This time of year ceases to amaze me. Even though the island seems so crowded, there’s traffic and navigating the grocery store can be a bit of a blood sport, you can always find a piece of the Rock that gives you that inner peace. I was in Madaket checking on a house and it was totally serene – no one around, beautiful colors everywhere from the different shades of the ocean to the dune grass to the flowers, smell of salt air, birds chirping and and boat stays clanking in the distance, all with a light breeze – heavenly… As the saying goes, if you’re lucky enough to be on Nantucket, you’re lucky enough.
Market continues to fire. Almost already hit $1bn in overall closed deals!
More so than ever because there are no rentals available for this summer, a big contingency of buyers are literally buying right now so they can be on Island this summer. A lot of the desirable sales listings are rented for the summer, so if a listing is available for this summer, it has a big competitive advantage over the listings that are rented. Definitely perks my ears and piques my interest when buyers says they can’t find a rental, but definitely plan to be here this summer:-)
The market continues to be very strong. The biggest issue is a lack of inventory. After hearing what their property is worth, I imagine some owners will get perked ears and piqued interest and test the market, but all in all, I think inventory is going to remain light.
Here are the YTD closed stats, which are incredible. And, at least another $200mm in the pipeline.
As the flowers start to bloom, this time of year always reminds me how important landscaping is to get top dollar for a property. The landscaping is the first impression and sets the viewer’s mindset whether they like the property or not before even stepping foot inside. The more blooming flowers, the better.
Not going to go into the opportunities, which there are many, around Hot Springs, Arkansas, the town where Al Capone was known to relax and President Bill Clinton worked, but hopefully I got your attention.
The market remains robust. Here is a perfect example of how robust and how the Nantucket real estate market stays robust over the long run. 51 Milk Street, a 1,565 sf 3 bedroom, 2.5 bath house built in 1992 on a 5,227 sf lot, sold for $254,500 on 6/2/94, then for $625,000 on 4/29/03, then, after landscaping and driveway improvements, for $1,225,000 on 10/26/05, then after some renovations, for $1,358,100 on 4/21/17 and now it is under agreement for, I’m guestimating, $1,950,000. Not much appreciation between ’05 and ’17, but each sale price surpassed the previous sale price. Over the long run, real estate values go up, especially on Nantucket.
YTD Sales Volume as of April 11 in $ mm’s
Lowest total yearly volume.
$1bn+ year. Record year at $1.86bn.
I recommend strapping on your rocket boosters because this is going to be a wild ride…
Besides factors like work from home, Coronavirus refuge, low interest rates and massive amounts of capital in the market, another more subtle reason the sales market is so strong is the lack of vacation rental inventory. Naturally, a lack of supply of rentals will drive demand for sales. The supply of vacation rentals on Nantucket has decreased by 15% +/- since last year and demand has gone up, primarily because work from home and Nantucket as a Coronavirus refuge, so, the sales market is cranking.
Nantucket’s legislature is the registered voters of Nantucket who are eligible to vote on Articles of the Warrant issued by the Board of Selectpeople at the annual Town Meeting. The Articles vary from the benign of funding for a storage shed to the impactful of whether there should be a Land Bank fee. Citizens can submit Articles with only 10 signatures from Nantucket registered voters. Big decisions are made at Town Meeting and often at the hands of few…
One Citizen Warrant Article that is already causing a stir is from an organization called ACK-Now, which is proposing there be heavy restrictions on short-term rentals. Most notable highlights of the proposed Article are:
Residents can only rent their property a maximum of 90 days.
Non-residents can only rent their property a maximum of 45 days.
Vacation rentals have to be a minimum of seven days.
Vacation tenants can only bring one car on Island.
The main reason ACK-Now says they brought forth this Article is to help with affordable housing. It says, investors are buying up property, driving up prices and making property out of reach for Island residents, so the Town needs to restrict this behavior.
ACK-Now is generalizing the acts of one or two LLC’s, that own several vacation rental properties, across all property owners that rent. If this Article passes, there will be less tourists, which means less shopping, less restaurant meals eaten, less charter fishing trips taken, etc., which means less money in the pockets of Island residents, which means less money to buy a home on Nantucket. Also, there will be less tax revenue from the 6% tax on short-term rentals, which means less money for affordable housing programs. So, this Article will probably have the opposite effect of the “intended” purpose.
