Relieved Island bankers and real estate professionals see an 87 per cent increase in Island property sales in the first quarter of 2010 as a solid sign of recovery.
Moreover, bankers and real estate brokers believe the longer-term market will be defined by slow, steady increases and prices close to current values, replacing the unrelenting demand and huge home price increases in the decade prior to the 2008 housing meltdown.
LINK, the Island’s multiple listing service and data source, provided data for the three-month period ending March 31 compared with the same three months in 2009. The numbers show that:
- 92 Island properties (residential, land, and commercial) sold in the three months, compared with 50 in first-quarter 2009.
- Seventy-three homes sold, compared with 39 in the 2009 period.
- The inventory of 430 unsold residences is down more than 17 per cent from prior year.
- The inventory of all properties for sale is up nine per cent from the first quarter of 2009 but the 617 total (residences, land, and commercial) on March 31 was well down from the record 857 properties for sale in October of 2008 when the national real estate market crumbled.
- The price of a single-family Island home was $615,000, about 8.5 per cent higher than a year ago in the first quarter.
According to LINK statistics, median home prices were affected by several multi-million-dollar sales above the market average and by about 10 foreclosure sales, which reduced the overall price increases.
Median home price and the price change from 2009 by community are: Vineyard Haven ($461,875, no change), Oak Bluffs ($490,000, up 46 per cent), West Tisbury ($571,250, up one percent), Edgartown ($807,000, down 13 percent). Aquinnah ($1,525,000, up 12 per cent, based on a small sample) and Chilmark ($1,934,000, down 17 per cent, also based on a small sample).
Pricing right is key
LINK’s Eleanor Wilson said last week, however, that an accurate measure of home selling prices is their relationship to assessed value. “Look at the numbers on properties that sold. Overall for the quarter, sale prices tracked with assessed value,” she said.
Over the three-month period, residential selling prices were equal to 99.2 per cent of assessed value of the homes, LINK data showed.
The average Vineyard home has been on the market for 269 days, according to LINK. Analysis of home sales data in the first quarter shows that the 11 houses on the market for less than 100 days sold at an average five percent discount from the asking price. In comparison, only three of the 17 homes on the market for more than a year sold at a five per cent discount. The remaining 14 homes sold at an average 17 per cent discount.
Real estate sales professionals say the most dependable sign of continued improvement is realistic alignment of asking and selling prices.
“We believe activity has increased because values have not. I have no crystal ball but if you look at the numbers, it’s pretty evident the number of sales is up substantially but our gross dollars are down, despite some skewing from a few high dollar sales,” Shari Purdy, owner of Sandpiper Realty in Edgartown, said.
“Buyers are feeling that values have adjusted to where they are comfortable. The game has changed. The rules have changed, No longer can sellers put property on the market at a price they want and hope a buyer will come along. We have to price appropriately so the buyer sees inherent value. With the amount of properties for sale, pricing has to be appropriate. They don’t have to be rock bottom, but value must be substantiated,” she added.
Alan Schweikert, owner of Ocean Park Realty, also pointed to realistic pricing as a new marketplace reality. “I’ll give you an example. Just recently, we sold a water view property in move-in condition. It was priced comparably with other properties with fewer advantages, such as water view, and some fix-up needs. It sold because it represented a better value,” he said.
“Without doubt the market is better than 2009 and 2008. We are getting sales but grinding them out. Sellers are taking offers. There is less demand and prices have been coming down a bit. Inventory is still as high as I’ve ever seen it.”
“Honestly, I don’t think there are more buyers. We’re fortunate here to have a large base of affluent clients,” Ms. Purdy, said. “There are some distressed sellers, but not at the 1980s level when the papers had pages of foreclosure notices.”
From the bankers’ vantage point
The three Island banks report healthy loan portfolios. On-Island banks have initiated fewer than a handful of nearly a dozen foreclosures on Island properties. That’s because, bankers said, of consistent practices of lending to qualified buyers based on current values.
“We’re doing it the same way we’ve always done it,” Brad Egan, executive vice president at Martha’s Vineyard Savings Bank, said this week. Mr.Egan and Paul J. Watts, senior vice president and senior commercial loan officer at Edgartown National Bank, said their homespun mortgage practices, including holding mortgages themselves, have helped customers during a difficult Vineyard economic winter.
“It’s been a tough winter. A lot of customers were struggling, but we were in a position to be flexible because we had few problems (with mortgage portfolios),” Mr. Watts said.
Banks said they are lending and see more interest in new mortgages rather than mortgage refinancing that dominated 2009.
“Buyers are taking their time but the 30-year, five per cent fixed mortgage is the most popular product,” Jeanne Ogden, senior vice president at Bank of Martha’s Vineyard, said.
Lenders and brokers this week embraced the idea of slow, steady market growth.
“I’m not sure I want to see a market like we had five years ago. It was distorted, people got greedy. I hope we’ll see solid, steady growth,” Mr. Schweikert said.