Vineyard property sales and transfers reached unprecedented heights in December and many of the sales were high-end properties, according to people involved with Island real estate. The high sales also resulted in an unexpected uptick in Martha’s Vineyard Land Bank revenues which are dependent on real estate sales.
“We handled the largest number of December real estate closings in 2012 since I have been in business,” said real estate attorney Richard Dubin who has been in the business for more than 20 years. “December is often a relatively slow month. January is normally one of our big months.”
He said that the transactions, both arm’s length and within families. were sparked by concerns of anticipated changes in the tax laws in 2013 that overshadowed the usual moves to put off year-end tax payments with January transactions. Mr. Dubin is a senior partner of Dubin and Reardon, real estate attorneys with offices on the mainland and on the Vineyard.
Mr. Dubin said the expected rise in the capital gains tax rates when tax cuts enacted by the Bush administration were due to expire at the end of 2012 was the primary motivation for the December activity. He said he noticed a number of buyers making short offers on large properties to take advantage of the situation.
Capital gains tax rates vary with income. The recent tax deal struck in the waning minutes of the 2012 Congress raised the capital gains tax 5 percent from 15 percent to 20 percent for those with annual incomes of $400,000 or more, according to the New York Times.
An increase in real estate transactions on the Vineyard means more work for the Registry of Deeds in Edgartown. Dianne Powers, Dukes County register of deeds said, “Our office was so busy right up until December 31. Our excise stamps were through the roof, through the roof.” The excise stamps are a state sales tax on most real estate sales of $4.56 per thousand dollars. She said they normally collect an average of about $125,000 a month in excise payments. The figure for December was $589,817. This figure reflects the amount of money spent whether it is from higher prices or more sales and in December there were both, she said.
Ms. Powers said that only one month since 1998, when she first began tracking these figures, has been higher, July of 2002. She said she does not know why that month was so high. In a normal month her office records about 700 documents. There were 1,262 in December. Things have leveled off in January, she said.
Courtney Marek, broker/owner of Sandpiper Realty in Edgartown, said, “December was off the charts. The difference from 2011 to 2012 was staggering. We experienced a 367 percent increase in sold units and an 844 percent increase in gross dollars.” She added the real change is due to buyer confidence.
She said, “until the 3rd quarter of 2012, no one was particularly confident that there was going to be an overly positive outcome for the year. There were definitely more higher end sales.”
Many of the December sales were of high end properties in Edgartown and Chilmark. The Tower Hill, Arundale Family Trust property in Edgartown sold for $12.6 million, next to the Vose property that sold for $12.5 million. $5.6 million was paid for the Kidder property on Chappaquiddick, and $5.05 million was paid for vacant land on Pohogonot Road west of Edgartown Great Pond. Property in Chilmark near Radar Hill sold for almost $4.2 million, some of the old Cagney estate on North Road in Chilmark sold for $4.1 million and the Segal property on Pasture Road in Spring Point, Chilmark, sold for $4.2 million. A group of condominiums at the Triangle in Edgartown sold for $3 million. According to the Link Martha’s Vineyard data, an online real estate service, Vineyard real estate sales totaled $96.4 million and averaged $1.8 million for December, 2012. November’s figures were $36.3 million total sales with an average of $.93 million.
When Vineyard real estate sales increase so does The Martha’s Vineyard Land Bank income. After years of tight revenue budgeting due to slow sales, the Land Bank is well ahead of revenue budget projections for the current fiscal year due to the December sales. The Land Bank was established by an act of the state legislature in 1986. Their income comes from a two percent real estate transfer tax on most land transactions.
In December of 2012 the Land Bank had revenues of over $2.5 million on 395 qualifying transactions, a 374 percent increase over December 2011 when there were revenues of $668,000 on 132 transactions.
Prior fiscal year (FY) 2012 year-to-date revenue at the end of December was $3,366,658.52, on 608 transactions. Revenues as of December 31, 2012 for FY2013 were $5,841,704 on 975 transactions, a 172 percent increase.
James Lengyel, executive director of the Land Bank, said that their revenue windfall was obviously unpredicted and in itself does not give them the latitude to purchase new property. “We spend when we can sense that there is a real market trend that is genuinely producing revenue,” he said. “That is not what happened at the end of December. That was a strange, unusual circumstance. When you get revenues that you don’t expect you can’t rely that they will continue so you use it as a cushion rather than as an asset that can be spent on [new property].”
He said that due to the unexpected revenue the Land Bank is very close to its projected income for the entire year. They had predicted $7 million in income for the fiscal year ending June 30, 2013 and that they typically have about 55 percent of their income by the end of December. By that projection the Land Bank would have earned $3.85 million. Instead they have received $5.84. He said that he thinks the revenue stream will be closer to their budget figures for the remainder of the fiscal year. There has been no money in the current budget allocated to new acquisitions he said and that revenues will be used to pay down their indebtedness and for maintenance on the Land Bank Properties.