Market Report

RECENT NEWS

Martha’s Vineyard Mid-Year 2024 Real Estate Market Review

In the first half of 2024, the Martha’s Vineyard real estate market continued the slowdown that began in 2022. The number of transactions fell to 142 in the first half of 2024 which is the lowest number of transactions in the first half of the year since 2009 (which was immediately following the global economic crisis of 2008 caused by the housing bubble). 142 transactions in the first half of 2024 represents a decrease of 18% from 174 transactions in the first half of 2023. Dollar volume fell dramatically, down 24% from $359mm in the first half of 2023 to $271mm in the first half of 2024. For the first time in eight years, the average transaction price in the first half of 2024 fell, down 7.5% from $2.061mm in the first half of 2023 to $1.906 in the first half of 2024.

Most towns on the island felt varying degrees of decline in both the number of transactions and dollar volume except for Oak Bluffs and Chilmark. Oak Bluffs remained essentially flat from 35 to 36 transactions from first half 2023 to first half 2024 with a decrease of 3% in dollar volume. Chilmark’s market stalled in 2023 due to a lack of inventory and numbers remained low in the first half of 2024 creating too small of a market segment to compare percentages but Chilmark saw an increase from 6 to 8 transactions from the first half of 2023 to the first half of 2024 and its dollar volume more than doubled due to three sales over $4mm (versus none in this price category in the first half of 2023). The most dramatic impact on the market in the first half of 2024 occurred in Edgartown which experienced a decline of 28% in number of transactions from 54 in the first half of 2023 to 39 in the first half of 2024, and a decrease of 44% in dollar volume from $165mm in the first half of 2023 to $92mm in the first half of 2024.

Inventory has started to tick up for the first time in three years. The inventory level at mid-year 2024 was 262 properties which is significantly higher than 186 at mid-year 2023 and 157 at mid-year 2021, but still significantly lower than mid-year 2020 (just before real estate activity began to increase due to COVID factors) which was 396 properties.

The high-end in particular fell off dramatically in the first half of 2024 despite inventory of high-end properties over $5mm and $10mm being slightly above the inventory levels in the first half of 2023. There were 14 sales over $5mm and 5 sales over $10mm in the first half of 2023 versus 8 sales over $5mm and only 1 sale over $10mm in the first half of 2024.

At mid-year 2023, we speculated that, with the sustained dynamics of low inventory, higher prices and fewer sales, the market was very slowly starting to shift away from a Seller’s market. The sluggish performance of the first half of 2024 supports this trend and suggests that demand has diminished, either in general or at the current price points. For those who are considering buying or selling, understanding this market can be challenging.  For more information, give us a call. 

Martha’s Vineyard 2023 Real Estate Market Review

The Martha’s Vineyard real estate market The Martha’s Vineyard real estate market continued its slowdown in 2023 yet, like 2022, posted mixed results overall. The number of transactions decreased 13% from 468 transactions in 2022 to 407 transactions in 2023. Dollar volume declined less sharply, down 7.5% from $884mm in 2022 to $817mm in 2023. However, average price increased 6% from $1.888mm in 2022 to $2.001mm in 2023. 

These results are enigmatic, especially when taking a wider historic perspective. 407 transactions is the lowest activity level since 2011 for this market, but the dollar volume of $817mm is the fourth highest ever recorded (and still higher than the pre-COVID boom level), and the average price in 2023 set a new record high, breaking through the previous record-breaking high established during the COVID boom in 2021. 

Residential sales in 2023 accounted for 87% of overall market dollar volume and 79% of transactions. Looking at residential properties specifically (including condo sales), transactions and dollar volume declined similarly to the overall market (down 12% and 6% respectively), while average price of residential properties rose even higher, up 7% from $2.054mm in 2022 to $2.196mm in 2023. Median price increased 9% from $1.425mm in 2022 to $1.550mm in 2023. 

