And, all of a sudden, the season is upon us. Despite difficult travel conditions up until recently, the real estate market posted strong numbers. YTD dollar volume is at approx. $325mm. Compare this to the billion dollar plus years of:
2017 – $238mm
2014 – $225mm
2005 – $295mm
2004 – $335mm
With a start like this, high equity markets and low interest rates, seems this market’s volume is going to end up with three commas.
Let the season begin!
Doesn’t necessarily matter what it is, but if presented properly it’ll overcome.
The market’s strong; get your Nehru jacket while available
10 years ago, I leased a Monomoy waterfront property for $40k for a week. 6 bedrooms, 8 baths, pool, gorgeous. Highest $/night for a residential rental. People swooned and swanned – I can’t believe they’re getting that $… Naturally, I analyzed the numbers. For a comparable suite at one of the high-end hotels, $2k/night was the starting point. 6 bedrooms x 7 nights x $2k/night = $84k. So, $40k was a value. One may not fill every bedroom, though. But, they get a kitchen, living and dining rooms, yard, privacy, etc. And, for an extra $200/night, they can get turndown maid service. Then, someone built a dialed-in 8 bedroom, 10 bath amazing property in an unstoppable location and leased it for $45k/wk. – some more swooning and swanning. The math: 8 bedrooms X 7 nights x $2k/night = $112k/week. Now, investors have recognized this delta and there has been a proliferation of $45k/wk rentals. End of the day, those rentals are strong values (and don’t mess with the swans in Hummock Pond).
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.