At Large : Real estate sales slump persists
Real estate numbers for the first nine months of 2011 aren't bad, at least not compared with home sales in some of the more calamitous sections of the country — California, Nevada, Florida, Michigan, to name a few. For sure, there is nothing to cheer about, but when the median price of a house is $570,000 and the average is $891,000, one can hardly say that the bottom has dropped out of the market.
Unhappily, one must say that the number of properties for sale, nearly 800, remains historically high, about twice as high, as has been common when the market was perking along briskly before the Great Recession.
And, also unhappily, by every familiar metric — value, volume, price — the market sagged further in the first three quarters of this year, compared with the same period a year ago. House sales volume fell 12.6 percent year over year for the nine-month period. The aggregate value of houses sold during the comparable periods in 2010 and 2011 dropped 26.3 percent, and the median and average prices of houses sold fell 7.23 percent and 15.6 percent respectively.
Taking into account land sales and commercial property deals, the numbers warm up, but only slightly. Total volume of transactions in 2011 then runs at just 9.4 percent off the 2010 pace. The value of sales is off 19.7 percent, and the declines in median and average prices drop to 5.6 percent and 11.34 percent respectively.
Two things that suggest that change for the better may be dimly visible have to do with the relationship between sales prices and assessed values and between asking prices and sales prices. Taking all three real estate classes together, sales occurred at 98 percent of assessed value and 94 percent of asking prices. The suggestion in these numbers is that sellers who don't want to wait to make a deal are prepared to reduce the premium they hoped for to make that deal happen.
Of course, assessors in the six Island towns, like the sellers in the market, would like to enjoy the splendid value premiums that we dined on during the good years, when assessors struggled to keep up with the appreciation in real estate. Town real estate values, whittled annually over the last three years by the harsh realities of the market, have hurt municipal revenues, wounding in turn town budgets and the payrolls and benefits, infrastructure maintenance and improvement, and services for taxpayers. It would be a bold municipal budgeteer who would forecast a rise in assessed values over which to spread a hike in town spending.
The other possibility is that the stubbornly high inventory of property for sale may represent a substantial number of sellers in name only, that is sellers who won't really act like serious sellers until the market comes to them. This segment includes property owners who have no real need to sell and whose spectacular properties will command an astonishing price when the global economy climbs out of the mire, and sellers whose properties are the least attractive to buyers now in the market and may remain so after the market perks up. In other words, the persistently high inventory may exert only a marginal affect on sales prices, compared with the health of the economies in those regions — Washington, New York, Boston — from which most seasonal and many year-round buyers have traditionally emerged.
On a related note, it's not only the sellers and the brokers who are suffering in this relentlessly withering real estate market market. The damage has spread liberally through the Vineyard economy, harming every segment — town governments, banks, builders, landscapers, retailers, and on and on. Every segment and almost every individual or family feels the contraction, as less activity in this important economic sector takes the pruning shears to business and family budgets.
Ironically, casting an eye over the Vineyard's economic landscape, one is inclined to conclude that the one sector to be in is the Steamship Authority sector. Now, there's a recession-proof business. As of mid-October this year, Steamship Authority business activity — auto, passenger and truck traffic on SSA vessels — had declined in each category, 1.4 percent for passengers, two tenths of a percent for autos, and one percent for freight. But, despite the decline in volume, the SSA's pricing power has resulted in revenue growth of 5.2 percent for passengers, 1.6 percent for autos, and 2.9 percent for freight.
Wouldn't it be nice to have a lifeline like the SSA does in times like this — for Island families, businesses, social services, and town governments?