In many respects, the slowdown in the Martha’s Vineyard real estate market mirrored a slowdown nation-wide. The Wall St. Journal reported that “Home sales last year dropped to the lowest level in nearly three decades, after elevated mortgage rates and a lack of homes for sale shut out buyers.  Existing-home sales slid 19% in 2023 from the prior year ... That total was lower than during the subprime crisis and the lowest full-year level since 1995.” (Wall Street Journal, January 19, 2024) 

INVENTORY AND PRICING TRENDS 2020-2023

The two-year real estate boom on Martha’s Vineyard during 2020 and 2021 was driven by the Covid pandemic, low interest rates and high demand for Vineyard properties. During these years, the number of transactions soared and prices rose. The market slowed in 2022, however, as the number of transactions dropped dramatically and prices leveled off.  2023 continued this downward trajectory with the caveat of rising prices. 

2023 was the fourth consecutive year with historically low inventory and this factor continued to have an impact on pricing.  Although the peak inventory level has been climbing since 2021, the growth rate has been slow. Peak inventory in 2023 was 230 properties, versus 201 in 2022 and 187 in 2021.  Peak inventory in 2019 (prior to the boom) was 527 properties, revealing that peak inventory in 2023 was still down more than 50% compared to pre-COVID levels. 

Meanwhile, Average Days On Market hit its low point in 2022 and started climbing back up again in 2023. In 2020, when the real estate boom was just starting, average Days On Market was 250.  It dropped to 171 in 2021 and 135 in 2022, then moved up to 154 in 2023.  Longer Days On Market may indicate possible pushback from buyers on pricing.

The figures for low inventory in 2020 and 2021 reflected a different situation than in 2022 and 2023. During 2020 and 2021, peak inventory fell and stayed low due to properties being scooped up quickly, pushing down the Days On Market. The record high numbers of transactions during those years occurred even with technically low inventory. High demand meant that many properties didn't ever make it to the market or were listed for less than a week so inventory levels never accumulated. However, with 2021 transactions down to 2011 levels, the low inventory levels in 2023 represented a true lack of properties.

The lack of inventory played a part in the Seller’s Market dynamics in 2023. These dynamics caused prices to rise to record breaking levels in 2023 and moved the market in general toward the higher end.  Naturally this caused the entry level segment of the market under $1mm to be further squeezed. Only 32% of transactions occurred under $1mm in 2023 versus 36% in 2022. Meanwhile, the highest end of the market sprang back into action in 2023 with 8 sales at $10+mm, up from just 4 sales at $10+mm in 2022. 

Lack of inventory was not just an issue on Martha’s Vineyard in 2023.  Inventory was low nationally as well. “Supply was so tight in part because many homeowners with low mortgage rates chose to stay put last year, determining it would be too expensive to buy another house at a higher interest rate. That lack of inventory pushed home prices to record highs last year and made home purchases prohibitively expensive for many prospective buyers.” (Wall Street Journal, January 19, 2024). 

While the above statistics include all transactions and represent island-wide performance, individual towns and market segments reveal different dynamics. Martha’s Vineyard is an island with six towns, each with its own character and specific market conditions. Within each town there are different niches as well…waterfront, water view, high-end, mid-range, entry level and commercial properties. Generalizing trends or making broad statements is challenging because each market segment can be, on its own, very small. However, it is worth diving into the different towns and niches to understand their role in the overall market performance.

Conclusion

2023 was another complicated year for the Vineyard real estate market, marked by slow activity with record-breaking prices and a continued lack of inventory. After remaining flat in 2022, pricing jumped to its highest recorded level in 2023. While some properties actually sat on the market for a longer duration, as proven by a rise in average Days On Market, demand, overall, was still strong.  Average Days on Market in 2023, while higher than 2022, remained significantly lower than in 2020 when the boom was just starting.

Martha’s Vineyard’s lack of inventory and rising prices mirrored the national housing market. It was a challenging year nation-wide for buyers. It was also a challenging year for those owners who wanted to sell but hoped to buy another replacement property. In this respect, climbing interest rates were an obstacle to buyers and sellers alike. 

