After a strong start, the Vineyard real estate market appears to have weakened dramatically in the latter part of the fiscal year just ended, according to data for the Martha’s Vineyard Land Bank.
Land bank revenues, generated from a two per cent fee imposed on most real estate transactions and therefore a good indicator of the overall health of the property market, were a little over $7.7 million in fiscal year 2011, a modest increase on last year’s $7.4 million and well up on the $5.76 million of 2009.
But revenues were far stronger in the first half of the year than in the second. And the overall number of transactions for fiscal year 2011 fell seven per cent compared with the previous year.
“That is a not-inconsiderable drop,” said land bank executive director James Lengyel.
Land bank revenues came in just above the forecast of $7.64 million, which was based on a historical pattern in which a strong growth year tends to be followed by one in which revenues plateau.
“What the land bank was expecting was a flat year compared with the prior fiscal year, and that’s what happened,” Mr. Lengyel said.
Earlier in the year, however, things looked much rosier. In January Mr. Lengyel reported revenues up about 15 per cent at the midway point for the year, even as transaction numbers had declined about 10 per cent.
It appeared then that Vineyard real estate prices were growing strongly despite large inventories of property — which normally would point to a buyer’s market. There were 608 transactions in the first half of the year and the land bank took in some $4.4 million
Then came the reversal. In the second half of the year, revenues declined to about $3.3 million, although the number of transactions increased to 620.
On average, the land bank received $19,400 per transaction in the first six months. In the second half, its average take per transaction fell 27 per cent, to $14,100
Mr. Lengyel said February, March and April were usually among the slowest months for revenue, but even so, this was an abnormal decline.
The reason was that sales of lower-priced properties increased sharply in the second half, while sales of higher-priced properties fell dramatically.
Mr. Lengyel divided the market into three categories: sales under $500,000, sales between $500,000 and $1 million and sales of more than $1 million.
Between the first and second half of the year, sales in the under $500,000 category increased 22 per cent. Sales in the $500,000 to $1 million category increased 16 per cent. But sales of $1 million-plus properties dived 45 per cent.
Exactly why that happened, Mr. Lengyel could not say.
Perhaps it was just a statistical glitch. Or perhaps it indicates the Island housing market is again losing steam, that moneyed buyers are holding off because of renewed uncertainty about the economy and that less wealthy are being forced to sell for less.
Whatever the cause, the low sales volumes and trend towards lower-priced sales indicate the long-awaited recovery in the market is not evident yet.