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…
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.
National real estate statistics are just that-national. Although the national February numbers for new construction home sales and pre-existing home sales numbers were not what many had hoped for, these numbers take into account the US as a whole. But, there are many parts to the whole and Nantucket is one part. There are areas that are still hurting,
but from what I can see, Nantucket is not one of them.
There is serious money coming into the ACK market-get it while it’s fresh!
P.S. Don’t believe everything the talking heads tell you-there is optimism in the air…
J Pepper Frazier Company just successfully brokered and closed another short sale on Nantucket-70 Pochick Avenue. Although I was working on the deal for 6 months, once Chase assigned the case a negotiator, in the sixth month, I was actually able to communicate with someone and move the deal along smoothly, basically as a conventional deal. The lenders are finally putting set systems in place to process these short sales; Chase has a whole team of negotiators that will actually call you, Bank of America uses a system called Equator where one can actually see updates and get instructions for the next step, other lenders have their own processes. None of these systems are perfect, but they are a far cry from how the short sales used to be handled. When the short sales first started appearing on Nantucket, about two years ago, closing the deal was very hard because the lenders had no system in place to handle the deals and many times the property would end up going to foreclosure and be bought at auction for a lesser price than what was offered with the short sale-definitely not in the shareholders’ best interest… The last month of the 70 Pochick Ave. deal was refreshing to see that the lenders are finally stepping to the plate to get the short sales processed. We need the shorts sales and foreclosures out of the marketplace to get back to a healthy market-seems like we are getting closer…
The Independent came out with another article in the series on Nantucket real estate. It⦡mp;#8364;™s titled ⦡mp;#8364;œIf there⦡mp;#8364;™s a will, there may be a way⦡mp;#8364;? and it addresses financing issues with bank loans and borrowing money.
The global boom in house prices has been driven by two common factors: historically low interest rates have encouraged home buyers to borrow more money; and households have lost faith in equities after stockmarkets plunged, making property look attractive.
Will prices now fall, or simply flatten off? And in either case, what will be the consequences for economies around the globe?
This article about The global housing boom by the Economist explores this in greater detail.
There is a well written article in from the Nantucket Independent addressing how the islandâ€™s real estate market has risen, dipped and surged to new heights in over three decades.
â€œThe old-line Yankees arenâ€™t as plentiful as they used to be,â€ said our own Pepper Frazier, Sr. â€œBostonians are still here, but the New York and Washington influence is being felt and there is a pretty good San Francisco group here, a lot of people who have made a lot of money. There doesnâ€™t seem to be any signs of a slow down now. Iâ€™m becoming jaded â€” if [a property] is only $10 million I wonder why itâ€™s so low.â€
In Hammy Heardâ€™s opinion, the island real estate market will never see another low cycle because of the simple equation of supply and demand. Heard said there are only 45 buildable empty house lots on the real estate listing service.
â€œWhen theyâ€™re gone, theyâ€™re gone,â€ said Heard. â€œThe alternative is buying a house, tearing it down and replacing it with a house that is more pleasing to the owner. There is less and less supply and there is still a demand. Coming to Nantucket is special.â€
Read the full Nantucket Housing Boom article from the Nantucket Independent to learn more.