LANDMARKS REAL ESTATE of MARTHA'S VINEYARD
2021 Q3 Market Commentary
Sean D. Federowicz, M.B.A.
Broker, Owner, Realtor
Happy Fall to one and all. We hope that each of you are remaining healthy and safe during these unprecedented times.
Summer came to the Island and brought many eager patrons back to enjoy the wholesome, ample spaces and outdoor lifestyle. It was a much-appreciated respite from last year's lock-downs and muted seasonal activities due to the various Covid restrictions. And there were a lot of families gathering to enjoy each other's company, who were unable to convene the previous summer. By most accounts, everyone enjoyed themselves fully too!
One of the most surprising results from the past three months was the continued surge in demand to find and consume almost any form of a residential haven from Covid. This variable has persisted since the arrival of the virus and has further contributed to the lack of housing supply and the escalation in pricing. Since more owners are holding onto their properties longer for their personal use rather than selling into a frenetic market, seasonal inventory did not increase as we migrated into the summer months.
Beginning the new year, the local inventory was already working from a deficit. The annual consumption of residential property has far outpaced the replenishment rate during the past seven years. And being an Island, we are finite in the amount of land that can be developed as it is. Our channels of inventory re-stock primarily come from life events such as death, divorce, and family economics. And the practice of “flipping”, or moving up, are not typical drivers that create more stock within a discretionary market, especially as most purchases on Martha's Vineyard are made from a ‘lifestyle and legacy” perspective.
Clearly, there are ongoing geo-political and macro-economic issues in the world, and health and safety have become paramount considerations for families these days. We have frequently heard the term "re-designing one’s life" during these tumultuous Covid times. “If my kids and I can work and school remotely via Zoom, our home can be anywhere we desire!” And with increased purchasing power that is made available through persistently low mortgage rates, many of the prospective buyers we have represented this summer are making the decision to invest in and migrate to Martha’s Vineyard for a healthier and arguably safer environment for their families.
While inventory on-Island exists across the full market spectrum, no segment has been ignored during this wave of recent purchase activity. Not surprisingly, the most economical segments have experienced the greatest levels of consumption. But for buyers, as limited supply persists, it will only become more problematic to acquire property as heightened competition coupled with low inventory will preserve elevated prices for the foreseeable future. And this, unfortunately, is not a condition that is likely to resolve itself in the short term. In fact, we have not experienced the volume of late summer listings often activated to participate in the customary, albeit, "truncated fall market". Time will tell if this was an anomaly this year, or maybe a harbinger of a lean "spring market" to come in 2022.
For sellers, the momentum has certainly swung in their favor given the existing low inventory condition. However, that should not embolden them to command outrageous prices at resale either. Mortgage rates are still historically low and "smart money" is still seeking purchase loans. However, lenders learned their lessons well from the last recession and have become highly vigilant with respect to appraisal and credit risk issues associated with transaction prices.
The exuberant excesses we recall from the last housing bubble are not present today, nor are the same contributing factors. However, location, amenities, condition and market segment will continue to be significant pricing variables affecting the consideration and urgency to transact real estate on-Island.
Please consider the following;
- Year-to-date 359 residential properties have sold on Martha’s Vineyard, which is down 1.4% from the 364 sold for the same period in 2020.
- Q3 alone has conveyed 113 residential properties, which is also down 36% from the 176 sold in 2020 for the same period.
- However, year-over-year median home sale prices have increased 6% from $1,295,000 to $1,375,000 with average home sales prices also increasing 16% from $1,757,000 to $2,034,000 for the period.
- On average, year to date home sales on-Island have transacted at approximately 97.4% of their asking price while realizing almost 152.5% of their tax assessment! This correlation suggests that property sale prices are exceeding the respective tax assessed values more broadly throughout our micro-market, and reflect the greater scarcity of available properties.
Third Quarter sales statistics courtesy of LINK