As 2021 nears an end, the frenzied, record-shattering Martha’s Vineyard real estate market shows few signs of slowing, with prices in the stratosphere across every sector and inventory at its lowest ebb in recent memory.
The trends are confounding even seasoned analysts and professionals who have closely observed the boom-and-bust cycles of the market for decades.
Available data for real estate sales through November show that the Vineyard has already broken last year’s record-breaking numbers. According to reports compiled by LINK, the Island’s multiple listing service, 610 properties (homes, land and commercial) had changed hands with a total value of $1.15 billion through November. That eclipsed last year’s number of 607 properties sold, with a combined value of $917.7 million for the same time period. (The Island ended 2020 with a total sales volume of $1.09 billion.) As of the end of November, the average sale price of a single-family home on the Vineyard was just over $2 million, while the median price was $1.2 million. Last year, the average price for single family homes was $1.5 million, while the median was $1 million. Homes are now selling for 156 per cent of assessed value and 97 per cent of asking price, according to LINK reports.
In phone interviews this week with the two leading executives at LINK, the head of the Martha’s Vineyard Land Bank and brokers, one word surfaced repeatedly.
“The key word is unprecedented — no other word fits the situation,” land bank executive director James Lengyel said. The land bank, which buys conservation properties using a two per cent fee collected on most real estate transactions, is on track to collect nearly $25 million for the calendar year, breaking last year’s record of around $21 million.
“The market is still very energized,” Mr. Lengyel said. “There are plenty of high-end sales, and plenty of middle range sales as well. They show great energy . . . but who can predict what will happen. We are not making any projections.”
Deb Blair, LINK president, echoed the theme.
“It’s just so unprecedented,” she said. “We thought maybe 2020 would be an off-the-charts anomaly [due to Covid], and then we would see normalization. That has not materialized.”
She zeroed in on inventory, that is, the number of properties currently on the market, as a key data point.
“Inventory is at all time low,” Ms. Blair said. As of Tuesday this week, 80 single family residential properties were listed for sale with LINK.
Eleanor Wilson, client services manager for LINK on the Island, said the real number is lower than that.
“If you throw out the high and low, you’ve got 60 that are saleable,” Ms. Wilson said.
Ms. Blair described what is termed negative inventory: when the number of buyers and price ranges exceed what’s available for sale.
“It’s one thing to have low inventory, but negative I classify as a situation where the number of buyers exceeds by more than 10 per cent what is available for sale,” she explained. She continued:
“What that means in real life is that real estate agents are literally calling homeowners asking them if they would like to sell, because they have buyers.” Among other things she said the trend throws a monkey wrench into days-on-market as a data point, with some properties changing hands that were never on the market in the first place.
“Here is what the brokers are saying: there’s no inventory, many [buyers] are priced out,” she said. “It’s impossible to find anything, in Edgartown for example, that’s livable for under $1 million that doesn’t need to be torn down or substantially rehabbed. We are approaching the getting-in price of a $1 million in some parts of the Island. When more than half of sales are over $1 million, then we are in the million-dollar market.”
The cost of land is following a similar upward trajectory, Ms. Blair said.
“The other major trend we are seeing is developers snapping up the under-$1 million homes, taking the house down, and putting up a new home. Those are getting listed for $3 million,” she added.
In sum, she said the economics of the market have changed. “It’s no longer, ‘I’m moving to the Vineyard I want to buy a house to live in,’” Ms. Blair said. “You have a new buyer, highly capitalized investors or stakeholders . . . and then the properties are turned into expensive summer rentals.”
Ms. Wilson said the current conditions raise a red flag about where things are headed for a key sector of the Island economy.
“Real estate has always driven this economy; there are a lot of people who make good money in the real estate industry between rentals and sales,”
Ms. Wilson said. “I don’t know what people will do if the market shrinks to the point where sales are high but there are not enough to go around . . . this is the long-term indication of this selloff right now.”
As of this month, there were 436 people on the Vineyard with active real estate licenses, according to the Massachusetts Board of Registration of Real Estate Brokers and Salespersons (there are two classes of license: broker and salesperson).
Ms. Wilson listed her top three takeaways on what’s driving the Vineyard market:
“One: people perceive that real estate on Martha’s Vineyard or Nantucket or any resort is probably a better investment than the stock market right now, if you’re willing to wait on it.
“Two: I think the pandemic has opened up the eyes of people to how different life can be, [i.e.] I can work from home . . . maybe not every day, but two to three days . . . and having more space is really, really important now.
“Three: look at property taxes — compared with Lexington or a similar town . . . the Vineyard is still cheap.”
“I don’t view it as a second home [place] anymore. I view it as two primary homes . . . I think a lot of people are [buying] for a lot of different reasons. I don’t think any one is the sum total. I think there are lot of reasons we stayed on this heavy-buy track. And it so goes beyond what’s being sold and what’s being listed . . . . it’s a shift from summer investment to year-round housing.”
Island brokers who spoke with Gazette echoed similar themes, noting that the frenzied pace of sales and low inventory have disrupted many of the typical patterns.
Lesley Heidt of Sandpiper Realty in Edgartown said the sustained head of steam in the market came as something of a surprise. “I think the low inventory made us hesitant to think it would be as strong as it was,” she said. “It’s a strange market.”
Ms. Heidt said the breathtaking pace of the market has kept brokers hopping. “Whether you were on the listing end or the buying end — you need to be right on it,” she said.
The lack of inventory has posed major hurdles, brokers said.
“It’s very tough to be competitive in this market,” Ms. Heidt said.
As for the buyers, Ms. Heidt said she has seen more families who don’t have a long history with the Vineyard looking to buy homes.
“They’re new Vineyard people,” she said. “They’re not necessarily people who have been renting for the past 15 years.”
Shelley Christiansen, a broker with Donnelly & Co., spoke too about shifting patterns. She said in the past a motivated buyer could visit the Vineyard over the winter with five or six houses lined up to see.
“Nowadays if you can find one that fits their criteria, you’re doing well,” Ms. Christiansen said.
She also said people looking to move to the Vineyard full time pale in comparison to those looking for what she called “secondary primary homes,” or places that are used for frequent getaways and long stays intermittently throughout the year.
She said she’s also seen more buyers looking for investment properties. “People coming together in groups in investment teams to buy up properties,” she said. “Things that they can, say, rent out and get income for a while.”
Heading into the winter and the new year, Ms. Christiansen said everything is uncertain. “Right now it’s hard to know what to expect. It’s going to depend on inventory, I think,” she said. “I think overall we’ll be looking at a quiet winter . . . I think people will just sort of bide their time.”
Ms. Wilson offered her own description of the market.
“Unprecedented, but unsustainable,” she said.
Aidan Pollard contributed reporting.