Economic Forecast: Sunshine, After All
Rental Market Season Begins Slowly, but Bookings Even with Last Year; Ferry Reservations Filling Up
By JULIA WELLS
Gazette Senior Writer
The war in Iraq, four straight months of vicious winter weather followed by something that only vaguely resembled spring - perhaps it's little wonder that the economy on the Vineyard this year is like the lilacs: late to bloom.
But bloom it will, the prognosticators say, and despite regional reports last week that cast a gloom on the coming season for resorts from the Hamptons to Cape Cod, the summer outlook on the Vineyard is decidedly auspicious.
The summer rental market had a slow start, but lately the pace is picking up.
"During the war the phones really slowed down and people just were not booking, but now they are and we're getting calls," said Judith Federowicz, the owner of Landmarks Real Estate in Vineyard Haven.
"The rental market this year started out very slowly, but recently it rapidly increased and we are running about par with our numbers from last year," said Sharon Purdy, owner of Sandpiper Realty in Edgartown.
Ditto for advance reservations on the Steamship Authority.
"This year everything is a little late," said Gina Barboza, director of marketing and community relations for the SSA. "I don't want to say it's bad, it's just later," she added.
Ms. Barboza said boat line ferries are sold out for the coming Memorial Day weekend, and they are sold out for every peak period through the summer, including Fourth of July and Saturdays. She said there is still some availability during the midweek periods, and there were some group tour cancellations during the spring. Group tours are a staple of the shoulder seasons, especially the fall. Ms. Barboza said the group tour bookings still look strong for the fall.
"We seem to be getting some group tour cancellations, but beyond that there are no hard numbers that say we are off," Ms. Barboza said. "The serious people - the people who rent every year and own homes on the Vineyard - are still committed. It's those middle-of-the-week, last-minute, are-we-going-to-travel-or-not people that we don't know about yet," she said.
If past is prologue, the boat line can expect to see another profitable summer. The annual report released by the boat line last week shows the SSA ended last year with total operating revenues of $67.6 million, an increase of 7.7 per cent over the previous year. Passenger revenue was up 3.7 per cent and car revenue was up 12.2 per cent.
The summer rental market is one economic indicator for the Vineyard. Ms. Federowicz and Ms. Purdy, both principals in established real estate companies, said they are not seeing the sharp drops that have been reported on the Cape this year. Both did say that high-end properties are not as popular as they were a few years back.
"High-end rentals are not going nearly as quickly," Ms. Purdy said. Ms. Federowicz agreed.
"High end is the last to go but that's with everything - sales as well as rentals," she said.
The remark led to the larger question that is still something of a puzzler: Can the Vineyard economy as a whole remain insulated from a weakening national economy beset by rising unemployment, a falling stock market and new fears about deflation?
Numbers from the Martha's Vineyard Land Bank confirm reports that the very top of the market, which has been explosively hot in recent years, finally appears to be cooling.
Six weeks before the close of the fiscal year, the land bank reports total revenues at $7.1 million, a 15 per cent increase over last year, when revenues stood at $6 million for the same period.
The land bank fiscal year ends on June 30.
Land bank executive director James Lengyel said this week that the 15 per cent increase in fact marks the end of a two-year dip. Last year land bank revenues were off 10 per cent from the year before and in 2001 revenues were also off six per cent from the year before.
"The path we're looking at is a six per cent drop, a 10 per cent drop and now a 15 per cent increase," Mr. Lengyel said.
The number of transactions is also rising and is up six per cent. But the biggest clue to real estate trends lies in the type of transaction. For eight years land bank statistics show that transactions of $1 million or higher have been on the increase, but this year that has changed. The heaviest activity in real estate sales now lies in transactions between $500,000 and $1 million, Mr. Lengyel said.
"It's another sign of liveliness in the market. Here we are thinking we're into a drop and there is vitality - and what I find interesting is what sectors are seeing a steady trend. The steady vitality in the market is between $500,000 and $1 million - that's what the numbers bear out," he added.
Land bank revenues are collected through a two per cent transfer fee on most real estate transactions. The money is used to buy conservation land. But if $7 million sounds like a lot of money, in truth it only makes the barest dent when it comes to the land acquisition list prepared by elected and appointed officials in the six Island towns. "The land bank is looking at a priority list of $60 million worth of real estate," Mr. Lengyel said.
Quiet and unsung jewels, public land bank properties are strung throughout the woodlands, meadows and coastal sandplains of the Vineyard.
Mr. Lengyel said despite the upturn in revenues this year, the land bank will continue to be conservative in its projections.
"Having seen two years of down trends, the land bank was very, very cautious with its projections and we will continue to be cautious. It's hard to reverse the land bank's innate cautiousness. We are still working and going on the assumption that we should be cautious," he said.
Meanwhile, the predictions go on for a strong summer season.
"Saturday to Saturday looks as strong as it did before. Memorial Day weekend is sold out, so is the Fourth of July and so is most of August," said Ms. Barboza.
"In the middle of the week there is still some space available on the ferries, but these spaces usually get filled by people who make last-minute plans to come to the Vineyard," she added.
"Overall it's not bad - the economy and the war definitely have impacted rentals, but our situation is pretty good," Ms. Federowicz said.
"We think it's going to be a very good summer," she concluded.
"We feel there is going to be a great deal of last-minute booking, and we've seen that in past years as well. Our numbers have not changed from last year. They are in fact a little better than last year," said Ms. Purdy.
Fred Raskin, the chief executive officer of the Steamship Authority, recalled a recent conversation with a seasoned ferry captain that strayed to the topic of the day: The economy and the outlook for the summer season. Mr. Raskin said the captain told him there is really only one key indicator.
"He told me to forget about the national economy, forget about the war, forget about SARS. He said it's not the economy, stupid. It's all about the weather."