What's Happening with the Real Estate Market on Martha's Vineyard - 2019

Martha's Vineyard 2019 Real Estate Market Review

The Martha's Vineyard real estate market posted mixed results for 2019. The number of transactions fell 9% to 537 total transactions for the year. The overall dollar volume, however, gained 6.3% in 2019, up to $763.8mm. The average sales price rose 16.7% to $1.422mm. 2019 marks the third consecutive year of decreasing transactions and the fifth consecutive year of expanding dollar volume. Martha's Vineyard Land Bank revenues increased by 13% over 2018.

As prices continued to rise, the overall average sales price of $1.422mm in 2019 reached a level surpassing the last peak of the market where average prices were $1.325mm in 2006 and $1.375mm in 2007. In this respect, the year 2019 represented a full recovery for the Martha’s Vineyard market from the 2008-2009 recession and is consistent with national trends of home prices exceeding pre-collapse value in many areas.

The continued expansion of dollar volume in 2019 was driven by high-end sales and by the performance of the three up-island towns with help from Tisbury.  Aquinnah, Chilmark and West Tisbury experienced double-digit growth in dollar volume (12%, 31% and 36% respectively) while dollar volume in Tisbury grew 5%, Oak Bluffs remained flat, and Edgartown declined slightly with a 2.2% decrease in dollar volume.

High-end sales in 2019 were record setting. A record high number of sales occurred in the segment over $3mm, and even more significantly in the $10+mm segment. There were 11 sales over $10mm in 2019, versus 4 in 2018 (and 7 in 2015 which was the most recorded in a calendar year prior to 2019). 2019 sales included the most expensive residential sale ever on Martha’s Vineyard which transacted in January 2019. The 186-acre property on the North shore of West Tisbury, owned by the son of former Washington Post publisher Katharine Graham, sold 1/11/19 for $32.5mm.

Overall activity, or the number of transactions, has been falling for three years now, modestly in 2017 and 2018 with approximately 3% decline in each of those years, and more significantly in 2019 with a 9% decrease (from 590 sales in 2018 to 537 sales in 2019). While the high-end thrived in 2019, one segment of the market which was hard hit was the middle of the market between $1mm and $3mm. There were 39 fewer sales in the $1-3mm range in 2019, a 23% decline in this category from 2018 to 2019. The $1-3mm segment represented 28% of all transactions in 2018 and dropped to 23% in 2019, whereas the $3+mm segment grew from 5.6% to 9.5% of the overall number of transactions. The number of 2019 entry level sales under a million also declined from 2018 as did the number of land sales. We will look both these market segments later in this article.

While the above statistics include all transactions and represent island-wide performance, individual towns and market segments reveal different dynamics in 2018. 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.

Up-Island

Chilmark

2019 was a solid year for Chilmark with 43 sales, exactly the same number of transactions as 2018. The high-end returned to Chilmark in 2019 with 10 sales over $3mm (versus only 4 sales over $3mm in 2018). Therefore the total dollar volume and average price both rose significantly and at the same pace of 31% growth, to $93.5mm in dollar volume and to an average price of $2.173mm.

Like the island as a whole, Chilmark saw a slowdown in the mid-range segment of $1-3mm in 2019: there were 14 sales in this range in 2019, down from 18 in 2018, a 20% decrease. The other slower segment in Chilmark in 2019 was the sale of beach lots. There were only three beach lot sales in Chilmark in 2019 compared to eight in 2018.

There were two sales over $10mm in Chilmark in 2019: 1) a 4.1-acre waterfront estate on the South shore with a 4-bedroom main house and 2-bedroom guesthouse which sold in October 2019 for $10,250,000, and, 2) a 5.9-acre property in Squibnocket Farm with a four-bedroom architectural-acclaimed house, pool, strong waterviews and private beach access which sold in May 2019 for $11,083,500.

In 2019, Chilmark sales represented 8% of transactions and 12% of dollar volume island-wide. Chilmark had the highest average price of all the towns on the island.

