A summertime boom in the Martha’s Vineyard real estate market, fueled by the pandemic, has accelerated into an unprecedented fall frenzy, shattering records on sale price and volume as the market’s fragile bottom disappears and limited inventory evaporates.
According to data provided by LINK, the Island’s primary real estate listing service that aggregates 100 per cent of arms-length transactions, Martha’s Vineyard reported 175 sales Islandwide during the third quarter of 2020, with a median sales price of $1.3 million and a total sales volume of $308 million.
All three numbers represent historic highs for a single quarter, each up at least nine per cent from previous records, with the overall increase in sales volume representing a 20 per cent increase from a high set in the fourth quarter of 2016. The $1.3 million median selling price broke the market’s own $1.2 million record, set just months ago in the second quarter of 2020.
The all-time records for price and volume come on the heels of a strong summer that also vaulted home and land sale prices upwards. And it arrives at what is traditionally a slow time of year for the market, as would-be summer buyers normally head back home and the new year rush remains months off. “There’s a bit of a frenzy,” said Chilmark-based broker Russell Maloney. “It looks like people are wanting to find a safe place to escape to. That’s what I sense is going on.” The most recent 90 days have been even more active than the third quarter in 2020, which includes July, August and September. More than 220 properties have sold since August 25 and roughly another 120 have come under contract. Longtime Island brokers said the numbers are unprecedented, creating unmatched market conditions on both sides of the transactions.
“Right now, it’s a great time to be a seller, whatever your reason is. And it’s a very difficult time to be a buyer,” Mr. Maloney said. “Nobody wants to participate in a frenzy. But people are.”
Overall, 2020 has already proven to be a gangbuster year for the Vineyard’s normally robust real estate market. According to transaction numbers provided by register of deeds Paulo D’Oliveira, the Island has recorded 646 sales in the year, up 32 per cent from the 491 recorded in 2019. Total sales value has reached $888 million, up 37 per cent from 2019 and already topping previous records. And both median and average sale price have increased as well, to $885,000 and $1.38 million respectively.
But what began as a hot start in January and February and then got completely derailed when the pandemic hit in March and April, has recovered with a vengeance over the summer and now snowballed into an unparalleled fall.
Vineyard Haven broker Doug Reece, who has worked in the industry for more than 20 years, said in the past three months he has never seen the quantity or speed of sales that have occurred on the Island. Up-Island broker Jim Feiner agreed. Almost all brokers contacted by the Gazette described phones starting to ring off the hook around June and not stopping since. Homes that have been on the market for a long time — like a $10 million waterfront Chappaquiddick property that had been listed for the better part of a decade — have abruptly come under agreement. Average time on the market has decreased dramatically, from nearly one year to less than half that, and turn-key homes have become so desirable that they often disappear from the market within days.
“As soon as these properties come on, they get sold,” said LINK owner Debra Taylor, describing certain move-in ready properties. “There’s unprecedented demand. And what’s interesting, is that there’s been demand for homes before. But that doesn’t necessarily mean that they’re going to buy and close right away. There’s such an immediacy to this market, with cash buyers who want to close and move within 30 days. Immediacy. That’s the best word I can think of.”
Brokers described jet-setters from Boston, New York, Connecticut and New Jersey — the bedrock of the Island’s market — who will fly to the Island in order to view listings, and offers will be made within days, or even hours. A higher proportion of sales are in cash than ever before. And a few who have declined to travel have decided to purchase anyway, buying properties sight-unseen or after viewing only video tours of a home.
The rushed and frantic pace of demand, brokers said, is being driven mainly by the pandemic, as well as factors like low interest rates and a dramatic increase in the wealth of the Boston area, which Ms. Taylor said has added more than 1,000 luxury condominiums in the past three years. Any letup, they said, would come from the market itself.
“During the summer, we were just at the start of what I would call the Covid real estate market. And it’s continued,” Mr. Reece said. “The only thing holding the real estate industry back from breaking even more records, is more inventory.”
Mr. Feiner agreed. “There’s a multiplier in terms of 5 to 1 in terms of buyers,” he said. “As a result, just look at our inventory. Our inventory has gotten crushed.”
As sales volumes have reached record highs, inventory has all but dried up, even as demand continues unabated. Land prices and sales have also increased, with the lack of inventory driving buyers to snatch up buildable lots instead. It has also prompted some longtime Vineyarders to cash out, selling their homes while the market is hot.
“I’ve had two people make offers on three different properties at the same time,” Mr. Feiner said. “We had a property that we were going to list at $875,000. We got three offers in one day. And it sold for $950,000. That’s not something we do every day. It was a wake-up call.”
The lack of inventory has also hollowed out the already perilous bottom end of the Vineyard’s real estate market. Most brokers, Ms. Taylor, and executive director of Island Housing Trust, Philippe Jordi, agreed that it is now almost impossible to purchase anything livable for less than $600,000, and that anything under $1 million disappears fast.
According to data from LINK, approximately 40 per cent of single-family homes sold in 2011 went for under $500,000. That number is now two per cent. Sales between $0 and $750,000 made up 70 per cent of the market in 2011. They now make up just 20 per cent of the market.
Now sales for properties between $750,000 and $2 million have ballooned, accounting now for about 60 per cent of the market, with more than 30 per cent between $1 and $2 million. In 2011, homes in that price range accounted for only 20 per cent of the market.
As of Nov. 24, LINK listed only four homes under $600,000. Two of them, located on Dukes County avenue in Oak Bluffs, are Dickensian tear-downs. Only one is above 1,000 square feet.
“It’s going in the wrong direction,” Mr. Jordi said. “Unlike the last recession — or past recessions, where things have, slightly, corrected themselves — in this case it’s totally aggravating the situation because there’s so much more demand as people flee urban areas. It’s really going to mean that there is a lot less opportunity. Not that there was much opportunity.”
Brokers also expressed concerns about the availability of inventory and affordable housing. Knowing that real estate markets often behave cyclically, many said they expected to see a downturn in 2020 after more than eight strong years in the aftermath of the 2008-2010 recession. But the pandemic put rocket boosters on the market, and like everyone else, they don’t know where it’s going. They just know it is happening fast.
“Let me get out my crystal ball. Oh yes, it’s still foggy,” Mr. Reece said. “We thought we might see a leveling of the market this year, and it’s broken all records. I’d be shocked if it continues. But I’m presently shocked with what’s going on.”
