2023 YEAR END MARKET REVIEW

TEA LANE 2023 YEAR-END HIGHLIGHTS

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.

Read on for our DEEP DIVE into the 2023 Real Estate market on Martha's Vineyard ...

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 in2021. 

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, 

Peak inventory in 2022 was 201 

Peak inventory in 2021 was 187 

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 (DOM) 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 DOM was 250. It dropped to 171 in 2021 and 135 in 2022, then moved up to 154 in 2023. Longer DOM 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 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 2023 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:

UP-ISLAND
Chilmark - In 2023, Chilmark sales represented 6% of transactions and 6% of dollar volume island-wide. The average home sale price in 2023 in Chilmark was $2.31mm.

Chilmark suffered from a continued lack of inventory in 2023, off 73% from the inventory level prior to the COVID boom. This was the most dramatic shift in inventory of all six towns over the past two years (from a peak inventory of 64 properties in 2019 to 10 in 2022 and 17 in 2023). Although Chilmark posted 23 transactions, technically a 4.5% increase from 2022 which had 22 transactions, this level of activity in 2022 and 2023 is the slowest for the town since 2009. 

Due to several beach lot sales in 2023 and a decrease in high-end sales for the town, Chilmark posted a 35% decrease in dollar volume from $81mm in 2022 to $52mm in 2023 and average price decreased 38% from $3.68mm in 2022 to $2.28mm in 2023.

Looking at Chilmark’s price segments specifically, the high end over $3mm fell off in 2023 from 11 sales in this segment in 2022 to only 4 in 2023. However, this included the highest priced vacant land transaction on the island of $10.5mm. Activity in the $1-3mm range increased from 10 transactions in 2022 to 14 in 2023. There was just one residential sale under $1mm in 2023, the same as 2022, and there were 4 beach lot transactions in 2023 (versus 0 in 2022).

West Tisbury

In 2023, West Tisbury sales represented 12% of all transactions on the island and 12% of dollar volume.
The average home sales price in West Tisbury in 2023 was $1.97mm.
All of West Tisbury’s indicators declined in 2023. Transactions fell 6% from 53 transactions in 2022 to 50 in 2023. Dollar volume fell 10% from $110mm in 2022 to $99mm in 2023. Average price dropped 4.5% from $2.07mm in 2022 to $1.98mm in 2023.
The segment of transactions under $1mm slowed from 15 sales in 2022 to 9 in 2023. The mid-range of $1-3mm held steady at 30 sales in 2022 and 2023. The high-end over $3mm saw an increase of one sale from 8 transactions in 2022 to 9 in 2023. West Tisbury had the highest commercial transaction of the year at $6.6mm for Cronig’s Market at 469 and 479 State Road.
 

Aquinnah

This smallest market on the island represented 3% of total island-wide transactions and 3% of total island-wide dollar volume. The average home sale price in Aquinnah in 2023 was $2.54mm.
Aquinnah posted increases across the board in 2023. Transactions were up 16.7% from 12 sales in 2022 to 14 in 2023, dollar volume increased 84% from $13mm in 2022 to $23mm in 2023, and average price grew 58% from $1.05mm in 2022 to $1.66mm in 2023.
Similar to 2022, there were six land sales in Aquinnah in 2023, four of which were beach lot sales (2 on Oxcart Road and 2 on Moshup Trail) and two were buildable parcels. Of the seven residential sales, prices ranged from $300k to $6.15mm. Plus Aquinnah posted a $2mm commercial transaction (The Aquinnah Shop restaurant).

DOWN-ISLAND
Edgartown

Edgartown sales represented 31% of transactions and 43% of total dollar volume island-wide in 2023.
The average home sale price in Edgartown in 2023 was $3.02mm, the highest of all the towns on the island in 2023. 
Edgartown transactions fell 24% in 2023 from 168 in 2022 to 128 in 2023 but dollar volume did not decrease as sharply, down 7% from $376mm in 2022 to $350mm in 2023. Average price rose 22% from $2.24mm in 2022 to $2.74mm in 2023.
All pricing segments felt the slowdown again in 2023 except for the luxury-high-end of $10+mm which bumped back up to 6 sales including one transaction over $20mm, versus only two transactions in this segment in 2022 with none over $20mm. Edgartown’s highest transaction in 2023 was $20.5mm for the combination of the neighboring properties at 27 Braleys Way and 8 Tuthill Road which created a waterfront compound with beach, pool, barn and 10,000 square feet of living space among two houses.
 

