In December 2008, there were 628 total properties listed and out of those, 17 had accepted offers or were under agreement, 2.7%. In December 2009, there were 630 total properties listed and out of those, 33 had accepted offers or were under agreement, 5.2%. In December 2010, there are 593 total properties listed and out of those, 25 have accepted offers and 29 are under agreement, 9.1%. So, the numbers, falling inventory and rising amount of deals, are clearly showing that the Nantucket real estate market is strengthening. Now could be the golden opportunity for buyers while the interest rates are still low and the market is at the bottom…
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In my opinion, I don’t know why sellers get offended by offers. If they don’t like the offer, all they have to do is say no. When I am a seller, I encourage the brokers to get their buyer clients to make any offer. One never knows. I have seen a buyer make a $500K offer on a $1MM property and instead of getting in a huff and puff, the seller simply gave a minor counter-$995K-and then eventually the deal was settled at $975K. Offers are a good thing, not bad, so sellers take advantage. On the same token, buyers in this market should not hesitate to make offers. Although it is rare, I am seeing some properties trade at up to 35% discounts off their asking prices. If you see a Nantucket property or properties that you like, there is no time like the present to make an offer-the worse the Seller can do is say no…
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Bank owned properties, known as REOs (real estate owned), on Nantucket mostly present excellent values. Although they are few and far in between on Nantucket because most homeowners have enough holding power to get them through this lean time, if you can find one and it is in an area you like, you should take a hard look at it. So far, J Pepper Frazier Company has closed a handful of REOs and is the leading company on Nantucket handling REOs (for example, 8 Sunset Hill Lane) . In my experience, what I have found is the REOs mostly get multiple bids and end up going to a highest and best sealed bid within the first week of being listed. This phenomenon demonstrates two good points. One, there are buyers in the market place and the market has a bottom. If there were no bottom, then there may not be a liquid price, but given the fact that most closed REOs on Nantucket received multiple bids and usually sold for over the asking price proves that there is a bottom and properties have a liquid value. Two, if you really want to sell your property and you have the liberty to price it aggressively (i.e. you will not be upside down on the mortgage), then there is a price it will sell at. REOs are strong examples of how to get your property sold quickly. Again, the REOs are far and few between on Nantucket, but if you see one listed, definitely worth a look if just for educational purposes.
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As we all know, interest rates are at historic lows and will inevitably go up some day-maybe not in the next few months, but probably within the next 12 months. So, if you buy a $1MM property now, put 20% down and lock-in a 4.5% 30-year fixed interest rate, your payments will be $4,053.48/mnth. If interest rates climb to 5.5% and you want to keep your monthly payment around $4,000, then you will only be able to buy a $900K property ($4,088.08/mnth.). Also, inevitably, because of simple supply and demand economics of Nantucket real estate, prices are going to go up at some point. So, if prices and interest rates go up in tandem, your purchasing power gets a double hit; you get less leverage with the interest rate and you get less property for your money. Sure your down payment will be more for a $1MM property than an $900K property, but it’s not like the extra $20K you put down disappears-it becomes equity in the property that hopefully appreciates (more than likely it will and at a faster rate than if the money was in a bank account). I’m no rocket scientist, but seems to me that if you have any extra money lying around and you can qualify for a mortgage, right now is an amazing time to buy real estate, especially if it is on Nantucket.
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30 Washing Pond Road closed today for $20MM. The asking price was $23.95MM and the property was on the market for 45 days before getting an accepted offer. The “smart” money is buying Nantucket real estate, which is a great sign that Nantucket real estate is currently being viewed as a strong value/investment by very sophisticated buyers/investors.
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It was a monster week for Nantucket real estate sales. The week ending Thursday, September 23 had a little over $65MM in total real estate volume. What is very encouraging is that there were deals across all price ranges including a huge one for $22MM that sold with an abutting parcel for $5.5MM, to a not so huge trade for a free-standing condo. for $587,350. There are quite a few deals in the pipeline and total dollar volume for the island is likely to be around $800MM. Sellers have adjusted their expectations and Buyers are sensing that now is their chance to get into the Nantucket market.
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