I think most Dunmer residents of Vvardenfell would choose the first option. while long-time non-Dunmer residents would no doubt chose the latter.
Vvardenfell was only recently opened up for colonization, which means there are few non-Dunmer who were born there, unless they were part of an outsider group (slaves, mercenaries, merchants, et cetera). While many non-Dunmer have becomes comfortably situated on the island, they're probably still considered outsiders by most of the dunmer.