West Tisbury

West Tisbury experienced flat activity with 60 sales in 2019 (and 60 in 2018). Dollar volume was up 36% in 2019 to $93.1mm and average price increased 36% as well to $1.551mm. The rise in dollar volume and average price was due exclusively to the record-breaking $32.5mm sale of Katharine Graham’s estate on the North shore of West Tisbury, the most expensive residential sale to date on the island. Without this specific transaction, the total dollar volume in West Tisbury fell 11% to $60.56mm in 2019 and average price fell 10% to $1.026mm.

In the West Tisbury market, the mid-range $1-3mm segment fell from 20 sales in 2018 to 13 in 2019. The high-end  $3+mm segment inched upward from three sales in this category in 2018 to four sales, including the Graham sale, in 2019.

The $32.5mm Graham Estate included a main house, guesthouse and beach house, plus other  outbuildings and extensive trails on 186 beautiful, rolling acres on the North shore of West Tisbury with private beach.

In 2019, West Tisbury sales represented 11% of all transactions on the island and 12% of dollar volume.

Aquinnah

Aquinnah is the third of the three the up-island towns to post exactly the same number of sales in 2019 as in 2018: 12. And like the other up-island towns, it also experienced growth in dollar volume and average price. Dollar volume grew 12% to $16.8mm and average price grew 12% to $1.398mm. This smallest market on the island represented 2% of total island-wide transactions and dollar volume, which matched its position in 2018.

Down Island

Edgartown
Edgartown activity slowed in 2019 with an 18% decline in number of transactions (from 205 in 2018 to 168 in 2019), but dollar volume was only down 2% (from $356mm in 2018 to $348mm in 2019). It is worth noting that this 2% decline in dollar volume followed 27% and 26% growth in dollar volume in the two years prior. So the fact that 2019 dollar volume just about kept pace with the level set by end of 2018 actually signifies decent performance for the town in 2019. Average price rose at a rate of 19% (from $1.736mm in 2018 to $2.071mm in 2019). Of the 11 sales over $10mm on the island in 2019, 8 of them were in Edgartown. Overall, despite a slower market in Edgartown, 2019 was a solid year for this largest market of all the towns on the island, but not for all segments.

Looking at specific segments in Edgartown, the mid-range segment of $1-3mm declined 21% in 2019 (from 62 sales in 2018 to 49 sales in 2019). And the entry level segment under $1mm declined 26% (from 118 sales in 2018 to 87 in 2019).

Looking at the eight sales over $10mm in 2019 in Edgartown, they range from an historic home on Edgartown harbor with a dock for $14.1mm to a Cow Bay compound with pool for $11.25mm to a 29-acre estate on Edgartown Great Pond for $11.75mm, the last of which was purchased by the Obama family. It included nearly 7000 square feet of living space with 7 bedrooms and 8.5 bathrooms, porches,  swimming pool and garden,  and an expansive lawn area with a path to the pond.

Edgartown sales represented 31% of transactions and 46% of total dollar volume island-wide in 2019. 

Oak Bluffs
Oak Bluffs experienced a drop of 11.5% in the number of transactions, from 157 in 2018 to 139 in 2019. Dollar volume in the Oak Bluffs market remained essentially flat at $112mm year to year and average price increased 13% from $714k in 2018 to $806k in 2019. The segment most significantly affected in 2019 in Oak Bluffs was the entry level segment under $1mm which fell from 133 sales in 2018 to 116 in 2019. Also worth noting is that there were two sales over $3mm in Oak Bluffs in 2019 (versus none in this category in 2018).

Oak Bluffs’ transactions represented 26% of transactions on the island in 2019 and 15% of dollar volume.

Tisbury (Vineyard Haven)

Tisbury had a solid performance in 2019 and was the only town to post an increase in the number of transactions. Though modest, the number of sale grew 1.7% with 115 transactions in 2019 (up from 113 in 2018), dollar volume rose 5% to $101mm (up from $96mm in 2018) and average price rose 3.2% to $874k (up from $847k in 2018).

