2022 Q3 Market Commentary

Happy Fall to one and all. The warm and overly dry summer returned to the Island and again brought many eager patrons back to enjoy her beauty. By most accounts, everyone fully enjoyed themselves.

Beginning the new year, the local market was riding high upon the carry-through demand from 2021, but our inventory was already working from a deficit. The annual consumption of residential property has far outpaced the replenishment rate during the past eight years. Especially since our natural channels of inventory re-stock come primarily from life events such as death, divorce, and family economics and not from new construction efforts.

Activity and transactions were consistent and on pace, until late June when mortgage rates skyrocketed. The cooling affect upon local real estate activities was marked throughout July. But as the Federal Reserve’s new paradigm took hold, and became better understood, August and September sales activity resumed, albeit with less fervor than was experienced during the first half of the year. 

While inventory on-Island exists across the full market spectrum, not surprisingly, the most economical segments have experienced the greatest levels of consumption and are the most depleted. But as limited supply persists, it will only become more problematic to acquire property as consistent competition coupled with low inventory will preserve elevated prices for the foreseeable future. And this unfortunately, is not a condition that will resolve itself in the short-term nor amidst rising interest rates.  Higher rates will affect the buyer at the margin, but not necessarily those buying between the median and average market prices on Martha’s Vineyard.

Notable during the waning weeks of August was the lack of late season listings that were activated to participate in the truncated, “fall market”.  It was almost a non-event going into early September. Unbelievably, at this writing, there are only 127 residential properties currently available for sale Island-wide!

For sellers, market momentum has remained in their favor given the persistent low inventory condition. However, that should not embolden them to command outrageous prices at resale. Mortgage lenders learned their lessons well from the last recession and have become highly vigilant with respect to appraisal and credit risk issues associated with transaction prices.

The exuberant excesses we recall from the last housing bubble are not present today, nor are the same contributing factors. However, location, amenities, condition and market segment will continue to be significant pricing variables affecting the consideration and urgency to transact real estate on-Island.

Please consider the following;

• Year-to-date 259 residential properties have sold on Martha’s  Vineyard, which is down 28% from the 359 sold for the same period in 2021.

• Q3 alone has conveyed 79 residential properties, which is also down 30% from the 113 sold in 2021 for the same period. • Year-over-year median home sale prices have increased 13% from $1,375,000 to $1,550,000 with average home sales prices also increasing 3% from $2,034,002 to $2,098,166 for the period.

• On average, year to date home sales on-Island have transacted at 98.5% of their asking price while realizing 175.5% of their tax assessment! This correlation suggests that property sale prices are exceeding the respective tax assessed values more broadly throughout our micro-market and reflect the continued scarcity of available properties to purchase.