Nantucket Island Massachusetts Directory of Real Estate Resources

2% for what?!

Dalton — Mon, 14 May 2012 14:41:47 +0000

For all arm length real estate transactions on Nantucket, there is a 2% transfer fee typically paid by the Buyer at closing. The 2% transfer fee is called the Land Bank fee because the Land Bank collects the revenue from this fee. The yearly revenue can get up there-think when there was $1b worth of transactions, that’s $20mm to the Land Bank!

The Nantucket Land Bank is the first program of its kind and was adopted by the voters of Nantucket, and established by a special act of the Massachusetts Legislature in 1983. To this day, the Land Bank has acquired over 2,400 acres of land which it maintains and has made open to the public. Considering the size of Nantucket, that’s a lot of land (what’s amazing though, is that number pales in comparison to the amount of land acquired by the Nantucket Conservation Foundation-over 8,300 acres!).

Although the 2% fee can hurt when you have to pay it, understand that you are literally changing the dynamics of the marketplace to your benefit-you are helping fund a reduction of supply of marketable property. For example, if there are only ten Nantucket baskets left on Island and you pay $1,000 for one of them, then the Nantucket Basket Museum buys five of them to be forever preserved and owned by the Nantucket Basket Museum (meaning there are only five baskets left in the marketplace), your one basket is now probably going to be worth more than $1,000. In the long-run, Econ. 101 tells us that Nantucket real estate is a great investment!

Also, the Land Bank is a sophisticated buyer always on the lookout for good buys. It just closed on Skinner’s Golf Course, the country’s oldest, active golf course-66 acres for $8.7mm-not bad considering 68 acres in Polpis will cost you $59mm!

Thanks to amazing groups like the Conservation Foundation and the Land Bank, Nantucket is nearly 60% conservation or “protected” land with wonderful views and walking trails throughout. Thank you 2% Land Bank fee!!!

First Offer is Your…

Dalton — Mon, 30 Apr 2012 18:45:23 +0000

I love the saying first offer is usually your best offer because it is amazing how often it rings true. It is equally amazing how often sellers don’t listen to that saying and end up not making a deal with the first offer and end up settling in the future for a worse offer. Sellers will make this mistake because they put their property on the market, immediately get an offer and think that since they got an offer so quickly, their property is probably under-priced and there will be many more offers to come, so they will hold out for a better offer. In most cases, this is flawed thinking because what is actually happening is a buyer has been sitting on the sidelines waiting for just the right property and right when the property comes on the market, this individual buyer steps up and makes an offer. So, the point is, if you get an offer right away, don’t think it is because your property is under-priced, think that it is properly priced and a specific buyer has been waiting for just your property; first offer is usually your best offer…

High-end to the rescue?

Dalton — Sat, 14 Apr 2012 16:17:30 +0000

Beyond hard statistics like time on the market, inventory levels, and properties under agreement, which are all improving, there is another, subtle sign that the market is improving-the high-end is heating up. In the last two weeks, there have been two high-end sales, 18 Rabbit Run Road for $7,000,000 and 59 Shawkemo Road for $7,747,500, and two high-end properties went under contract, 4 Salt Marsh Road, listed at $6,500,000, and 183 Polpis Road, listed at $9,850,000. This may not seem like much of a sign, but the high-end has led the market out of the bust cycle many times before. Think of successful fund managers; other managers mimic the successful managers’ moves because the successful managers are successful for a reason-they make smart investments. Buyers who can afford high-end properties typically can afford them for a reason-they make smart investments. Does anyone remember what happened when Lou Gerstner bought 10 and 17 Berkeley Avenue in 2003?!

Another sign…

Dalton — Fri, 30 Mar 2012 10:24:46 +0000

The market continues to show signs of strength. A subtle one is the National Association of Home Builders just published “Top Counties for Residential Remodeling” in the US. Guess which county was number one? You got it, Nantucket, coming in at $8,520/household/year!

This stat could be interpreted as people remodeling their existing houses rather than buying and remodeling, but even if that were the case, which it only partly is, it still shows people are spending. People are spending because they are confident about Nantucket real estate-that elusive consumer confidence is gaining some mo on ACK!

BTW, guess which county was number 2 on the list? Marin County. Last I heard, the economy isn’t too bad out there…

To Build or Not To Build

Dalton — Wed, 14 Mar 2012 11:49:21 +0000

Seems to me that bids are firming up, so if you are thinking of building, now may be the time before there are significant upticks. I do not have any hard evidence to support that thought, but I do have empirical evidence. One example, the other day I talked with a plumber about a huge job that he is plumbing. The project has been going on for three years. The owner has been building the house in stages, then stopping for a few months, then asking everyone to re-bid their respective jobs, expecting the bids to go down from the previous bids as the world became closer to imploding. The owner’s system worked as the contractors became evermore desperate to hang onto their jobs, until recently. The plumber said, with a big grin, “The last time the homeowner asked everyone to re-bid a month ago, all the bids came back 15% or more higher than the previous bids.” This could be more of an example of a revolt and not of an uptick in bid prices, so another example. I talked with a builder the other day and asked, “How’s business?” He said verbatim, “I have never been this busy. There are not enough workers for the amount of work out there.”

Drive around the island and there are building projects going on everywhere. How about some of the new developments:
-Gingy Lane
-Pilgrim Place
-Olde Westmoor Farm Road
-Finback Lane
-Hydrangea Lane
-Blackfish Lane
-Ellen’s Way
-Nanahumacke

Whoa!!!

