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.
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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…
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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!
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Although the year is not over, we have a pretty clear picture of how the overall market is going to end up. All things considered, not bad.
According to LINK,
For the period 1/1/11-11/30/11
-total volume was just under $481mm from 355 transactions
-average sale price was just over $1.57mm
-median sale price was just under $1.04mm
-average days on market was 255
For the period 1/1/10-11/30/10
-total volume was just over $610mm from 323 transactions
-average sale price was just under $1.89mm
-median sale price was $1.07mm
-average days on market was 251
The wide discrepancy between the total volume numbers is mainly because this period in 2011 had three 8-figure sales and this period in 2010 had eight 8-figure sales , which accounted for a little over $100mm in extra volume for 2010. What is encouraging is the median prices and days on market stayed roughly the same, which makes me believe that 2011 followed 2010′s trend of laying a bottom to the real estate market. There are still a lot of buyers on the sidelines that will jump in at any sign of the chaos in the world settling, which will give a nice bump to the market.
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Not for long because the conservation groups are buying it all up, but that is great for all of us who love Nantucket (and like our property values to go up)! Nantucket has some of the strongest conservation foundations/efforts in the world. A group of great Nantucketers had the foresight to found the Nantucket Conservation Foundation in 1963-58 years ago! The Nantucket Islands Land Bank was the first program of its kind in the country, established by a special act of the Massachusetts Legislature and voted on at Town Meeting to essentially impose a 2% tax on every arm’s length real estate transaction-final vote, Yes: 446, No: 1. That is simply amazing, 446-1, to impose a tax! There are at least eight other legitimate, conservation focused groups on Island. Much of the conservation land is open for passive, recreational use, so if you get tired of eating at the world class restaurants, shopping at the world class shops, bathing at the world class beaches, then you can always go for a walk through the Tupancy Links, Sanford Farm, Middle Moors and on and on…
Recently, the Land Bank put under agreement a 66 acre parcel and the Sconset Trust put under agreement an abutting 53 acre parcel, which combined could be sub-divided into well over 50 building lots. So, although paying the 2% Land Bank tax can be painful in the moment, remember that tax is probably going to give you well over a 2% return in the long run. Nantucketers, seasonal and year-round, were and still are a smart bunch. Must be the water…
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I grew up in a real estate family. I have been hearing real estate deals being negotiated since I was 3 months young. Sometimes I would hear my mom say, “How’d the third showing with so and so go?” My dad would say, “Libby, it’s never a good sign if they want to see the property for a third time. They are only talking themselves out of doing the deal; they are looking for excuses not to buy it.” Very ironic, too, because you tell your clients you have a third showing and they get excited that the buyers are going to make an offer, but, in reality, the opposite is happening-the buyers are talking their way out of the deal. Now that I am active in the real estate brokerage business, I see this phenomenon first hand; third + showings are the kiss of death. Most buyers that pull the trigger know it when they see it.
Last two properties my wife and I have bought, I made the offers before she had been to the properties. Naturally, she asked, “How’s the interior?” I replied, “Not sure, I haven’t been inside…”
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The use of real estate zoning has been a heated debate from its existence. On one hand, proponents of it say you need it to protect integrity of real estate districts-do you want a nuclear power plant next to an elementary school, a brothel next to a church? On the other hand, opponents say, among other things, let the invisible hand of economics do its job and the highest and best use of the property will be determined-if housing is in shortage, should only single-family dwellings be allowed or should a developer be allowed to build an apartment building to fill the demand? So, does zoning help or hurt real estate values? I’m under the belief, and maybe I am biased because I live on Nantucket, that if utilized properly, zoning increases property values. There is a fine line how restrictive zoning should be. It should be just restrictive enough to protect the integrity of districts. This protection creates demand and a strong market because owners, buyers and sellers expectations are clear. Would someone want to live in or buy a home where they did not know what could go on around them? For a certain price, yes, but not as high of a price if the people knew a chemical plant couldn’t be built next to them. Zoning should not be too restrictive. For instance in a commercial district, zoning should not dictate that only an ice cream shop could be in a certain space-that would tremendously distort supply and demand economics. What happens if the existing ice cream shop goes bust and there isn’t another one to take its space, but there are five jewelers to take the space. That restriction creates a huge inefficiency in the economy. The debate will continue, but I’ll take Nantucket’s 300% appreciation over the last 20 years to Houston’s, which has no zoning, 95% appreciation over the last 20 years any day of the week. I know, not fair of me to compare Houston to Nantucket…
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Nantucket has always been an amazing place to invest, but now, with interest rates low and the market down 25%+, I venture to use the superlative, Nantucket is the best place to invest. Many people use to buy Nantucket real estate as a lifestyle investment first, monetary investment second. This is still true, but given the current fundamentals, some buyers are buying monetary investment first and lifestyle investment second (although, in my opinion, the lifestyle will always outweigh the investment-carpe diem). So, some buyers want to invest with a partner.
The scenarios: 1) Two people invest, everything goes according to plan, we all sunbath at Cisco, drink at the Brewery and have someone take our money to the bank. 2) Everything does not go as planned, what to do? 50/50 relationship and one investor wants to do ‘x’ and the other ‘y’. Our Founding Fathers were so amazing that they came up with a brilliant check and balance system. Two partners do not have the luxury of using this system. However, people are still amazing. Introduce the “Shotgun Clause”, which says one partner can offer the other partner an amount to buy her out. She can say yes and take it, but if she says no, then she has to match the offer and buy the other partner out. Don’t make the offer too high, don’t make it too low-brilliant. The ingenuity of people is amazing and the investment of Nantucket real estate is the best!
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Nantucketers barely take notice when they see a house being moved along one of the island’s streets. Vacationers on the other hand seem amazed by a whole house being trucked along one of Nantucket’s streets.
Houses being moved on Nantucket are no new phenomenon. Houses have been moved on island for centuries and basically for the same reason as now-cost of materials. Moving a house from one location to another was and still can be cheaper than building a house from scratch. We had a listing at 10 Pine Street that was built in 1694 in the original Town of Sherburne, which was on Capaum Pond. The house was deconstructed and then reconstructed at 10 Pine Street in the 1800′s.
Recently, I saw a house on the ‘Sconset bluff get cut into five pieces and moved to a vacant lot in Monomoy where it was put back together. Not sure if the owner saved any money on the construction costs, but he saved a lot of time getting the house (re) built.
Ingenious Islanders…
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Before I begin, please know that I welcome and love all buyers. Also, below not meant to be gender specific, just easier to read.
I find it so interesting that during a multi-million dollar negotiation, a lifestyle Buyer (opposed to an investment Buyer) and a Seller will draw a line in the sand when they are within low single digit percentages of each others’ prices and not be willing to bridge the gap (believe it or not, I see this all the time). The Buyer’s position baffles me more than the Seller’s because the Seller could 1) be somewhat indifferent about selling (you pay my price, I’ll sell) or 2) need a certain net number or the sale is not worth it for him. The Buyer on the other hand is looking at the property as a lifestyle property for her that she will use and enjoy for years to come. So, the Buyer thinks she is maybe overpaying 2-5% now? Is that really significant over the long-run? Is that really worth her torturing herself with having to find a rental that meets her needs for the next season when she has the right property lined up to buy? I don’t think so, but then again, the buyers have the money for a reason…
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