There’s a catch to the special, the lots are in Newark and you have to live there for at least five years. There are only 100 available – wonder if they’ll sell out… That would be a very sweet deal if the letters after “N” were “antucket”, not “ewark”. The land market on Nantucket remains hot. Consider this, according to Nantucket’s multiple listing service, LINK, there are 51 land listings available and 43 land listings under agreement; there are 191 single-family listings available and 24 under agreement. So, 48% of the land listings are under agreement compared to 11% of the single family listings – whoa! The demand for land is inevitably pushing values up. Last year, the average land sale was approximately $1.3mm and the median was approximately $760K; the average price of land sales currently under agreement is approximately $2mm and the median is approximately $1.1mm – whoa, again! What typically happens is land values will get pushed up to an inflection point where consumers are financially better off buying a house than a piece of land, the demand for land dries up, values drop and the cycle starts again. However, with a limited supply of land on Nantucket, that may not happen. Values for land and houses on Nantucket will continue to rise. $1,000 lots are tempting, but as my friend said, “Would your wife rather a $1,000 necklace or a $1,000 lot in Newark?” It was a rhetorical question, I think…
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…
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?!
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…
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…
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…”
To a layman looking on at a real estate auction, it seems straight forward-a bidder has the max she will bid, she’ll go back and forth with other bidders until a) she is tapped out or b) she wins the auction. Au contrair mon ami. Auctions have a lot more to them than meets the eye. They are dynamic and to be successful one has to understand many factors, including, but not limited to, the time, place and weather (are we on Nantucket on a cold May day with 50 mph gusts when the boats aren’t running or are we at the Copley Place, 68 degrees with a cold drink and plenty of space in the parking garage), the players (are there builders and/or bankers bidding) and the motivation (is WaMu foreclosing and happy with 30 cents on the dollar or a private developer and happy with 110 cents on the dollar). Answering these as well as other underlying questions will help you put together a winning strategy. Another reason why a good broker is invaluable and worth well over 6%. Bonne chance mes amis!!!
My dad always told me that Nantucket is one of the last ones in and first ones out of a bust. That’s another way to say that Nantucket is a very safe place to invest and/or park your money. Another way to see the strength of an investment is to look at capitalization rates. Cap rates on Nantucket’s prime commercial real estate are around 5.5%, which are extremely low for commercial real estate-cap rates are basically a function of risk, lower the cap rate, lower the risk. So, I called Nantucket Island Resort’s (NIR), who is the biggest commercial landlord on Nantucket (Team Frazier is two), today to inquire about what spaces they have available. The leasing agent’s answer-we have a small art gallery, about 200 sf, available on Old South Wharf. Excuse me, you have 200 sf out of tens of thousands of sf available?!!! That’s a sign of the Strength of Nantucket.
Properties on the open market, 4/28/09, 602.
Properties on the open market, 4/18/10, 560.
Properties on the open market, 4/20/11, 482.
Properties under agreement, 4/28/09, 18.
Properties under agreement, 4/18/10, 32.
Properties under agreement, 4/20/11, 50.
I think I see a trend… Get in while the interest rates are still low!
Nantucket is not perfect, but it is pretty close. Once the new Dreamland Theatre is done,
it will be directly across South Water Street from the Atheneum.
So, Nantucket will have two, amazing, multi-faceted learning/cultural centers that complement each other perfectly a stone’s throw away from one another. I find that very cool and that’s not even to mention the beaches, restaurants, historic downtown…