Considering specific market segments in Tisbury, the mid-range of $1-3mm fell to 18 sales in this category in 2019, down from 30 in 2018. These losses were picked up mostly by the entry-level segment under $1mm which had 93 sales in 2019 (up from 82 in 2018). The high-end had a bump in 2019 as well with 4 sales over $3mm (versus just 1 sale in this category in 2018).

Tisbury represented 21% of transactions and 13% of dollar volume island-wide.

Entry Level Sales
Over the past three years, rising prices have shifted the entry level segment of the market, all sales under $1mm, from a growth segment (during the period 2008 to 2016) to a declining segment (2017 to present). With rising average prices in all towns in 2019, the total number of sales under $1mm continued to decline. The number of transactions in this segment decreased 8.5% to 362 in 2019 (versus 396 in 2018 and 427 in 2017). Although, as mentioned in the previous town-specific analysis, this segment did grow in Tisbury in 2019.

High End Sales
2019 was a strong year for the high-end segment of the market. There were a record-breaking 51 transactions over $3mm, including 11 sales over $10mm and the sale of the most expensive residential property on the island ever. There was a 55% jump in sales over $3mm in 2019, (51 in 2019, up from 33 in 2018). This $3+mm segment of the market represented 45% of total island-wide dollar volume in 2019, up from 30% of dollar volume in 2018. 

We discussed last year that the high-end market was strong but the highest segments had not reached the level of the real estate market peak of 2005-2007. The performance of 2019 changes that narrative this year. The activity of the three-year period 2017-2019 surpasses the last peak of the market in 2005-2007. There were 17 sales over $10mm in 2017-2019 (versus 14 in ’05-’07). There were 34 sales over $7mm in 2017-2019 (up from 30 in ’05-07). There were 57 sales over $5mm in 2017-2019 (versus 49 in ’05-’07). And there were 118 sales over $3mm in 2017-2019 (up from 91 in ’05-’07).

Land Sales
Sales of vacant buildable parcels represented 6% of the total sales on the island in 2019 and $49mm in total dollar volume, which was a decline of 24% from $64mm in dollar volume in 2018. The number of transactions dropped significantly as well with a decline of 12.5% from 80 sales in 2018 to 70 sales in 2019. The number of land sales has decreased every year for the past four years.

Looking at high-end land sales, there were only two transactions over $2mm in 2019, down from four in this category in 2018. These two sales in 2019 included a 4-acre parcel on Edgartown Harbor for $11.25mm and a 9-acre parcel on Menemsha Pond for $3.4mm.

Beach Lots represent a separate segment of land sales. These are unbuildable properties which convey ownership in private beaches on the island. This segment slowed significantly in 2019 where only 4 beach lots transacted, versus 11 in 2018. This market is more volatile than the overall market due to erratic availability of these properties.

Commercial Sales
The sale of commercial properties fell to 13 transactions in 2019, down from 24 in 2018, but equal to the activity in 2017 when there were also 13 transactions. Of the 13 commercial transactions in 2019, 5 were in Edgartown, 3 in Oak Bluffs, 4 in Tisbury and 1 in West Tisbury. The highest priced commercial transaction was the sale of 35 Circuit Ave in Oak Bluffs which sold for $2,015,000 in October of 2019. This was a mixed-use retail/commercial/residential building in the heart of Oak Bluffs’ main street with 5300 square feet of space including three apartments with potential for two more.

Market Cycles
2019 was a year of ups and downs.  In the first six months of 2019 the Vineyard market experienced a significant slowdown while the second half of the year saw a strong resurgence in activity. Total sales fell 19% in the first half of 2019 compared to the first half of 2018. Total dollar volume fell 12% over the same period while average price rose 8% these first six months. By the end of 2019, however, the market had turned around. The total number of transactions was still down but only by 9%, total dollar volume had actually risen 6.3% for the year and average price had further increased 16.7% in 2019 compared to 2018. For the second half of 2019, the number of sales transactions was 314, compared to 308 in 2018 for the same period, an increase of 2% in the summer/fall months between 2018 and 2019.

