Martha’s Vineyard Real Estate Market News

MARTHA'S VINEYARD 2012 REAL ESTATE MARKET REVIEW

The real estate market on Martha’s Vineyard rallied from 2011 to 2012 with the number of properties sold increasing 27% to 507, total dollar volume increasing 32% to $487mm, and average sales price gaining 4% to $946,000.  The real estate market on the island, like across most of the country, has been sluggish since being hit by the recession in 2008. After a modest recovery on the Vineyard in 2010 followed by another downturn in 2011, the 2012 real estate market shows significant signs of health with dollar volume at its highest level since 2007 and total transactions at a level higher than we’ve seen since 2005. However, the buyers were welcomed back in 2012 with recession-adjusted pricing that only rose 4% (average sales price) compared to 2011, remaining well below the prices from the peak 2005-2007 levels. The modest increase in price coupled with the fact that the peak inventory level in 2012 was down 9% from the peak in 2011, signals that the buyer’s market of the past four years may be starting to shift.

While the above statistics include all transactions and are island wide, individual towns and market segments performed somewhat differently in 2012. 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.

Up-Island

Chilmark was the big winner in 2012 due to the town’s 96% increase in the number of transactions, from 28 in 2011 to 55 in 2012, and 40% increase in dollar volume, with enough high end sales to keep the average price relatively flat at $1.56mm. It is important to note that the average Days On Market for the properties that sold in Chilmark in 2012 was 472 days, much longer than the island-wide average of 302 days, which paints a clear picture of the stagnation in Chilmark in 2011. It seems Chilmark sellers held out in 2011 for higher offers but decided to negotiate in 2012 to move their inventory. 

All island towns saw an increased quantity of transactions and dollar volume in 2012 except for Aquinnah which experienced a slight downturn in the number of transactions from 14 in 2011 to 12 in 2012 and dollar volume which fell just $1.5mm from $108.5mm in 2011 to $107mm in 2012. Average price in Aquinnah was up 15% to $893,000. Historically many up-island buyers move to Aquinnah to get more for their money so Aquinnah may have been adversely affected by the gains of the Chilmark market in 2012. The adjusted Chilmark pricing made the market more competitive for Aquinnah which could have caused this slight dip for Aquinnah in 2012.

West Tisbury had a modest 8% gain in the number of transactions from 48 in 2011 to 52 in 2012, but the real story is the 42% jump in dollar volume (from $43mm in 2011 to $60mm in 2012) and 31% jump in average price (from $887,000 in 2011 to $1.16mm in 2012). 2012 saw the return of a strong mid-market in West Tisbury with 20 sales in the $1.0-2.5mm range, a segment of the market which was lagging in the recent past. 

Overall up-island, the combined number of sales (houses and land) in West Tisbury, Chilmark and Aquinnah rose from 91 in 2011 to 119 in 2012 (a 31% increase) and total dollar volume was up 37% from $115mm in 2011 to $157mm in 2012. Average price rose slightly, from $1,331,812 in 2011 to $1,369,230 in 2012 (a 2.8% increase) while median price rose from $664,628 in 2011 to $850,000 in 2012 (a 27.9% increase).

Down-Island

The combined down-island towns of Vineyard Haven, Edgartown and Oak Bluffs saw healthy increases in total dollar volume and numbers of sales in 2012. For Edgartown this translated into a 15% higher average sales price of $1.25mm; however, even though Vineyard Haven and Oak Bluffs’ had significantly more transactions in 2012, they were properties selling at lower prices and therefore Vineyard Haven and Oak Bluffs saw average sales prices decrease 14-15% to $588,100 and $486,500 respectively.

In Edgartown specifically, the number of transactions grew 42% from 114 in 2011 to 162 in 2012 and total dollar volume increased 62% from $125mm in ‘11 to $205mm in ’12. Vineyard Haven experienced 40% growth in the number of transactions (from 72 in 2011 to 101 in 2012) and had a 20% increase in total dollar volume (from $49mm in 2011 to $59mm in 2012). Total number of transactions in Oak Bluffs increased 32% (from 95 in 2011 to 125 in 2012) and dollar volume was up 12% (from $54mm in 2011 to $61mm in 2012).