Oak Bluffs

Oak Bluffs’ transactions represented 25% of transactions on the island in 2022 and 18% of dollar volume. The average home sale price in Oak Bluffs in 2023 was $1.42mm, which is the lowest of all the towns.
In 2023, Oak Bluffs felt the slowdown but prices remained flat. The number of transactions decreased 14% from 117 in 2022 to 101 in 2023, dollar volume fell similarly 13% from $166mm in 2022 to $144mm in 2023, and average price essentially leveled off, up just 0.3% from $1.419mm in 2022 to $1.423mm in 2023. The market segment under $1mm dropped from 57 transactions in 2022 to 45 in 2023, causing the median price to rise, from $1mm in 2022 to $1.1mm in 2023.
 

Tisbury (Vineyard Haven)

Tisbury represented 22% of transactions and 18% of dollar volume island-wide in 2023. The average home sale in Tisbury in 2023 was $1.87mm.
Tisbury reported a 5% decline in the number of transactions from 96 in 2022 to 91, a 7% increase in dollar volume from $138mm in 2022 to $147mm in 2023, and a 13% increase in average price from $1.44mm in 2022 to $1.62mm in 2023. The growth in dollar volume and average price in 2023 in Tisbury is due to the highest sale on the island for the year which occurred in Tisbury in 2023. The highest sale for the town in 2022 was $8.25mm whereas 2023 reported the sale of a $23.9mm compound on the Vineyard Sound with multiple houses and a large stretch of beach.

Entry Level Sales
The entry level segment of the market, all sales under $1mm, continues to decline. The total number of sales under $1mm dropped from 298 in 2021 to 169 in 2022 to 132 in 2023. The segment decreased from a market share of 42% of all transactions in 2021 to 36% in 2022 to 32% in 2023. For buyers in this segment, including local families and service workers, it continued to be more difficult to enter the island real estate market, and the challenge was compounded by the rise of mortgage rates over the past two years.
As the housing crisis for local families and workers continues, the effects of this crisis can be felt throughout the Vineyard community. We are losing young, creative people. We are losing friends and neighbors who move off island where they can afford to buy homes. We are losing businesses. Essential services are harder to come by as are the amenities which power our economy. Labor shortages are an ongoing reality.
Local individuals, governments and organizations continue to chip away at this monumental issue with zoning by-law changes, rent subsidies and building new affordable housing. In the Spring of 2022, the proposal for a Martha’s Vineyard housing bank was approved with landslide majorities in all six towns on the island. This proposal would implement a transfer tax on real estate transactions on Martha’s Vineyard to create a fund for affordable housing. The legislation is currently at the state house in Boston
and has been endorsed by Governor Maura Healey. The state legislature should be voting on this bill (Bill H4138) in the Spring or Summer of 2024. If it passes, it will then return to the island for a vote on the implementation of the law in our towns. To find out more, go to the Coalition to Create a MV Housing Bank website 

High End Sales
While the results for high-end sales in general revealed a slowdown like the overall market, the luxury-high-end of $10+mm bounced back in 2023 from 4 sales in 2022 to 8 sales in 2023 which is the third highest result for this segment on record and included 2 transactions over $20mm. Meanwhile, sales in the range of $3+mm dropped 18% from 77 transactions in 2022 to 63 in 2023. The category of $5+mm sales fell 17% from 30 transactions in 2022 to 25 in 2023. $7+mm sales decreased 8% from 13 in 2022 to 12 in 2023.
In 2023, the $3+mm segment of the market represented 46% of total island-wide dollar volume (flat from 46% in 2022) and 15% of all transactions (down slightly from 16% in 2022). There were two $20+mm sales in 2023, the highest transactions on the island for the year: $20.5mm for 27 Braleys Way and 8 Tuthill Road combined in Edgartown, and $23.9mm for 690-794 Chappaquonsett Road in Tisbury. The Chappaquonsett sale was the 20.34 acre Chip Chop property which included 4 houses plus detached bedroom cottages, pool and pavilion area, tennis court, garage, waterfrontage and beaches on the Vineyard Sound and Lake Tashmoo, dock, extensive paths and gardens and a colorful legendary history.
 

