Page 4 - Luxury Market Report as of January 2021 revised 3-15-21

Island Summary

2020 Year-in-Review: It was an unusual year to say the least! The island saw record home
sales with 544 single and multi-family properties sold, for an increase of 40% over 2019. The
luxury market (defined as above $900K, which has been the median price on the island for the
last 10-years), drove the gains — with an increase of 84.4% to 343 homes sold. But, in the
market for homes under $900K, sales remained flat at the same level as 2019, at just 204 homes
sold. While we predicted this bifurcated market would develop, the magnitude of the gains in the
luxury market far exceeded expectations. What caused it and will it continue?

Essentially three main factors drove the gains. First, there were powerful effects from tax
law changes affecting the second home market — favoring the luxury end of the market, where the
buyers were not as affected by the capping of property taxes and mortgage interest that could be
claimed on federal tax returns, but did affect the buyers in the under $900K market. Secondly, the
historically low interest rates, a very strong economy going into February of this year, plus sales
that were already in the pipeline from a strong end to 2019 sales, drove strong gains in the first 4-5
months of the year. Thirdly, the coronavirus, which slowed island home sales in April and May, then
combined with an eruption of violence in the major urban areas, and caused an accelerated trend to
working remotely, driving buyers into the luxury market on the island.

What’s Ahead for 2021? The big unknown right now of course is how fast the new
vaccines will halt the virus and push us forward in phases 2, 3 & 4 of the reopening. The
expectations are that the economy will resume its full steam ahead mode but gradually -- due to new
stimulus spending, continued growth from the 5 new trade deals, low inflation and interest rates,
past deregulation and tax law changes, and likely strong new federal budget spending. Nonetheless
– while this would normally point to an unusually bright outlook for island home sales, we still face
the end of a devastating pandemic, low inventory of homes for sale, and rising home prices. And,
comparisons to 2020 historically record sales mean that even if sales remain strong, they will likely
post a decline compared to 2020.

While older-skewing demographics continue to attract cash buyers looking to purchase
second or third vacation homes, one of the new primary factors driving growth across the island
luxury real estate market is the evolving profile of the luxury home buyer. Decades ago, Baby
Boom buyers sought large mansions that offered privacy and unobstructed coastline views.
In contrast, today’s luxury buyers – often older Millennials and young Gen Xers – are
motivated by unostentatious yet modern homes that are of equal distance to uninhibited
seacoast and downtown amenities; in short, access is displacing opulence when it comes
to defining a luxury listing on Martha’s Vineyard. This desire to be close to conveniences
like restaurants and shops has led to large per centage increases in single family homes
sold year-over-year in areas such as Edgartown, Oak Bluffs and Vineyard Haven.

Though diverse in geography and landscape, each of these towns offer the ease of
accessibility that today’s luxury home buyer’s expect. 55 Ocean Ave, Ocean Park, with water views, 4BRs/5.5BAs,
sold for $2,200,000