Looking into 2024, interest rates are expected to be lower than their peak 2023 levels. This is good news and will prove helpful to buyers and to some potential sellers. However, economists are not predicting a return to record low pandemic-era rates. “Rates have slumped from a peak of around 8% reached in October to about 6.6% in the past week (in February), according to Freddie Mac data. That's been a big incentive for prospective buyers to get back into the market, Daryl Fairweather (Redfin’s chief economist) said – a key reason why the housing market is expected to be stronger this year. Both Redfin and Zillow estimate that the 30-year fixed mortgage rate will probably end the year around its current level, dipping to 6.5%” (Business Insider, February 10, 2024).  

Most economists do not see a full turnaround in 2024, but there is some optimism that the coming year will be a stronger one than 2023.  The “dynamic is starting to change as mortgage rates trend lower.”  (Business Insider, February 10, 2024.)  Inventory may tick up this spring but Skylar Olsen, Zillow’s chief economist predicts “I don’t think it’s going to be a massive rebound. Until we see mortgage rates really improve, we don’t expect owners to come back very very quickly.” (Business Insider, February 10, 2024).  Some economists are predicting that prices will continue to rise in 2024. “Home prices keep marching higher” says National Association of Realtors Chief Economist Lawrence Yun.  “Only a dramatic rise in supply will dampen price appreciation.” (USA Today, January 1, 2024). 

We’ve looked, thus far, at the economic factors influencing the Martha’s Vineyard real estate market but housing is more than just an economic asset.  Whether you are considering a seasonal vacation home or a year-round property, you are likely thinking about family and friends, what the Vineyard offers, where you are in your own life cycle, what you are looking forward to and what you would like to change. A new job? Marriage? Children?  Retirement?  Grandchildren across the country? An elderly parent?  There are many reasons people choose to buy or sell at any moment in time. For those that can afford it and have waited on the sidelines for the market to improve, 2024 may be the time to jump in and move forward.

As the New York Times reports, it’s not always about the math. “For some homeowners, the math may look challenging, but other factors come into play… After 18 solid months of high interest rates, buyers and sellers may decide to make a change anyway’, Dr. Sturtevant, of Bright MLS pointed out. ‘I think 2024 is the year of ‘life happens.’” (New York Times, January 19, 2024.)

Looking into 2024 for Sellers, as we said last year, prices are strong and inventory is low.  The Vineyard real estate market remains a Seller’s Market and, with reduced interest rates, this can be a great time for Sellers to make a move. If you are considering selling, feel free to reach out to us for more information.

For Buyers, there are some signs that the market may be shifting as interest rates have declined and may fall further. However, inventory remains low so if your timeline is “near future”, it is important to consult with your agent to better understand the market and strategize so that you can move quickly when the right property appears.

National and world events will continue to affect our local economy, for good or bad. With the upcoming presidential election and two wars raging in the world, there is never any certainty what will happen in the year to come. But the Martha’s Vineyard real estate market is solid and the draw to the slower, quieter, simpler life the island offers is as strong than ever. We remain optimistic about the year ahead for buyers and sellers alike.

KEY MARKET STATISTICS

TEA LANE ASSOCIATES' YEAR-END HIGHLIGHTS 2023

Tea Lane Associates sold property in all six towns in 2023 and represented the buyer and/or seller in the three highest sales in Aquinnah, and seven of the ten highest sales in Chilmark (including the top three), one of which was the highest up-island transaction and one of only eight transactions on the island over $10mm in 2023.

Tea Lane Associates represented the buyers in the two highest priced land transactions on the island in 2023.

Tea Lane Associates’ sales represented 67% of Chilmark dollar volume, 72% of Aquinnah dollar volume, 36% of all up-island dollar volume, and 10% of dollar volume island-wide. 

Tea Lane Associates represented buyers and sellers at all price points.  We worked with buyers who have been coming to the Vineyard for their lifetime and buyers who discovered the island more recently, with buyers who were upgrading on the island, and with buyers who were down-sizing. We helped families purchase their year-round homes, and buyers who were setting up for retirement. We worked with sellers (individuals, groups of family members, trustees, business partners) to list and sell a wide range of properties from vacant land, to new construction, to beloved generational family homes.  All are an important part of what we do and we were honored to be part of a new chapter in our clients’ lives.