Property Inventory Rises; Brokers See Slowdown
By JAMES KINSELLA
Gazette Senior Writer
More properties are coming onto the Vineyard real estate market, dampening what had been an explosive increase in sales prices.
"Prices have continued to move up, but not as quickly as sellers would like," said Jim Hogan of Tea Lane Associates in West Tisbury, who has appraised and sold real estate on the Island for the past 12 years.
"There seems to be a normal number of buyers looking around," Mr. Hogan said. "There's a slightly higher inventory. Deals will be made at a smaller percentage of asking price."
Whereas Tea Lane had been selling properties at 90 to 100 per cent of asking price, Mr. Hogan expects deals in the coming months will be made closer to 80 per cent of the asking price.
An increase in inventory and a slowdown in price appreciation is revealed in the draft second-quarter numbers now being assembled by LINK, a Vineyard Haven-based business that tracks market transactions.
By the end of the second quarter of the year, the three months ended June 30, inventory of Vineyard properties with structures on them, such as single-family homes and condominiums, rose 31 per cent over the same period a year earlier, to 355.
Over the same three months, the sales of such properties on the Vineyard dipped 8 per cent over the same period to 132.
Inventory of land over the same period rose 33 per cent to 84 parcels, while sales fell 31 per cent to 18.
Three Vineyard towns - Oak Bluffs, Vineyard Haven and Edgartown - account for the bulk of sales of properties with structures on them, according to LINK.
A comparison of the 2004 and 2005 numbers shows a flattening of the market in Oak Bluffs, where the number of structure sales dropped from 45 to 41, and the median sales price dipped by $5,000 to $520,000.
A similar trend is revealed in Vineyard Haven, where the number of structure sales rose from 31 to 32, and the median price rose six per cent to $589,250.
In Edgartown, sales dropped sharply from 51 to 31, a drop of 39 per cent, helping push the median price 25 percent higher from $590,000 to $739,900.
In two of the three towns, median sales prices increased more sharply from 2003 to 2004 than over the past year.
Between the second quarters of 2004 and 2005, the median shot up 41 per cent, or $155,000, in Oak Bluffs, and 38 per cent, or $154,000, in Vineyard Haven.
In contrast, Edgartown saw similar price appreciation in each of the two years, with the median rising 24 per cent or $116,000 between 2003 and 2004, and 25 per cent or $149,000 over the past year.
LINK owner Eleanor Wilson said structure sales for the Vineyard overall slipped from 143 in the second quarter of 2004 to 131 in the quarter ended June 30. In the same quarter five years ago, 162 structure sales took place.
Neal Stiller, who has worked as a broker at Cronig's Real Estate since 1982, said a number of Island residents may be thinking that the market has peaked, leading them to put their properties up for sale.
"We've gotten a tremendous buildup in inventory very recently," Mr. Stiller said. "There's this very recent trend of homes starting to fly in the door. People are thinking, ‘Get out while the getting's good.'
"We could be at the start of a new cycle, a trend downward," said Mr. Stiller, who has worked in the Vineyard real estate market since 1982.
Also, he said, LINK statistics show that most sellers are not getting their full asking price. Of Vineyard structure and land sales detailed by LINK in the final three months of 2004, Mr. Stiller said, 17 per cent went for full price or more.
But Alan Schweikert, a broker who has worked in the Vineyard market since 1973, said the increased inventory in the Island market is being met by increased demand.
"Properties, in terms of values, are increasing," said Mr. Schweikert, the owner of Ocean Park Realty in Oak Bluffs. "They've always gone up.
"I see more properties coming onto the market," he said. "It's a very strong market. They're selling."
The Vineyard, he said, always is going to have enough demand for its supply of property, especially since the Martha's Vineyard Land Bank continues to buy private parcels for public ownership.
But Mr. Schweikert also said that properties must be priced properly to sell. Given the good exposure that the Vineyard market gets and the marketing activity of the Island's 60 or so real estate brokers, Mr. Schweikert said, any property that sits longer than three to four months is overpriced.
Mr. Hogan said Vineyard property owners need to remember that they're selling something that many of their customers don't need. Those customers, Mr. Hogan said, often aren't seeking a primary home, but a second - or even third or fourth - home.
He said such buyers can wait. And if they sense a softening market, they'll wait longer. Of course, he said, a sense that the market is softening can lead to an actual softening, through a decrease in demand and consequent price declines.
Mr. Stiller expressed some concern about the 100 per cent or higher financing that he has seen on a number of Vineyard property sales. Should the market turn down, he said, buyers might walk away, leaving lenders holding the properties. Regulators will frown on lenders who own houses, prompting them to sell rather than carry the houses.
Mr. Stiller said he believes a slowdown in Vineyard real estate is due. "The market can only handle so much," he said.