparing your property for sale in a complex and challenging market.  Whenever possible you should try to answer any and all questions about engineering, zoning, permitting, and/or other issues in advance.  This might also include the cost of potential renovations to bring your property up to the market standard of your competition.  As one of the most experienced and successful real estate firms on Martha’s Vineyard, Tea Lane Associates has a full time staff of knowledgeable agents and brokers that can help you navigate this market and achieve your goal.

Tea Lane Associates 2010 Year-End Highlights:

- Tea Lane Associates' sales represent 42% of total dollar volume of all up-island sales.

- Tea Lane Associates' sales represent 13% of total dollar volume of island-wide sales.

- We sold property in every town on the island.

- Properties Tea Lane sold ranged from $475,000 to $7,750,000 ($7,750,000 was the highest sale up-island in 2010).