So, to build or not to build? We all know what happens when labor supply stays constant and demand goes up…

This Could be Good…

Dalton — Tue, 28 Feb 2012 15:03:03 +0000

Let’s see where the market is today compared to this time in 2010 and 2011.

At this time in 2010, there were:
-498 active listings
-36 listings with either an accepted offer or under contract
-23 closings YTD.

At this time in 2011, there were:
-435 active listings
-43 listings with either an accepted offer or under contract
-35 closings YTD.

Today, there are:
-427 active listings
-55 listings with either an accepted offer or under contract
-45 closings YTD.

I see a pattern…

Splish-splACK, what’s happening in bACKyards…

Dalton — Tue, 14 Feb 2012 17:53:51 +0000

Pools have longtime been staples of many vacation areas, but on Nantucket they were a rarity (in fact, my dad tells me that my grandmother had one of the first pool on Nantucket at 141 Main Street, which is ironic because pools are now banned in the Old Historic District). However, recently, permits for new pools have been on a tear. There are approximately 300 pools on Nantucket. In 2010 and 2011, there were approximately 30 new pool permits pulled per year. So, basically, 20% of the total pools on Island were built in the last two years-that’s amazing…

Why such an explosion? A couple of main reasons, 1) they are very refreshing after a long day at the beach and 2) demand by tenants for pools has made rental rates for properties with pools go up drastically, sometimes 100%. So, many investors are now able to justify owning a Nantucket property as a rental property (who wouldn’t want to justify owning a Nantucket property?!) that can actually cash flow because of the extremely low interest rates, i.e. low cost to carry, and the big rental rates, if all they have to do is install a pool. 17 Boulevarde is a great example of this. Also, the developers of many of the new spec. projects pulled permits for new pools; is the increase in pool permits a sign of more spec. projects which is a sign of where the market’s going…

What the numbers say…

Dalton — Sat, 28 Jan 2012 20:28:43 +0000

As of today, there are:
-432 active listings compared to 435 one year ago.
-52 listings with accepted offers or purchase and sales agreements compared to 43 one year ago. Lower inventory, albeit not much, and more deals must be signs of an improving market.

There is also noticeably more activity on Island this winter than the past three or four winters. I do not have any hard facts to support that, but I do have an all-telling sign; the owner of one of the main fast-food places on the Strip told me that he has not been able to take a vacation this year because his place has been so busy and that his customers are primarily contractors.

Another sign of a strengthening Nantucket economy, my brother and I had one of our spaces on Centre Street become vacant on 1/1/12. We did a little advertising. 15+ inquiries and two weeks later, we signed a long-term lease.

As long as we don’t have another major shock to the system, I think we’ll have a good year.

Thawing-Where the Market Stands

Dalton — Fri, 13 Jan 2012 00:52:20 +0000

2011 was a roller coaster year. The market started off strong, barreled into the summer seeming like it was not looking back and then the Europe debt crisis hit in early August and it not only looked back, it went back. However, the resilience of the Nantucket market persevered and the market continued forward after a few months of European haze-we’re called New England for a reason! Although not as strong as 2010, 2011 was not bad and the rental market from most accounts was up 25%+ in 2011 from 2010. So, 2011 ended with approximately $530mm total volume with the average sale price being $1.5mm and the median price being $1mm. Despite the European haze, the total number of transactions was approximately the same as 2010-345-and the median price was approximately the same-$1mm. The main difference between 2010 and 2011 were the number of 8-figure sales. In 2010, there were nine sales with a median price of approximately $15.5mm compared to 2011, three sales with a median price of $12.6mm. All in all, not complaining.

Where’s 2012? Passing the bulls of 2010! Currently there are 438 properties actively for sale and 50 with an accepted offer (OP) or signed purchase and sale agreement (PS). In 2011 at this point, there were 430 properties actively for sale and 38 with an OP or PS. In 2010 at this point, there were 498 properties actively for sale and 36 with an OP or PS.

I just heard about a mid-size, spec. property on Cliff Road that is under agreement for $4.2mm and is only 75% finished. The market is thawing, so don’t want until the ice is gone…

Last In, First Out

Dalton — Tue, 27 Dec 2011 21:15:03 +0000

I used to quiz my dad on the Nantucket real estate market. Is Nantucket a good investment? Why are people buying? Where’s the market now? Does it really go in cycles? Etc. Two fundamental points he always made were, 1) in the long run, yes this market always goes up and 2) the market does go in cycles, but Nantucket is always last one in, first one out. Having been on the ground for the “last one in” segment, I can personally confirm that’s true, but I haven’t been on the ground for “first one out” segment, yet (I was spoiled early on in my career). However, now, I think I am witnessing the “first one out”. The early signs of this were smart people were buying and spec. builders were starting to build again, among other more subtle indicators. Now, there have been two, huge signs that we are on the upswing. 1) A developer, Mark Snider, has entered into a purchase and sale agreement to buy the Point Breeze. The Point Breeze epitomized the housing bubble on Nantucket. Nice work, Mark! He understands the fundamentals of Nantucket real estate.

2) The yearly “red ticket” raffle, where a consumer gets one red ticket per $25 spent, is up 14% +/- YoY ($9.1mm in 2011 compared to $7.97mm in 2010 in revenue for participating merchants). One could say this is almost a baseless assumption, but I tend to believe that sometimes too much info. blurs the picture and better to go with what is clear. I’m ready for another Nantucket Sleighride! Happy New Year!