Real estate for sale increases as sales decline and prices rise

By Aubrey Gibavic - June 15, 2006

According to data compiled by LINK, the Island's real estate listing service, the Island's inventory of homes for sale rose 25 percent in the first quarter of 2006, compared to the like period a year ago, while actual sales dropped more than 10 percent.

While individual sales and statistics vary between towns, overall the numbers show a rise in inventory as sales volume has declined. And, despite declining sales activity, prices have continued to rise.

"What we've seen is the number of sales decreasing, but the dollar values just keep going up," said Eleanor Wilson of LINK, the only multiple listing service on the Island.

Sean Conley of Nautilus Reality in West Tisbury said, "There is a point where, if the volume drops low enough, the prices will come down. But I don't see that happening."

The statistics available from LINK reflect only properties and land listed through the service. Ms. Wilson said 95 percent of Island realtors list with LINK. But properties for sale by their owners are not included in the analysis.

Aquinnah data presents a startling example of the cross-currents in the Island real estate industry. For first quarter 2006, Aquinnah recorded an 83 percent jump in for-sale residential property, compared with the like period in 2005, despite a 50 percent drop in actual sales. The Island's smallest town listed 22 residences on the market in the first quarter through LINK, and only one sale.

There were a total of 391 home or condo properties for sale on the Island in the first three months of the year, but only 72 were sold, just 18 percent of the total. According to LINK analysis, this represents a 12 percent drop in sales from the year-ago period, during which there were 82 completed sales.

The same trend is apparent in land sales. Available parcels of land Island-wide for the first quarter climbed 33 percent from last year, while actual sales dropped 41 percent.

Vineyard Haven showed the most dramatic change, with a 100 percent increase in land for sale, paired with a 75 percent drop in sales compared to the same quarter last year.

Only one out of 24 parcels of land in Vineyard Haven sold in the first quarter of 2006, compared to four out of 12 a year ago.

But, even as sales volume has slowed and inventories of for-sale property have grown, "Every year, the average value price has gone up," Ms. Wilson said. "There's still certainly appreciation going on, it's just a question of what level."

It's all in the numbers

Residential sales on the Island have been dropping rapidly since 2004, when 114 total sales were recorded in the first quarter, the highest volume since the turn of the century. Despite the drop in final sales of homes and land, inventory has been growing dramatically. A total of 488 Island properties, including houses, condos, and land were listed for sale during the first quarter of 2006, presenting a 57 percent increase from 2001. This ran parallel to a 47 percent decrease in actual sales of land and homes.

"It's ironic, but this is when we have to spend more money and advertise more," Mr. Conley said about the trend.

Prices rise nevertheless

Still, buyers are paying more. The median price of homes sold in West Tisbury in the first quarter of 2006 was above $1 million, rising from $700,000 the year before.

According to LINK analysis, both West Tisbury and Aquinnah had 27 and 50 percent decreases in total sales respectively, but 47 and 165 percent increases in median sales prices.

Ms. Wilson said LINK focuses more closely on median sales price rather than average, because of the way high price sales can skew averages in towns with very few sales.

Edgartown leads the Island in total land and home sales. Although the number of homes sold in that town has been steadily decreasing during the past five years, the sales prices have been steadily increasing. The median sale price of homes sold in Edgartown is up 67 percent since 2001, although the number of sales has dropped 35 percent.

What the experts say

Mr. Conley, who has worked in real estate on the Island for more than 20 years, attributes the backlog of inventory to weather conditions in the beginning of 2005.

"The weather is huge," Mr. Conley said of the real estate market. "People want to come to the Vineyard and mix business with pleasure. They want to come down, have a nice weekend and look at property."

Mr. Conley said snowstorms dotted the first few months of 2005, and buyers shied away from weekend trips.

"I think that was the beginning of the backlog," he said, adding that even though sales have been average this spring, it has not been enough to recoup the accumulation from 2005.

"Rentals are very strong, and that's a good indicator that people still want the Vineyard," Mr. Conley said.

Sharon Purdy, owner of Sandpiper Reality, has seen various market trends throughout her 30-year career.

"We're in a flex period where the seller and the buyer aren't really in concert," Ms. Purdy said. "The seller is still looking really optimistically, and the buyer is looking a little more pessimistically."

Ms. Purdy said in the late 1980s the Vineyard saw residential inventory in the 800's, much higher than the current profusion. "We're not in a bust; we're in a really good solid trend of stabilization," she said.

Ms. Purdy said today's buyers are much more savvy and informed than in past decades, which leads to cautious spending. "They know market values, and they are much more loath to just come up with the ready dollars that these sellers want," she said.

Edgartown, where Ms. Purdy's company is based, leads the Island in total sales, with Oak Bluffs and Vineyard Haven trailing. The three up-Island towns account for a small percentage of total sales. "We have the demand that an Island creates," Ms. Purdy said. "I think people will always want to come to the Island."

Adam Lewenberg, who runs Mvforsalebyowner.com, said buyers expect lower prices when shopping for homes today and are surprised by the persistent high and growing costs.

"A lot of people have maintained the pricing from the peak, when in fact it needs to go down," Mr. Lewenberg said, referring to sellers.

Mr. Lewenberg's site, which has been up for a year and half, provides private sellers with an opportunity to list their properties with lengthy descriptions and multiple pictures. He says listings, now 100 or more, have nearly doubled since last summer.

"The amount of people who are doing these things themselves, because they don't want to spend five and six percent on commission, seems to be increasing. That's a pretty significant amount of people that are trying to sell without paying commission," Mr. Lewenberg said.

The $400,000 to $800,000 price bracket has traditionally been the most active due to its relative affordability; Mr. Lewenberg reports what he describes as a "boom" in houses with million dollar-plus price tags. He estimated that there are as many as 200 Island homes for sale with price above $1 million.

"It's hard to believe that the average home is going to be close to a million dollars," Mr. Conley said. "But you have to step back and look at it nationally, and this is happening everywhere. The difference is, they can drive down the road."