With the level of appreciation we experienced this past year, will we see some type of softening in the 2021 real estate market? The experts are saying that won’t be the case. It looks like there will be continued demand and high prices being paid for Vineyard properties.
The following is a five year sales comparison for Vineyard properties. We saw a 40% increase in the number of sales and a 31% rise in the median selling price in 2020! While I don’t think this will repeat itself, I do think we will continue to see appreciation in 2021.View in Browser
In addition to the national outlook, the Vineyard has two unique characteristics that add to the continued demand and rise in sale prices. The fact that it’s an Island creates the issue of true limited inventory, as there is no option to buy something for a little less, “further out” from the prime areas.
Secondly, the huge rental demand that we’ve experienced for decades allows people to feel confident that purchasing here is always going to be a solid investment. So, while someone may feel that they could be over paying, they know they can rely on the rental income even if the market does flatten over the next several years. During the last recession our rental prices actually went up due to less sales, as that caused less properties to be introduced to the rental market. This decrease in supply drove up rental prices. As the sales market has recovered, we’ve actually seen owners needing to slightly reduce rates in weeks of lower demand. Of course, now that we’ve had the huge spike in people being able to work from home and such little available for sale, the rental market can’t keep up with demand either. We are seeing many people wanting to rent for the entire season, rather than just a week or two.
We most likely won’t see the massive appreciation we experienced during 2020, since so much of that felt like the result of people panicked about their current living situations and locations. And while we are still seeing a huge demand from buyers, there doesn’t seem to be as much of a frenzied feeling to it. But, appreciation has continued to rise over the last several years (see Ten Year Price Index below) and I think we can at least expect that to continue. With so many companies seeing the success of employees working from home, it only makes sense that this will play into the continued higher than normal level of demand for the Vineyard.