Instead of trying to force this overreaching, property seizing Article upon us, why not incentivize for affordable housing? How about having a tax-break for those that rent their dwelling year-round instead of short-term or disincentivize the LLC’s from running vacation rental businesses by taxing at commercial rates or ??? Let’s think macro, not micro on this.
Makes me wonder, is this Article about affordable housing or NIMBY?
The market remains robust. The biggest factor slowing it down is the lack of inventory, which is also true nationwide. Nantucket inventory is down approximately 20% year over year and 60% from its peak in 2009. According to Realtor.com, national inventory of active listings dropped below 700,000 for first time in its records. What has also become very apparent is rental inventory is way down, too – approximately 20%. Many rental homes were either bought and taken out of the rental pool or the homeowners simply are not renting this summer.
Total yearly sales volume went over $1.5bn in 2020 for the first time in history. And, it almost went over $2bn!!! Total volume for 2020 was an astounding $1.862bn (and, keep in mind the market was basically non-existent for mid-March to June).
The saying goes, “First impression is your best impression.”. So, why would I have a squeaky front door as my first impression? I wouldn’t. That’s why, I travel with a can of WD-40.
Banner year… Some interesting stats. Comparing right now to the same time in 2009 – currently 265 available listings vs. 597 in 2009; 126 listings marked as under agreement vs. 33; $1,642mm closed YTD vs. $402mm; median sale price $2.15mm vs. $1.195mm.
Here is year over year comparison of YTD total volume:
’09 – $402mm *Lowest total yearly volume.
’10 – $635mm
’11 – $504mm
’12 – $723mm
’13 – $701mm
’14 – $946mm *$1bn+ year.
’15 – $804mm
’16 – $945mm
’17 – $985mm *$1bn+ year.
’18 – $1,086mm *$1bn+ year.
’19 – $937mm *$1bn+ year.
’20 – $1,642mm *$1bn+ year. Already record year and approximately $356mm in the pipeline.
The market continues to break records and, besides the seasonal factor, it does not seem to be slowing. The YTD total volume is already well past any previous total yearly volume and there’s still a massive pipeline of deals. Also, to put further emphasis on how extraordinary this market is, keep in mind that April through June volume was way down compared to other strong years.
Here is year over year comparison of YTD total volume:
’09 – $339mm *Lowest total yearly volume.
’10 – $574mm
’11 – $424mm
’12 – $633mm
’13 – $630mm
’14 – $842mm *$1bn+ year.
’15 – $727mm
’16 – $838mm
’17 – $917mm *$1bn+ year.
’18 – $940mm *$1bn+ year.
’19 – $811mm *$1bn+ year.
’20 – $1.400bn *$1bn+ year. Already record year and approximately $370mm in the pipeline.
Land Bank is going to be flush with cash (it’s already collected $28mm). Should be interesting to see what they buy…
I always find it amazing how what seem like benign issues, from a design flaw to the listing got stale to a plentitude of other factors, can drastically affect value. One would think, design flaw – furniture can fix that; listing got stale – drop the price a little and that will reinvigorate it, etc. But, it is not that simple. Take 10 and 14 Pippens Way – same size lots that abut each other, almost same livable square footage 4,926 sf and 4,300 sf, respectfully, both have pool, spa and cabana and similar quality finishes. 10 Pippens Way sold for $5.55mm on 8/20/2020. 14 Pippens Way sold for $4.6mm on 9/3/2020. That’s basically a $1mm, or 20%, delta! Why? Not entirely sure, but there is one glaring difference, 10 Pippens Way was on the market for 5 days; 14 Pippens Way was on the market for 526 days. I’m a firm believer in pricing the property to sell right out of the gate. “Testing” the market can lead to the disastrous outcome of the listing getting stale, which makes buyers think there must be something wrong, which ultimately leads to a lower price.
The market continues to crank. It set a new record – the earliest it has broken the $1bn mark in a calendar year by far.