Greetings once again from Martha's Vineyard, and a Happy New Year to one and all! It is now time for the annual installment of "The Year in Review" concerning Martha's Vineyard real estate.
It is always surprising to us that with so few people on the Island, the winter months are one of the busiest times of the year for our real estate industry, and most especially when Mother Nature provides a respite from her winter wrath to encourage property visits!
After enduring nearly five years of a tumultuous economy and an ever evolving real estate market, you can imagine that anyone with any sort of interest in all things Martha's Vineyard is asking us what may lay in store for Island real estate in 2012. Perhaps the more appropriate question to pose... is this a revision to the new normal? Here are some facts, observations, and comments that may help you to formulate your own opinion with respect to Martha's Vineyard real estate.
- 2011 saw several areas of the Vineyard real estate market stabilize and some even marginally improve, while others still remain in transtition. The 4th Quarter realized the largest volume of home sales (97) compared to the prior three quarters with the typical second-quarter "spring market" yielding a notable second place with 79 units sold. And yet, the total number of properties for sale has remained relativley constant (750-800 units) going on three years now. This number is still more than double the levels formally considered as "normal". With supply exceeding consumption, days on market are elongated, and average selling prices have modestly decreased by approximately 11% from 2010. Our median and average home sale prices have adjusted from $615,000 to $555,000 and from $1,054,000 to $939,000 year-end 2011 over year-end 2010 respectively.
- Notably, these successful home sales have on average achieved nearly 94% of their asking price and captured almost 98% of their respective tax assessment. And while there are exceptions and every property is subject, since late 2010 we have continued to observe a strong correlation between a property's tax assessment and the actual selling price.
- For the year, a total of 319 homes were sold among the Island towns: Oak Bluffs-98, Edgartown-97, Vineyard Haven-63, West Tisbury-39, Chilmark-13, Aquinnah-9.
- Over the four year span since the height of the market, as recognized in 2007, the average price of transacted homes on-Island have decreased by $490,000 or 34%. This change in pricing strongly refelcts the downward correction that many primary housing markets have also experienced. However, the difference is that most primary markets experienced this adjustment within an approximate two year period, while it took nearly five years to equally affect Island transaction values. This lag time is largely due to the seasonality and second home factors that our market is susceptible.
- Many industry commentators, including most recently Jamie Dimon, the CEO of JP Morgan Chase, the country's largest residential mortgage lender, have suggested that the housing market's bottom is in, and that local market improvement has taken hold and a general turnaround in the national real estate market may begin as soon as late summer 2012. Based upon the 4th Quarter transaction activity on-Island, there is reason for guarded optimism that signs of improvement are already underway much as they are in other like-kind, seasonal destination, vacation, resort, micro-markets. This behavior should continue into the new year especially if interest rates remain near historic lows, pricing continues to refelct relative values, and consumer confidence strengthens.
- The Corcoran Consulting Group recently published an article stating that a record setting 40% of all property transactions nationwide during 2011 were of a vacation/second home qualification. They cited from their research that breadth of inventory, availability of cheap money, opportune timing, and peak earning potential of the buying demographic as significant factors lending to this robust activity.
- Real estate is a cyclical business and all real estate is local. The Island's consistent sales volume, coupled with relative price stability suggests that we too are in the early stages of recovery. The Island is after all, a finite commodity having both geographic and economic barriers to enrty that promote differing forms of price support not typically found in many primary real estate markets.
- Clearly, there is a tremendous amount of interest and pent-up demand to own property on the Vineyard. This was most recently demonstrated by the heightened level of property visits made with pro-active Buyers and closed sales within the 4th Quarter, but also found in the amount of web traffic and inquiry we received.
- Everyone likes a deal, and realistically deals can be had given the degree of correction realized within our micro-market, which incidentally now largely refects on-Island home prices of the 2002-2003 era.
- Choice is vast, and opportunity abounds. And not surprisingly, the better priced, better conditioned properties are going under contract more quickly than their competition.
- The operative themes that many of our clients (both Buyer & Seller) repeatedly have voiced after successfully completing transactions with our assistance were; be prepared, perform your due dilligence, and develop reasonable expectations in advance.
It is our expectation that 2012 will feature yet another reasonably active real estate market on Martha's Vineyard with again some select areas realizing modest improvement in transaction volume and selling prices as the new year progresses. Anything can happen of course, as it so often does, and the Island's resilience will be tested one more time. However, for those individuals who perform their due dilligence, work with an experienced Realtor, can see past the fear, doubt, and uncertainty of current economic conditions, it continues to be a great time to be a Buyer of Martha's Vineyard real estate.
Please visit www.mvlandmarks.com to view a comprehensive list of all available Island listings. If you would enjoy having immediate, free, real time access to our ever evolving island inventory, please let me know. And as always, do not hesitate to contact me with your questions and curiosities concerning those properties of interest and Martha’s Vineyard real estate issues in general.
If, however, a purchase of Island property is not in your future right now, this is a terrific time to book your summer vacation rental for 2012. Our inventory continues to grow featuring homes that accommodate most every need, and represent every corner of the Island. Our experienced rental agents are readily available to assist you toward finding the perfect vacation home. Please contact us to assist you with creating your dream vacation.
Attached for your reference are the 2011 year-end, island-wide market statistics from LINK, the Island’s MLS.