Sharon Smith Purdy

Following is Sandpiper's standard Market Report for the month of February for the island of Martha's Vineyard.

Note that both sales volume and median have declined from January - 33% and 46% respectively.
            
            The vast majority of the current buyer activity remains well under $1.0 with 23 of the 27 sales pending

in that lower price range. We attribute the activity in this area to the fact that listing prices have dropped

considerably; there have also been several foreclosures and short sales at this price point.
            
            Current available inventory is well over 600 and we anticipate a substantial increase in this number as 

spring listings are brought to the market.
            
            Obviously, we are looking forward to the increased activity that the spring season will bring to the island.

PRICE
# SOLD
Under $1.0M
10
$1.0M - $3.0M
1
Over $3.0M
1

SOLD UNIT COMPARISON

SOLD DOLLAR VOLUME COMPARISON

Following is Sandpiper Realty, Inc.'s monthly Martha's Vineyard Market Report providing a summary of the dollar and unit volume of sales for January 2009.

As the year progresses, the comparison charts will show you the month to month trend as well as the year to year trend.

The majority of the sales that occurred in January were under $1.0 (72%), while the dollar volume remains high. (This number is skewed by two high end sales - $7.5 and $11.75 - both Edgartown waterfront properties). It should be noted that there were no sales between $1.4 and $4.3. This is consistent with what we have been representing - most sales are under $750,000, nothing is selling in the middle range and a few multi-million dollar sales continue to be made. At this time, most buyer interest is under $1.0 and we expect this trend to continue for at least the next several months.

SOLD UNIT COMPARISON

SOLD DOLLAR VOLUME COMPARISON

Following is our standard monthly transaction summary for December 2008 along with a month to month unit comparison for sales from 2005 through 2008 for all property sales on Martha's Vineyard.

The year ended on a positive note as December 2008 sales were up from November 2008 as well as from December of the previous year. However, at year-end the decline from 2007 was dramatic - the number of sold properties on the Island was down approximately 17% and total dollar volume decreased approximately 30%.

As we end a year of great instability and move into a new year with a new administration, we hope that the change brings more positive results.

MARTHA'S VINEYARD SALES - DECEMBER 2008

MARTHA'S VINEYARD REAL ESTATE 2005 - 2008

By Sharon Purdy
Published in The Martha's Vineyard Times: December 31, 2008

Galileo's Famous Falling Object Experiment applies even to real estate - what goes up, must come down. Every good run of appreciation is inevitably followed by a period of declining sales and values. The Martha's Vineyard real estate market has run in 10-year cycles since I entered the industry nearly 40 years ago.

Statistical data for the past 20 years clearly illustrates what has happened in the Island market in that time period. The graphs included here are an aid to understanding the trends.

Historical trends

In March 2002, The Martha's Vineyard Times published "A Year by Year Review of the Real Estate Industry on Martha's Vineyard" from 1989 through 2001.

The Times graphs showed the decline in values and sales from the late 1980s to the early 1990s, coinciding with the downturn in the economy at that time. They also showed the trend of the recovery that occurred from 1991 to 2001.

We have continued charting the real estate trends from 2001 to 2008 and the results are truly enlightening.

In the 1990s, the growth in dollar value and the number of transactions closely paralleled one another. Our Island economy, and our real estate values, followed the general growth in the national economy. Additionally, Martha's Vineyard gained international recognition when former President Clinton chose the Island as a summer retreat. The media attention brought us many new summer visitors and consequently a whole new pool of real estate buyers. We had a decade of continuous growth in sales and values from 1991 to 1998.

Popular opinion is that the real estate market continued to grow for yet another decade (1998 to 2008), but upon review of the actual numbers of sales, it's evident that the first decline began in 1999, when sales dropped from the all-time high of 1,000 in 1998 to 895 in 1999. And those numbers kept going down - as of November 30, there have been only 299 sales in 2008.

However, the perception of growth continued because the dollar volume continued to climb until 2005 - imagine, fewer sales, more dollars.

Many property owners feel that the market decline began this year. In fact, the decline began in 2006. The highest dollar volume in sales was reached in 2005 and there has been a 55-percent decline since then. Note that this decline began long before the stock market began to tumble.

Consequences

As wealth was accumulated in our economy, demand was created, and prices were driven up. And this wealth changed the face of Martha's Vineyard in many ways, but most evident to me was the loss of many potential buyers who were priced out of the market. An important segment of these lost buyers are the year-round residents of the Island. The enormous growth in the cost of even the smallest parcel of land or the most modest house removed forever the opportunity for many Islanders to purchase their own home.