Entry Level Sales

It continued to get easier to enter the Martha’s Vineyard real estate market in 2012. There were 385 sales under $1mm in 2012, more than in any year since 2005. Unfortunately, increasing foreclosure sales played a role in this scenario: there were 58 foreclosure sales in 2012 compared to 39 in 2011, a 48% increase. The foreclosure sales in 2012 accounted for 15% of the total sales under $1mm. Looking at specific towns, Aquinnah had no foreclosure sales, Chilmark had 1, Edgartown had 12, Oak Bluffs had 22, Vineyard Haven had 20 and West Tisbury had 3.

We have been following sales of homes under $1mm in Chilmark which is  a small but significant number that had been climbing the past few years but in 2012 it declined to 7 (from 9 in 2011, 6 in 2010 and 4 in 2009).

High-End Sales

One segment of the market to see more activity in 2012 was a portion of the high-end ranging from $3-7mm.  The number of sales in this range had slowed in 2011 to 22 and picked up again in 2012 with 36 sales. This was an encouraging sign for sellers in this segment of the market which was hard hit in 2009.  Looking at all sales over 3 million, the total number of high end transactions increased to 41 in 2012 from 32 in 2011; however, in both years, this segment of the market represented 8% of the total number of transactions (see our chart below for more details).  Therefore, the high-end segment held its share of the market and grew proportionally with the rest of the market in 2012.

Commercial Transactions

There were 20 commercial transactions in 2012, up from 15 in 2011, 14 in 2010 and 10 and 2009. The average price of a commercial transaction was $1,840,000 in the years 2005-2008. Average price declined in 2009 and 2010 until the low in 2011 of $749,000. However, 2012 saw in increase in average price to $975,000. The median price of a commercial transaction was $767,000 in the years 2005-2008 and also had declined each following year until the median price hit the low in 2011 of $500,000. 2012 showed median price jump up to $762,500. Commercial real estate is also affected by the economic conditions and seems to be rebounding in line with the residential market.

Conclusion

Nationwide, the total number of housing sales in 2012 rose to its highest level in five years (NY Times, 1/23/13.) Although Martha’s Vineyard is a sought after destination with a limited number of properties, we are inextricably connected to the world around us and have felt the impact of the national economic situation over the past four years. As the country’s economy slowly recovers, we see the positive effects on the island’s real estate market. 2012 was a solid year that pulled us up from the dismal performance of the Martha's Vineyard real estate market in 2011.

Although inventory is starting to decline and activity is picking up, these trends are tempered by prices that remain well below the highs of 2005-2007.  These adjusted prices continue to offer value for buyers while sellers can take encouragement from the increase in sales activity and the lowered inventory.

What will 2013 look like? Will a continued reduction in inventory affect prices and the number of transactions on Martha's Vineyard in 2013? How will other national and world events affect our local economy?  The New York Times observes that, nationwide, "most economists say that home sales are improving steadily and that the gains should continue this year." They write that "stable hiring, record-low mortgage rates and a tight supply of homes available for sale have helped increase sales and prices in most markets." (1/23/13).  Housing economist Robert J. Shiller  has sounded a cautionary note, pointing out that "most experts are not predicting any big change in home prices" but rather "forecasting modest increases for the next half-decade, implying inflation-adjusted price growth of 1 to 2 percent a year."  He distinguishes modest growth from the speculative housing boom that the nation experienced from 1997 to 2006 and writes that "while we can't rule out another boom....I wouldn't put any money on that."  (NYTimes, 1/25/13).

We at Tea Lane  look to 2013 with enthusiasm.  We are hopeful that our 2012 activity level can be sustained, but also believe that the pace of this upturn in the Vineyard market will likely be slow and gradual. We are cautiously optimistic about the year ahead for buyers and sellers alike.

_{Source: LINK and www.masslandrecords.com}