Last winter, island life felt different to Penny Dey, who has lived on Nantucket for some 45 years.
“It wasn’t as crowded as summer but there were definitely a lot of people that were not typically year-round residents,” said Dey, who is broker/owner of Atlantic East Nantucket Real Estate.
The pandemic had prompted many people to buy or rent homes on Massachusetts’s remote outpost, and they had settled in, staying through the off-season. The sudden influx of buyers changed the feel of island life and the local real estate market – and raised questions about how long the pandemic trend will last.
Island life has held particular appeal during a time of social distancing and safety-seeking, pushing home sales on Nantucket and Martha’s Vineyard to new levels.
Numbers of single-family home sales have increased by 72 percent over the past two years according to The Warren Group, publisher of Banker & Tradesman, from 112 through October 2019 to 177 in 2020, and 193 homes sold through October of this year, with the median single-family home prices surging from $1.56 million over the same period in 2019 to $2.22 million so far this year.
On Martha’s Vineyard, sales increased by 27 percent between 2019 and November 2021, with 221 sold through October 2019, 297 sold through October last year, and 280 sold through October 2021. The median price for a Vineyard home has jumped from $780,000 in 2019 to $1.56 million through October of this year.
Buyers ‘Keep Piling Up’
Not surprisingly, real estate agents on both islands are busier than ever, awed by the influx of wealth propelling the sales, concerned about those who can’t compete – and wondering what 2022 will bring.
The islands’ pandemic buyers hail from the same places they typically do, according to William Raveis Nantucket broker John Arena: Collectively, 75 percent of his buyers are from Connecticut, Greater Boston, New York City and Westchester County, New Jersey and Greater Philadelphia and Florida. The story is much the same on Martha’s Vineyard.
Noting that Chilmark is known as “Hollywood East,” Sandpiper Realty agent Dawn Bellante Holand said a growing number of her buyers are based in Los Angeles and Atlanta, while Tea Lane Assoc.’s principal broker and co-owner Abby Rabinovitz added Texas, Chicago and Great Britain to the list. Many have spent time on the islands with family in years past.
On both islands, the surge of demand amid little inventory has brought new challenges.
“I’m working with a pool of buyers that keeps just piling up,” said Meg Bodnar, a broker at Tea Lane Assoc.
Pre-pandemic, she worked with a small cohort of buyers over several seasons. Now, she’s figuratively holding buyers’ hands, calling to say she hasn’t forgotten about them, but that the well is dry. The cold-weather lull that typically punctuates their business has even been absent this year.
“I just have nothing. There’s just nothing available,” she said. “I want to solve it for them, and I can’t.”
More Cash Offers than Ever
Successful buyers are well-funded, able to afford going above asking price and paying with cash to a degree that shocked Bellante Holand. About two-thirds of her pandemic-era buyers initially offered cash, with most ultimately financing their purchases amid record-low interest rates. They’re not typical summer residents either, Dey noted, be that on Nantucket or Martha’s Vineyard. They’ve stayed put for months, some for more than a year, many without any apparent desire to leave.
“You have a group of new owners who are buying who really want to be part of the community,” said Rabinovitz.
For their part, pandemic sellers have generally been older and ready to sell, rather than being forced to do so due to financial difficulties or death, according to Arena.
“The past year and a half, there’s almost none of that, where people had to sell; they just cashed out because they would take that money and do something else,” he said.
Bodnar has been very busy for the past year and a half and notes that much good has emerged from the current market. And yet, not everyone has been able to make a home on the islands who wants to.
“I go to my kids’ school, and there’s families leaving because they can’t find a place to live, and their rental just went up for sale because the person who owns it can maximize the value on it right now,” she said.
A ‘Dark Side’ for Some
Those hit hardest are lower down on the economic ladder.
“There’s a dark side to all of this, which is the pressure it puts on the people who are trying to live here – sort of the workforce level on the island,” Dey said.
The same is true on Martha’s Vineyard, said Rabinovitz.
The housing crisis – which, for years, has prompted a variety of local employers to buy properties and homes to house their staff – and water quality concerns that limit new construction are “the two most confronting crises we’re looking at,” Cape Cod and Islands Association of Realtors CEO Ryan Castle said.
“The current disparity between supply and demand has caused rising prices at a high rate that’s outpacing what businesses pay for incomes for jobs,” he said. “So, we’ve got to get serious about how to create more housing at all price points to help the middle-income earner.”
There’s a chance that the reopening of affluent islanders’ remote workplaces and schools could ease things a little, William Raveis Nantucket’s Arena said. He foresees an end to middle-aged parents living with their adult children, “all working out of a $5 million house on Cliff Road, working from home because they can,” he said.
“Nobody, and I mean zero people, are doing a hybrid model from Nantucket,” he added, regardless of new commercial flights from the island to Philadelphia and Chicago.
Soon, he predicts, pandemic newcomers will sell their island homes and move closer to their offices.
Atlantic East Nantucket Real Estate’s Dey and Sandpiper Realty’s Bellante Holand see it differently. The more typical reasons for selling that took a backseat during 2020 won’t go away, Dey said, guaranteeing some inventory. Moreover, she suspects that new owners will keep their Nantucket homes, with an eye on the island’s equally burgeoning rental market. On Martha’s Vineyard, many homeowners have shifted to a hybrid work model, ensuring a steady stream of island time, Bellante Holand said.
“I cannot imagine that many people are going to be selling their homes because they’re going back to the office or their ability to work or school or home has changed,” she said.
UPDATED 12:35 p.m. Oct. 31, 2021: This story has been updated to correct the spelling of Dawn Bellante Holand’s name.
