Page 4 - Luxury Market Report as of May 2020

Island Summary

2019 Year-in-Review: Last year saw a 2-tiered market develop on the island where
properties in the luxury market above $900K (the median island price) saw sales rise by 2.7%,
compared to sales in the under $900K price range which saw sales decline by 16.7%. As a result,
overall island sales declined 9.3%. Average price in the luxury market rose by 29.7%. Days on
market climbed to 205 days. The combination of tax law changes reducing/eliminating the tax
advantages of owning a second home, particularly in the lower end of the market, the new
rental taxes, the low inventory of homes, and the length of the current housing up cycle, all
conspired to push overall sales down. And this was despite record low mortgage rates nearing
3%, record low unemployment at 3.5%, moderately strong gains in income and wages, high
consumer confidence and moderate economic growth.

What’s Ahead for 2020? The big unknown right now of course is how fast will the island
bounce back now that we are in the opening phase following the virus shutdown. The expectations
are that the economy will resume its full steam ahead mode but gradually -- due to 5 new trade deals,
low inflation and interest rates, past deregulation and tax law changes, and strong new federal budget
stimulus spending. Nonetheless – while this would normally point to an unusually bright outlook for
island home sales, we still face the end of a long 10-year up swing in the housing market, the power-
ful effect of tax law changes affecting the second home buyer, and a relatively low inventory of
homes. All of these will help drag down sales for a second year in a row, but by 9%, or about the
same as last year’s decline. Prices will continue to climb – up 5% and, days on market will remain
near 7-months..

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.