It is impossible to say with certainty what factors were responsible for this shift mid-year in 2019. Lowered interest rates probably played a role. In addition, the Vineyard market is a cyclical market with pent up demand.  When demand is satisfied it tends to be followed by a lull and then the cycle begins again. An increase in inventory in the second half of the year may have been a factor also, as well as some price reductions.  Although average price rose significantly in 2019, it did not always rise as high as sellers anticipated. The judicious adjusting of prices mid-season may have given the market additional impetus this year. Or….as uncertainty about the economy decreased, buyers may have become more open to purchasing property.

Certainly, the ups and downs of this year’s market should lead to caution when predicting what 2020 will bring and remind us that even a year is just a snapshot in time.

Conclusion
2019 was a record-breaking year for the island’s overall real estate market in terms of dollar volume and high-end sales. Although the performance of 2019 broke through the last peak of the market, there was also a significant drop in the number of transactions and a significant weakening of the mid-range and entry-level segments. Additionally, peak inventory levels, which had been declining for 8 consecutive years, rose slightly in 2019 to 336 properties from 324 in 2018 (a 4% increase). This may reflect owners on the Vineyard deciding that, with rising prices, this was a good time to sell or perhaps it was a reflection of other factors. 2019 marked the first time in 8 years that inventory did not continue to decrease. While it is too early to predict a trend, if inventory increases further in 2020, this dynamic should loosen the pressure on buyers and give them more negotiating power moving forward or, at least, slow the upward trend in prices in certain niches.

Looking beyond our island, the US economy has just set a record for the longest economic expansion in history.  Some economists forecast that this expansion will end in 2020 while others are more optimistic. Many, although not all, economists are predicting that home prices will continue to rise nationally in 2020, although perhaps not as dramatically, putting particular pressure on buyers at the lower end of the price spectrum. We have already seen this on the Vineyard, most especially, with the affordable housing shortage for year-round residents as well as second home buyers looking to enter the market in 2019. 

Varying economic forecasts combined with 2020 being an election year make it especially difficult to predict what the next year will bring. But after the last five years of gains in dollar volume, sellers retain strong value in their properties on the island. Reviewing a range of national forecasts, we found that the one thing most economists do agree on is their prediction that interest rates will remain low in 2020 and some predict they will reduce even further. As always, buyers who understand the market can find good opportunities and the increase in purchasing power provided by low interest rates should continue to offer value to buyers in 2020.

Market Trend Graphs:

2019 Tea Lane Associates' Year-End Highlights

• Tea Lane Associates sold property in all six towns in 2019 including:
  • The highest priced property in Chilmark.
  • The second highest priced commercial property on the island (located in West Tisbury).
  • Two of the three highest priced, brokered properties in Aquinnah.
  • The highest priced parcel of land in West Tisbury.
• In Chilmark, Tea Lane Associates’ sales represented 45% of dollar volume and 40% of transactions. Tea Lane sold 6 of the 10 highest priced properties, and 14 of the 24 properties priced over $1mm. 
• Tea Lane Associates’ sales represented 30% of all up-island sales dollar volume, and 8% of dollar volume island-wide.
• Tea Lane Associates represented a client in the creative sale of private property to the Lank Bank. This property will  link Land Bank property to private association conservation land in Oak Bluffs.
• 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 finally bought a summer home of their own, with buyers who purchased a year-round family home, and with buyers who purchased their retirement retreat.  We worked with sellers (individuals, groups of family members, trustees, business partners) to list and sell a wide range of properties in all corners of the island.  All are an important part of what we do and we were honored to be part of a new chapter in our clients’ lives.