Greetings and a happy belated New Year to one and all! As has become customary, we offer our annual installment of “The Year in Review” concerning Martha’s Vineyard Real Estate activities.
Despite the fairly pedestrian “spring market” and seasonal weather to start last season, Mother Nature did provide us with another terrific summer for all concerned. Let’s hope for another mild weather pattern to develop in early 2019 to help parlay the robust real estate activities of fall into the New Year!
The significant cadre of prospective buyers who have been biding their time since the market height in 2006, then endured the “great recession” and subsequent market recovery, have become more aware of the nuances associated with Island ownership. Many parties re-entered the market during the past four seasons to make their purchases, which has effectively contributed to an inventory supply issue on-island that reflects what is being experienced in many primary markets. And despite moderating lending rates, we are anticipating higher mortgage rates come later 2019, with continued demand that outpaces supply, especially within the sub-million dollar segments. Given the strong Q4 sales volume, we envision the New Year getting off to an early and strong start before the customary “spring market” arrives.
Here are some facts, observations, and opinions that may help you formulate your own point of view regarding the state of Martha’s Vineyard real estate.
Statistics Courtesy of LINK
- Nationwide sentiment toward real estate has substantively improved, especially among second home seekers in vacation/destination markets like Martha’s Vineyard, as investments made within these segments are for both lifestyle and financial purposes.
- Freddie & Fannie Loan limits have again been increased specifically for the Cape Cod & Islands region. The ‘mezzanine’ level found above the conventional limit of $417,000 now resides at an attractive $726,525 before “Jumbo” mortgages are required for lending need. This upward adjustment may affect eligible buyer’s purchasing power to help afford a wider range of properties on-Island.
- Reinforcing the good feeling is the surprisingly moderate and relatively favorable interest rate climate, which backed off significantly from the October rate highs. However, the trajectory of lending rates still appears to be heading upward with the continued policy guidance as expressed by the Federal Reserve Bank in the later part of the year.
- The National Association of Realtors’ chief economist Lawrence Yun cites home price increases are slowing from the recent 7% clip to a more moderate 3-4% in 2019. But tight inventory conditions remain an ongoing concern that will keep prices relatively elevated, but stable.
- Bloomberg News also reports that after a period of unrelenting price gains for most luxury markets in the US, this market segment has slowed during 2018. And while values have not fallen, the appreciation rate has slipped. How this dynamic may affect Martha’s Vineyard real estate remains to be seen in the coming months of the New Year.
- The 4th Quarter again realized significant volume of residential sales on-Island (140) exceeding Q1 (92), Q2 (113) and Q3 (107). Interestingly, our “Fall Market” has become stronger than the customary “Spring Market”. The total number of properties for sale has decreased significantly from the seasonal high of approximately 569 in late August to 399 at this writing. Yet with overall supply of inventory falling, prices can more readily increase. Therefore, this could be a cue for potential sellers to enter the market with new listings come spring, if not sooner. Please contact us to discuss the salability of your Island property.
- In 2018, residential sales on-Island were realized from all price segments totaling 452 units versus the 464 transacted in 2017. Median sales prices inched upwards by .60%, from $785,000 to $790,000, while average sales prices declined a touch by .63%, from $1,271,000 to $1,263,000 for the same period.
- Sales prices on-Island captured approximately 96% of their asking price, and now on average garnered 127% of their respective tax assessment.
- For the year, Island towns conveyed the following number of single family homes; Edgartown-148, Oak Bluffs-121, Vineyard Haven-75, West Tisbury-44, Chilmark-26, and Aquinnah-8
- The Island is a finite commodity having both geographic and economic barriers of entry that promote various price supports not typically found in many primary real estate markets. Scarcity, location, condition, and amenities continue to be key drivers toward establishing value and pricing.
- As desirable inventory is pared down, especially within the sub-million dollar segments, prices continued to adjust upward as a function of supply and demand. It is not surprising that within the improved market climate, the better priced, better conditioned properties are going under contract more quickly than their respective competition.
- Our successful 2018 clients, buyers and sellers alike, have these best practices in common: Identify your wants and needs, learn the market, develop reasonable expectations, perform your due diligence, and “be prepared to act”. This micro-market has returned to a more competitive and urgent dynamic.
We expect the increase in search activity to continue, especially from those who have long watched from the sidelines and now fear “missing out” in capturing their dream of Island ownership, or risk enduring higher finance costs to do so. But we also anticipate the potential in finding fewer properties becoming available as a result of the consistent level of acquisition during these past several years. The next several months will be telling with respect to determining the levels of inventory the spring market may hold.
As the economy continues to stabilize, the absorption rate for Island property will also continue to increase, resulting in upward trending sales price as supply further contracts. Lastly, with mortgage interest rates expected to rise, this factor may also provide some incentive for prospective buyers to act sooner rather than later. This factor will likely add to the competitive dynamic for real estate acquisition on-Island as well.
Certainly anything can happen during the year, of course, and the Island’s resilience as a discretionary market of desire will be tested. However, for those individuals who perform their due diligence, work with an experienced Realtor, and are ready to take action, it still remains an attractive time to be a Buyer of Martha’s Vineyard real estate!
If a purchase of an Island property is not in your future right now, there is still time to book your 2019 summer vacation rental. Our inventory continues to grow featuring homes that accommodate most every need and represent every corner of the Island. But availability for best properties and weeks are waning. Please contact us to assist you in creating your dream vacation!
Please also contact us to assist you in creating your dream vacation. Please also visit www.mvlandmarks.com to view a comprehensive list of all available Island listings for sale or vacation rental. And as always, do not hesitate to contact us with your questions concerning properties of interest, and Martha’s Vineyard real estate concerns in general.
Summer is coming to the Vineyard, might YOU be coming to your Island home???