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."