Nantucket is amazing right now. If you have any opportunity, come.
We’re in the thick of returning security deposits from summer rentals. It’s fascinating to see the different approaches of homeowners returning security deposits. One would think it is very cut and dry – there are 10 hours of exit cleaning included, the cleaner invoiced me for 15 hours, therefore the tenant owes for 5 hours of cleaning – let’s say at $40/hr. – $200. But, it really is not that cut and dry. If the tenant paid $25k for the week, do you think she’ll be happy to get a $200 deduction from her security deposit. Some don’t care and think it is business as usual. Others, though, take strong offense to it. There are many factors that play into the homeowners decision – were they a needy tenant, are they going to be a repeat tenant, were they gracious, etc. In my opinion, one of the most important traits a homeowner should use is finesse.
Tom Brady, Roger Federer – that’s finesse. Aaron Rodgers is finessing – good on ya, mate!
September is an amazing month on Island. Weather is gorgeous, you can get into any restaurant, find a parking space, catch fish and waves, and the list goes on. Also, it is a great selling/buying month – sellers make sure the house is in tiptop showing condition and buyers are focused on buying rather than being on vacation. So, I’ve been showing a lot of real estate recently. One contrast between older (let’s say pre-2000) and newer houses that keeps being apparent is the older houses, for the most part, have shallower basements. For whatever reason, basements constructed pre-2000ish have 8′ or less walls and few, if any windows, and post-2000ish houses have at least 9′, and many times 10′, walls and many windows. I remember growing up on Island going into basements and you’d have to push the cobwebs out of the way, be careful about inhaling too much mold and on top of that, there was very little natural light – dungeon central. Now, the lower level (no longer called “basement”) is as nice as the rest of the house.
$629mm on the books and $208mm in the pipe.
Awesome whirlwind season. Nantucket really is special. Not many places can you find your own private beach in the middle of summer, watch the Beach Boys under the stars on the water, see and hear Ziggy Marley, Blues Traveler, Steel Pulse and The Revivalists, among others, in a 300 +/- venue, have five star meals after shopping at five star stores, catch fish, surf, bike the island from east to west, north to south on bike paths, run in the Race for Open Space thru the cranberry bogs, while all in good company of great people. The list goes on… So, it’s no wonder the market is strong – who wouldn’t want a piece of the Rock. Prices continue to rise. The average sale price thus far for 2017 is $2,021,481. At this time in 2016, it was $1,807,520; 2015, $1,769,298; 2014, $1,683,023. Total volume YTD is about 7% higher than 2014, our last billion dollar year. Econ. 101 – supply’s falling, demand is rising.
We’ve had some gorgeous beach days as of late, which actually quiets down the market. Although they do want to buy, buyers typically would rather go to the beach with their friends and family than concentrate on looking at property during their vacation. This is a main reason why fall is very busy. The buyers enjoy their vacations during the summer and focus on having fun. Then come bACK for a day or two during the fall to focus on buying a property. Also, listings typically show better in the fall because they are typically either vacant or have less people staying in them and they are easier to get into.
The market still feels strong, though. YTD, we are about 12% ahead of 2014, our last $1bn+ year.
Summer’s in full swing – the fish are biting, the bikes are cycling, the waves are peeling, the Grey Lady is green and colorful and the market continues to crank. The last $1,000,000,000+ year was 2014. At this point now compared to then, the total volume is up about $30,000,000, so I’m anticipating another $1,000,000,000+ year. I would think many buyers will take some money out of the equity markets as they are hovering at all time highs and buy a hard asset, like Nantucket real estate, that won’t cost much to carry and they’ll get to enjoy it. Time will tell…
On another note, showings are in full swing. Some listings have been on the market for multiple seasons, so a common question from a buyer is, “Why hasn’t this sold?”. There could be a million reasons – the property couldn’t be shown because of tenants, word on the street is the Seller is nearly impossible to work with, it was initially overpriced and is now stale and forgotten, but one reason that is commonly the case is there is nothing wrong with the property, Seller, etc., it’s just a good deal waiting to be had. For all the others, but the one who stepped up, it’s a classic case of could’ve, would’ve, should’ve.
Many of our buyer clients buy because finding the right rental house year after year is torture. Some tenants are fortunate to find the right house and be able to rent it year after year, hence why the top ones seem to always be booked; the repeat tenants won’t give them up. But, what happens if the owner decides to sell or use it themselves or the tenant’s dates change? All of sudden the tenant is back to square one, so they need to start the search all over. We, J Pepper Frazier Company, do a great job at pairing tenants with the right house, but some tenants just cannot handle the anxiety of not knowing the property, not knowing the linens, not knowing the kitchenware, etc., having to spend time and energy going through the choices, holding his/her breathe that the spouse will like it, so they eventually say, “I can’t do this anymore, we just need to buy something.” On the flip side, some homeowners cannot handle renting even though the house will sit vacant while there are tenants that want to rent it. Dealing with a broken fridge or a broken door knob or whatever from afar from the Faraway Isle is too much for some and they say, “We can’t do this again.” And then there is one less, great rental house. It’s like getting a loan from BoA.
Despite many weekends over the winter having high winds and storms causing the boats and planes to be cancelled, so buyers simply could not make it here, the market still had a solid first half. Total volume was $375mm compared to $420mm in ’16 and $318mm in ’15, which both ended strongly. Factor in pent up demand from the winter, the equity markets, which the Nantucket market is directly tied to, being at all time highs and that Nantucket is one of the most amazing places in the world, we should see a big second half.
Sometimes people say it’s a pain to get here and it can be, I’ve definitely been stranded on the mainland, but as the saying goes, the harder the battle, the sweeter the victory. This place is firing!
Dad can go a little bonkers sometimes, but regardless how you feel about what he writes, his writing is pretty dialed in and very entertaining. His dad, George Frazier, who I never met, wrote for the Globe, Life and other leading publications of the day. He was the leading jazz critic in NYC during the ’50-60’s – boom time jazz; rolled with the greats. I’ve heard he was the man. When someone writes a book about you called “Another Man’s Poison”, you’re probably the man. Some folks are really eccentric and most of the time it runs in the family.
So, to the market. It is and always will be strong. We have a diminishing supply and rising demand – does anyone see which way the arrow is going? I think it is pointing up. Sometimes the market takes a dip, but it’s amazing how late ACK gets in and how quickly she gets out. So, if you are a short term player, play well. Long term, the epically awesome continues…
I had, literally, to go off Island to testify in a court case. The criminal cases came first, so the judge called break for lunch. I went to a very cool restaurant on Barnstable Harbor. There was a big crew next to me. So, I was solo at the top place in Barnstable eating a lobstah with a big crew next to me. Guess what they were talking about? How they just wanted to be on ACK – the Rock is extraordinary.
There’s only so much supply and when equity markets are at all time highs, I’m willing to bet that demand will continue to rise. Econ. 101. Let the games continue!
There are indefinite, unlimited reasons why to rock the Rock. Two important ones are the tax rate, aka the mil rate, is among the lowest in the country. 1mm assessment, 3.65k tax – not bad. And the other, for a vacation home, you don’t have to claim income to the Feds from a rental of 14 days or less. With such a robust vacation rental market, many homeowners will rent for two weeks and basically pay all of their hard expenses for the year. And the list goes on…
Island is coming alive – cherry trees are blooming, hedges are getting green, stripers are biting and the tennis nets are going up – this place is amazing.