During the pandemic, the real estate market on Martha’s Vineyard was booming: houses sold at record highs with many city residents buying homes to seek refuge on the Island.
Some new buyers looking for homes considered, or maybe hoped, that the market might regulate itself with those seeking shelter from COVID-19 putting their homes on the market now that the storm has mostly passed.
But taking a look at the recent real estate numbers, and that does not seem to be the case. Prices on the Island are remaining high — the median home sale is a whopping $1.38 million — and inventory remains low.
The theory was that the high-priced market would cause those that bought properties in the pandemic to take advantage of the opportunity and sell. But they haven’t.
Real estate agents on the Island say that buyers weren’t here to temporarily escape the pandemic, they’re here for a long time. They also say that many pandemic-era buyers always had the intention of purchasing Island real estate, but remote workplace conditions pushed forward the timeline, and many bought properties as legacy assets to be passed down through generations.
Sean Federowicz, a broker associate at Landmarks Real Estate in Vineyard Haven, thought that escalating sale prices on the Vineyard would push those that bought Island properties in “aggressive consumption” in the pandemic to “opportunistically” put their houses on the market.
But, in Federowicz’s newsletter about the year’s second quarter — April, May, and June — he said that his expected “‘spring market bounce’” from new houses on the market didn’t materialize.
“This thesis may not fully address the still constrained inventory condition on-Island,” Federowicz said. “In fact, the answer may lie more simplistically in the fact that this micro-market is finite, and that since we had averaged over 400 residential sales annually during the several years preceding COVID, and that most properties purchased are considered ‘legacy assets’ and do not intend to be resold in the foreseeable future.”
The legacy assets that Federowicz mentions are intended properties to be passed down through generations, which understandably would decrease turnover rate.
More than just legacy assets, James Feiner, principal owner of Feiner Real Estate on the Island, said that those who bought “COVID havens” probably always had a strong interest in Island real estate; the pandemic just encouraged them to make the purchase sooner, he said.
“Duress turned people into investors,” he added.
Federowicz agreed. He said that the problem is we pulled a number of transactions forward that would’ve happened in future years.
The houses, which Feiner suggested cost a lot more than they should have, became a getaway and a place to bide time away from the mainland and “wait out the storm,” Feiner said.
Ryan Castle, Cape Cod & Islands Association of Realtors, said the pandemic expedited decisions to buy a home in the region, noting that people who would have bought homes in 2025, 2026 and 2027, decided instead to buy during the pandemic. “If you spread those out over the next three or four years, the market looks more normal,” he said.
But now that the storm is less of a downpour, many have chosen to stay in their havens, and unfortunately for the Island’s real estate market, that’s caused a bit of a problem.
The channels of replenishment on the Island are finite. They’re death, divorce, or financial decisions, Federowicz said.
Pre-COVID, around 400 single family residential homes were available for sale in the second quarter, but this year, there’s only around 200, and it’s almost August, Federowicz said. The market saw about 141 available this time last year, so there’s been modest improvement. Supply was historically low the past couple of years, but it is starting to creep up, Castle said.
In the second quarter, 61 residential properties were sold across the Island, which is down about nine percent from 67 properties last year, according to data pulled by Federowicz.
Low supply isn’t only an Island problem, Federowicz said. It’s actually a nation-wide phenomenon.
But off-Island markets can more easily off-set low supply and build more houses. For the Island community, that’s not really possible.
In theory, when inventory goes down, the solution is to build more houses, but that’s not a feasible reality here, Feiner said. “Zoning is very resistant to overdevelopment,” he said, which he added isn’t a bad thing.
It’s one of the reasons that the Island can’t build its way out of the affordable housing crisis, Feiner said.
Feiner said there’s a possibility that as interest rates inch down, property values may rise as well, possibly encouraging sales, but that might not necessarily be true across the board.
And another problem is that prices are already high. The median price for residential sales this quarter was $1.38 million, and the average was closer to $2.2 million. Those numbers are pretty stable from last year, but that’s still “a lot of money,” Federowicz said. There are only 22 available properties on Island under $1 million, according to Zillow search results.
Sellers are holding onto COVID pricing, said Courtney Marek from Sandpiper Realty in Edgartown.
“New listing pricing is aggressive,” she said, which is the reason that demand has decreased, and buyer activity is slow.
“We’re very heavy at the top in terms of inventory,” Marek said. In one data pull a few weeks ago, she saw that about half of the listings in Edgartown were over $5 million.