A second result was the loss of jobs. As is most often the case, when a real estate market booms or busts, so too goes the number of real estate agents. In the 1980s, there were approximately 30 offices on Martha's Vineyard. Today there are more than 80. There has already been some attrition, and there will undoubtedly be more in the months to come.

Future options

While it is impossible to accurately predict what lies ahead, knowing the trends of the past two real estate cycles does provide a legitimate basis for making decisions on how to move forward.

Any property owner interested in selling within the first few years of the next 10-year cycle needs to be apprised of historical trends to understand that a dramatic shift has occurred in the Martha's Vineyard real estate market. We strongly urge all potential sellers to understand current market conditions and the changing values and to consult a professional, experienced realtor about how to best position themselves to accomplish their goals.

At the same time, a prospective buyer should be examining the same historical trends and understanding that they have been provided with a window of opportunity to invest on Martha's Vineyard. There are several conditions favoring the buyer:

• There is more inventory available now than at any time since the market downturn in the late 1980s.
• Price reductions/corrections are occurring with regular frequency.
• Interest rates are lower than they have been in the past 40 years, and financing is readily available to qualified buyers.

An incredible opportunity presents itself to all those who have been waiting on the sidelines for the past decade, wishing they had gotten into the market in the early 1990s!

Sharon Purdy is the owner of Sandpiper Realty Inc. and Sandpiper Rentals Inc. in Edgartown, Martha's Vineyard, Massachusetts. She has been a licensed and practicing agent since the early 1970s and has survived and thrived through several market downturns

Recently, The Martha's Vineyard Times did an on-line Q&A Session with a several Vineyard real estate brokers regarding the state of our real estate market. Following are the questions they posed along with my response:

Martha's Vineyard real estate sales appear to have fallen a little in volume and a lot in price. Is that your office's experience? If not, what has been your experience? And, what is your office doing that's new to energize the real estate market on Martha's Vineyard?

Statistical data speaks volumes in this regard. We regularly track market activity so that we're able to properly counsel our clients. The stats that follow clearly show that the number of sales has fallen more than "a little"; Vineyard sales YTD have declined over 40% compared to 2005 and, given that very few sales are currently reported as pending, that percentage is likely to be higher by year end.

It is a little more difficult to precisely track how much prices have come down - we've estimated approximately 15%, and the state association recently came out saying that the statewide number is 15.3%. This will vary by price range, location and other factors so prospective buyers should not expect this type of reduction across the board.

Since the real estate market is, and always has been cyclical, it's important for buyers and sellers to be properly counseled to identify their goals and to act accordingly. Counseling is a major part of our client service.

This has, undoubtedly, been a year of change; our agency is well positioned with nearly 40 years of service as well as previous experience in down markets, giving us a distinct advantage in a market that is always competitive (more than 80 real estate offices on a 22-mile-wide Island).

The fall and the spring have traditionally been the big real estate sales periods on Martha's Vineyard. Are buyers adhering to that longstanding pattern, or is there another pattern developing?

During the recent boom period, the Island real estate industry became more or less a "year-round" business with one season blending into another in terms of productivity - still generating more on-site lookers in the summer months but ongoing activity at all other times of year. The seasonal aspect of real estate returned in full force in the winter of 2007-2008, and we anticipate that this trend will continue until the market turns up again. Remember that the Island never had a "year-round" real estate business until the boom in the 1980s.

What are you telling buyers and sellers about what they should expect in terms of pricing, volume of desirable listings, length of time a seller may expect to see his property on the market?

Location, Condition and Price - These are always the three factors that govern the marketability of a property, days on market etc. This age old adage continues to hold true. It is the duty of good real estate professionals to fully inform and counsel their clients on all three factors as they relate to a specific property.

Inventory has increased more than 40% in three years. Even worse, it's increased by 23% in this year alone - inventory numbers for the past three years are illustrated here:

A bit more positive perspective can be maintained through this downturn by understanding the natural cycle of real estate and making certain that, as either an owner or a potential buyer, you're well informed:

As a PROPERTY OWNER, you should be properly positioned to meet your goals in the most advantageous way possible; seek all professional counsel available to assist you.

As a prospective BUYER, become a leader, not a follower - don't buy when the market is high and you're competing with everyone else, buy when the market is down and you stand out. Get educated and stay tuned....