LANDMARKS REAL ESTATE
2013 Year In Review
Sean D. Federowicz, M.B.A.
Owner, Broker, Realtor
Greetings and a belated Happy New Year to one and all. The year end numbers are now in allowing us to offer for your consideration our annual installment of "The Year in Review" concerning Martha's Vineyard real estate.
2013 proved to be the long awaited pivotal year for Island real estate activity and reflected a noticeably improved market. Mother Nature did her best to provide us with another terrific summer season of dry and seasonably warm months for our patrons to fully enjoy the usual and customary activities and events too.
Here are some facts, observations, and opinions that may help you to formulate your own point of view with respect to Martha's Vineyard real estate.
- Overall, sentiment toward real estate by the consumer as cited by the National Association of Realtors (NAR), Zillow, and even Case-Schiller, has finally regained a favorable tone. This perspective has especially resonated with strength among second home seekers in vacation/destination markets like Martha's Vineyard, as investments often made in these market segments are for both financial and emotional purposes.
- The 4th Quarter again realized a significant volume of residential sales on-Island (121) exceeding Q1(63), Q2(99) and continuing the strength of Q3(125). Of note is the inventory of properties for sale which has decreased significantly from the seasonal high of approximatley 820 in August to 623 at this writing. Yet, with supply still exceeding consumption, days on market continues to be lengthy but is dissipating more quickly. Total residential sales improved modestly by 2% closing the year with 408 units. The median sales price on-Island increased from $595,000 to $632,450 while average prices essentially remained flat from $1,046,039 to $1,041,549 year-end 2013 over year-end 2012 respectively.
- Notably, successful residential sales on-Island were found across all price segments inclusive of the high-value niche, averaging an approximate 94% of their asking price, but capturing 110% of their respective tax assessment. This is a break in correlation between the tax assessed value and transacted value which largely held true for the past few years. And while there are exceptions, and every property is subject to location, condition, uniqueness and scarcity, this new ratio substantively suggests that a market recovery may finally be underway on Martha's Vineyard.
- Since the height of the market in 2006, recovery had been slow to evlove on-Island. However, 2013 demonstrated the most consistent ground swell of activity toward the acquisition of Martha's Vineyard real estate in years.
- For the year, Island towns transacted the following number of properties; Edgartown-136, Oak Bluffs-96, Vineyard Haven-72, West Tisbury-48, Chilmark-23, Aquinnah-7.
- Many industry commentators continue to espouse that widespread local market improvement has taken hold and is now providing a return to positive equity for homeowners in both primary and other niche markets alike. Last year, Core Logic forecasted a 6% increase in national sale prices for 2013. According to NAR, sales in fact increased by nearly double that projection to close up 11.3% for the year! The Vineyard enjoyed similar price improvement, and NAR expects this positive trend to continue in 2014.
- Based upon the consistent level of closed transactions on-Island during 2013, there is good reason for market optimism. This sentiment is expected to continue especially as consumer confidence strengthens, home prices firm and continue to reflect relative fair market value. But perhaps most importanly, the risk of borrowing cost increases resulting from the reported economic recovery and Federal Reserve monetary policy action will now prod prospective buyers to act sooner rather than later.
- For perspective, at year-end 2012 the 30 year fixed rate mortgage averaged 3.52%. A year later, Freddie Mac reported that the 30 year rates averaged just under 4.5%. Many economists are now predicting that interest rates will likely rise to 5% or higher later in 2014.
- Real estate is a cyclical business and all real estate is local. The Island's consistent sales volume coupled with the notable increase in sale prices suggests that we too are on the proper road toward "normalcy". The Island is after all, a finite commodity having both geographic and economic barriers to entry that promote differing forms of price support not typically found in many primary real estate markets.
- There still is a tremendous amount of interest and demand to own property on the Vineyard as was demonstrated in the recent sales statistics. Opportunity and choice still exists. But as desireable inventory is pared down, prices will continue to adjust upward; it's simple economics and the function of supply and demand. Therefore, it is not surprising that the better priced, better conditioned properties are continuing to go under contract more quickly than their respective competition.
- The operative themes that many of our clients (both Buyer & Seller) have voiced repeatedly after successfully completing transactions with our assistance were; identify your wants and needs, learn the market, develop reasonable expectations, perform your due diligence, and be prepared to act.
It is our expectation that 2014 will continue to feature an improving real estate market on Martha's Vineyard. We expect an increase in search activity to occur, especially from those who have long watched from the side-lines, as confidence further develops to re-enter the market. The absorption rate of current inventory will increase along with sales prices as a result of the improving economy and contracting inventory. Increased borrowing costs as interest rates rise will offer risk to the consumer, but the improved attitude toward Island real estate as an investment will add to the improving market dynamic.
Certainly anything can happen during the course of a year, of course, and the Island's resilience as a discretionary market of dersire will be tested yet again. However, for those individuals who perform their due dilligence, work with an experienced Realtor, and are ready to take action, it still remains a great time to be a Buyer of Martha's Vineyard real estate!
If a purchase of Island property is not in your future right now, there is still time to book your 2014 summer vacation rental, but time is running out! Our inventory continues to grow featuring homes that accommodate most every need and represent every corner of the Island. Please contact us to assist you with creating your dream vacation. Our experienced rental agents are readily available to assist you in finding the perfect vacation home!