The Robb Report described 2023 as a year where “The international luxury housing market has remained remarkably resilient amid higher-than-usual interest rates and lingering economic uncertainty. Indeed, by the end of 2023, the sector logged some of the most expensive transactions (and listings) to date.” (January 4, 2024). The Times of London writes “prime global property markets are surprisingly resilient. The predictions are for positive price growth in 2024.” (Times of London, Apple News, January 7, 2024).

Land Sales
Sales of vacant buildable parcels declined significantly for the second year in a row – this segment decreased 23% from 100 transactions in 2021 to 77 in 2022, and then decreased again by 30% from 77 transactions in 2022 to 54 in 2023. Dollar volume of land sales dropped 17% from $87mm in 2022 to  $72mm in 2023. These buildable land sales represented 13% of all transactions on the island in 2023.
Looking at high-end land sales, there were six transactions of $3+mm in 2023 (versus three sales in this category in 2022). Of these six transactions, four of them were in Edgartown in the range of $3.06mm to $3.4mm and the two highest were a $4.7mm sale in West Tisbury and a $10.5mm sale in Chilmark. The West Tisbury vacant land sale included 6.4 acres on Tisbury Great Pond abutting conservation and the Chilmark property offered 20 acres with multiple house sites and sweeping water views.
Average price of buildable parcels increased from $1.130mm in 2022 to $1.333mm in 2023. Median price rose from $750,000 in 2022 to $800,000 in 2023.

Beach Lots represent a separate segment of land sales. These are unbuildable properties which convey ownership in private beaches on the island. This segment increased to 8 transactions in 2023, up from 4 in 2022. These eight beach lot sales were divided between Aquinnah and Chilmark in 2023 with four in each town with the prices ranging from $135,000 to $450,000. It is impossible to hypothesize about this market segment because inventory drives it and the availability of these properties is erratic and unpredictable.

Commercial Sales
The sale of commercial properties increased slightly in 2023 with 22 commercial transactions, up from 18 in 2022. Of the 22 commercial transactions in 2023, 12 were in Tisbury, 4 were in Edgartown, 4 were in Oak Bluffs, 1 was in West Tisbury and 1 was in Aquinnah. The highest priced commercial transaction was the sale of up-island Cronig’s Market in West Tisbury for $6.6mm. The Aquinnah commercial transaction was the sale of the restaurant (formally the Aquinnah Shop) and surrounding land at the Aquinnah cliffs for $2.0mm. Commercial sales represented 5% of transactions and 4% of dollar volume island-wide in 2023. Cronig’s Market and the Aquinnah Shop were two landmark sales for Martha’s Vineyard. Both are properties with deep island roots and both sales were not simply financial transactions. The buyers and sellers shared publicly that their motivations were about affirming community and giving back.

Cronig’s Market (up and down island) sold to a buyer in-house. Reporting in advance of the sale, the MV Times wrote that the goal was “to maintain Cronig’s as a community grocery store with the same spirit and conviction that he (Steve Bernier) had exercised after he acquired it from Robbie Cronig in 1985. Established over a century ago, Cronig’s will be owned and captained by Andrea Donnelly, (previously) the company’s bookkeeper…The deal is designed to preserve the company and stave off supermarket chains and absentee investors…Donnelly, who lives in Edgartown, said she first started at Cronig’s as a teenage cashier. ‘I did it a lot for the employees and the community,’ she said of the deal and added that there was real fear of the business getting sold off to the highest bidder.” (MV Times, October 9, 2021)

The iconic Martha’s Vineyard restaurant, formerly the Aquinnah shop, and the surrounding land sold to the Native Land Conservancy, a Cape Cod-based indigenous-led conservation non-profit with roots in the Wampanoag tribe. There are plans for a newly formed Aquinnah-based conservation group, the Aquinnah Land Initiative (ALI) led by a Wampanoag, all-female board of directors, to eventually own the property. “‘I am thrilled to have the land back in the hands of the Wampanoag people’ says ALI President, Wenonah Madison. Madison is the great-granddaughter of Napoleon and Nanette Madison, who founded the restaurant in 1948. ALI’s mission is ‘to restore the sacred relationship between native people and our ancestral lands’, the group says. The press release states that ALI has been assured that a Wampanoag-owned business will lease the former restaurant.”  (MV Times August 18,2023)

 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 by clicking the link or Call: 506 696 9999 Email office@tealaneassociates.com

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.