How long until we return to a balanced real estate market on Martha’s Vineyard?

My guess is 18 months. The unsold housing inventory of all properties and classifications on Martha’s Vineyard is just over 800 units. In any normal market, one that is balanced, the average time on market is about 90 days. When the inventory absorption rate or days on market (DOM) goes beyond 6 months we consider that to be a ‘buyer’s market’, and conversely when the average is less than 90 DOM we call that a ‘seller’s market’. When the inventory is high, buyers are in a better negotiating position --- as a rule. In order to thoroughly analyze the market you have to consider the various classifications and price lines as well as locations and the type of market. I think in our second home market the average time on market is a little longer. Buyers do not have to buy and sellers do not have to sell; they already have their primary residences.

As an example, taking only single family residences (SFR) on Martha’s Vineyard during the last 12 months, the average time on market was 317 days. Currently, the inventory of only SFR has increased to 516 units, so using the previous DOM rate we have about a 2 year supply of homes to absorb. I think it will be a lot less than that, as many more buyers are gaining confidence in our economic recovery and realizing the bottom of the market is here. Eager investors are entering into the market in increasing numbers to take advantage of the lower prices and attractive interest rates – below 5%!

Although the inventory is high, and actually increasing, in spite of all the recent sales, I attribute the increased inventory to more owners rushing their properties to market or re-listing their properties because they believe we have turned the corner and now is a better time to sell.

There are still those home owners who will be facing major loan adjustable rate resets before the end of the year and they want to get out now if they can in order to save their credit rating. Short sales continue to be a slippery slope for both sellers and buyers, but lenders are getting more assistance allowing them to be receptive to home owners applying for loan modifications. I do believe we will see more property loans in default even though a good majority of them will never go to auction, at least not on Martha’s Vineyard.

You still have time to take advantage of the many available and affordable opportunities in this market with the assurance that an investment made today will appreciate handsomely within the next five to seven years. Just remember, as the supply diminishes and demand increases those so-called good deals will become fewer and far between.