With the worst of the COVID-19 pandemic seemingly in the rearview mirror, many prospective homebuyers continue to hold out hope that the recent anomalous nature of the Island’s real estate market will soon steady, paving the way for more attainable and affordable purchase options.
But with average sales prices still rising, Island real estate brokers say it’s unlikely that the market will level anytime soon — especially considering the Island is currently remarkably low on housing stock.
According to the most recent reports from LINK, the Island’s primary multiple-listing service (MLS), Martha’s Vineyard is now confronted with a significantly lower inventory of real estate on the market compared with years previous.
But as the market’s housing supply decreases, prices continue to increase. The median sale price of Vineyard residential properties is now up to $1.5 million; the average price is up 9 percent from last year, reaching a whopping $2.3 million.
“The continued increase in both asking and sales prices are a direct reflection of the significant scarcity in available property listings,” a statement by M.V. Landmarks Real Estate on LINK’s quarterly report says. “Our supply is woefully below pre-COVID levels.”
In the first three months of 2023, 68 residential properties were sold among all the Island towns, a 16 percent decrease from last year during the same period. Those 68 property sales made up nearly $160 million in transactions Islandwide.
In April 2020, there were nearly 300 properties listed for sale on the Vineyard. As of now, three years later, there’s about 80 — fewer than five of which are home listings under $1 million.
“This is not an unusual condition for only Martha’s Vineyard, as the entire county is suffering through an inventory deficit,” M.V. Landmark’s statement reads. “But persistent demand has continued to outpace available supply on-Island, and thus has contributed to the sustained level of elevated prices. This condition appears likely to continue for the foreseeable future, especially given the finite nature being an Island that has few channels available to tap for inventory replenishment.”
The Island experienced a “buying phenomenon” over the course of the pandemic, with sellers being able to capitalize on the willingness of buyers to pay over market for Island homes, Island broker James Feiner of Feiner Real Estate told The Times in an interview this week. But as of this year, that COVID phenomenon seems to have “gone away.”
“Our inventories are really, really low,” Feiner said. “We’re trending at below 25 percent of normal inventory levels.” That decline is expected to continue.
Because mortgage interest rates are markedly higher now than they were just a few years ago — double what they were pre-COVID — many prospective buyers are opting to hold off buying for now.
“Unfortunately, that’s a lot of people,” Feiner said. “There’s a ton of buyers on the sidelines.”
In the meantime, Feiner estimates that around 25 percent of sales Islandwide don’t even make it to market listings; many are being plucked by real estate agents with decisive clients who prefer an expeditious purchase, making it even harder for year-round Islanders looking to buy a home.
Sometimes an incentive to sellers wanting to cash out during the pandemic buying era, Feiner said, those off-market transactions remove the chance of a bidding war. Such instances “happen a fair amount these days,” he said.
But as buyers are now becoming less likely to pay over market, some sellers are becoming less receptive to lower offers. “They think they’re going to get a higher number,” Feiner said.
But that ship has most likely sailed; the aggressive nature of COVID homebuying has stalled, Feiner said. Unlike during the pandemic, houses with asking prices that exceed their value are now sitting for longer periods on the market. This is especially true for older houses that require additional work and upgrades.
“The buyers determine if the price is realistic,” Feiner said.
Now, as the volume of sales continues to shrink, sale prices of higher-end properties skyrocket.
“The better-priced, well-conditioned properties are almost guaranteed to receive multiple bids within days of being listed for sale,” Landmark’s report commentary states. “Many buyers are now waiving typical purchase contingencies, and some are employing escalator causes … Therefore, offer strategies have dramatically changed.”
Plainly, “the people that are going to buy the nicer houses are willing to spend more money,” Feiner said.
With higher interest rates, now upwards of 6 percent, homebuyers are saddled with significantly higher monthly costs, adding thousands of dollars to existing debt.
For many, “it’s tricky,” Feiner said, unless they have an apartment or accessory dwelling unit that can generate revenue via rent or lease.
Feiner, who also serves on Chilmark’s affordable housing committee, said that in light of the current market, it’d behoove Island towns to seriously consider changes to local zoning bylaws that would give local residents relief for what are substantially high financial burdens. As an Island, “we all need to look at what we’re willing to tolerate as a community to help people stay here,” he said.