Pep and I just got bACK from seeing our buddy in Crested Butte, CO – very cool town. Naturally, I asked how the real estate market was and, as expected, was told it was strong. It has many similarities to Nantucket – charming historic district, tight zoning, stunning outdoors, friendly people, healthy lifestyle, solid restaurants, and a finite supply. Like Nantucket, it’s a market that won’t go down over the long run.
As I walk around the Beaches resort in Turks and Caicos, it reminds me how important presentation is, which in turn reminds me how important landscaping is to a property. Beaches owns an amazing piece of property here and the landscaping is stunning. We went to the sushi place last night and ordered edamame. Edamame typically don’t last, but they brought them out of their shells. Much of the pleasure of eating edamame comes from eating them out of their shells. The presentation was off and there sat the edamame. Landscaping is the last line item on the budget, but it is arguably the most important.
Hard to believe winter is half way over and Daffy is two months away. The rental market is in full swing and soon the season will be here in no time. For homeowners, now is the time to start thinking about any upgrades/maintenance that should be done for the upcoming season to your living house, especially if you rent it. A key one in particular is to make sure the smoke and CO detectors have good batteries, are functioning properly and their surrounds are clean. It can be exhilarating to some, like me, to be in a deep sleep and then all of a sudden get snapped out of it by the smoke/CO detectors going off – WHHOONNTTT, WHHOONNTTT – but not to most. Most initially get worried there is a fire and/or carbon monoxide situation in the house, but often it’s just a false alarm because of dead batteries, poor maintenance and/or an arthropod nearby, which turns the worry into anger very quickly. These false alarms tend to happen in the middle of the night, too, which gets people even more fired up. The false alarms are preventable. BTW, did I hear Daddy long-legs are nocturnal?
I’ve had many people ask me how the lowered real estate tax deduction would affect the market on Nantucket. Most people had the assumption that it would have a negative impact on the market. However, I think the opposite – it will have a positive impact. Although Nantucket is part of the Commonwealth of Taxachussets, the Nantucket real estate tax rate is $3.53/$1,000 or, no calculators, .353%, of assessed value for FY18 – one of the lowest mill rates in the country (another reason to own a piece of the Rock)! So, your property would have to be assessed over $2,832,861 to go over the allowed deduction. Whereas in Suffolk County, NY (Hamptons), the rate is approx. $22/$1,000. So, your property would hit the limit at approx. $454,000 of assessed value. People don’t like taxes, but like vacation homes. Hmmm…
Keep on whispering in my ear, tell me all the things I wanna hear, cause it’s true, they really wanna buy. If a buyer is willing to come on Island in arctic conditions in middle of winter, they’re probably serious. January is a great time for buyers to see properties because for the most part, they are vacant. Also, if a buyer likes a property when the flora is dormant, the sky’s typically gray and the house is shutdown for the season, then they probably are going to really like it in the summer. Believe it or not, many actually do make the mission to get a deal done making January a productive sales month. YTD, over $30mm has closed and there is at least another $150mm in the pipeline.
It’s been an eventful couple weeks on Island between the negative degree temps., the harbor freezing for about a week cancelling all boats (Stop and Shop had to move food from the downtown store to the mid-Island store to keep the natives at bay as rations dwindled) and the main sewer line busting. The sewer has since been fixed and the Strip area has been scrubbed and bleached; I actually had a client who recently commented how nice the Strip smelt:-) The harbor and beaches are in good shape; the system got flushed quickly.
Dow 26,000 – wow. Should be a strong season…
But the market is so delightful… This really is a win-win market. Sellers can get strong numbers and Buyers have extra purchasing power from the 25% stock market run and the ultra low interest rates.
If the $37.5mm sale of 6 Sun Island Road (Nantucket Storage Center) is included (and affordable housing excluded), 2017 sales were just over $1.03bn. I think the Sun Island sale should be partially included because the deal included the real estate, 1.7 acres in 5,000 sf zoning, and it was a market trade. If you back out the value of the business (I’m not privy to details of the deal, so don’t know exactly), then ’17 sales would be $1bn MOL.
Wishing everyone a healthy, happy, peaceful and prosperous New Year (and that you’re a Boston sports’ fan).
The market continues to be strong and steady. If you have a properly priced property in this climate, it should eventually sell. One main component that is fueling the market is the stock market. Buyers are pulling money out of the stock market, as it hovers at all time highs, and investing in Nantucket real estate. We just closed a deal where the buyer flat out said, if the Dow hadn’t risen 5,000 points over the last year, there would have been no way I could’ve pulled this deal off. Couple this wealth creation with historically low interest rates and I see a lot of runway…
Total volume YTD is well within striking distance of the $1,000,000,000 bench mark. Time will tell.
The market, in general, is well above the previous high and it doesn’t seem to be slowing. In the long run, Nantucket real estate values go the only way to the sky. However, if you are a more financially motivated than lifestyle Buyer and have the dough, there are some deals to be had, especially in the $5-10mm market. These are typically the listings where the Seller has either bought another property on Island (mostly an upgrade) and just doesn’t want to have two, big properties on Nantucket or they’ve had a fundamental change in their lives (moved to California, changed jobs, etc) and they can easily afford to take a hit; it won’t financially change their lifestyles. So, if you make them an offer within striking distance, they’ll probably bite. Feel free to contact your favorite ACK broker to hear ones we think are prime for the pickin’.
For the most part, the second decision you make when deciding to buy Nantucket real estate, which is the first decision, is where the scale sits between a lifestyle and financial decision. Hard to go wrong with either… If it weighs heavily on the financial side, where you are more objective about the buy, now is typically the ideal time to make a move. You might not get the property you want, but, again, it is more of a financial, objective decision. So, as long as the numbers add up, you’re in good shape. There are certain sellers that will negotiate heavily right now. They’re holding off on rentals for next season, i.e. cash flow, in case a buyer doesn’t want to inherit tenants, but they are not going to hold off for long; they want cash flow. Of course, if it is a financial decision, you want cash flow, also. But, right now holds potential of having your cake and eating it too. Might not be perfect, but everything’s a compromise and it could be pretty close.
New day, new goal; new goal, new day.
A client and I debated what the asking price of his property should be. Our numbers were close, but mine was slightly less and, what I believe to be, under a psychological barrier. He kept insisting on his number; I mean, truly, how could I be right, I’ve only been in the business for the last 15 years?! Finally I said, you built this to sell, right? Yes. You want to sell ASAP, right? Yes. Would you be more upset if you try to squeeze every last dollar out of it and it doesn’t sell or feel like you left a little dough on the table and it does sell? He went with my number. It’ll sell and despite what he might think, it’ll sell for market value. And, the ironic part, if we went with his number, it would’ve taken longer to sell and probably would’ve sold for less than we’ll get now because buyers often pass over overpriced listings.