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Beaches and BBQ’s

Hope everyone is hanging in there. Extra special Happy Mother’s Day to all the moms making it happen.

A couple trends:

The sales market is slow because we haven’t been able to show property. But, there are hungry buyers eager to lock in historically low interest rates (sub 3%).

Although, there are many rental cancellation requests, there are also many rental requests for tenants to extend their stays and new rental requests are for longer time frames than typical.

A few predictions:

Longer term rentals will become more common. Currently single week rentals account for 80% +/- of all summer leases; this number will decline for the foreseeable future.

As long as the island is open for business, high-end retailers will do well. They’ll be limited to amount of customers in their shops at a given time, so when it’s a customer’s turn to go into the shop, they’ll be more ready to pull the trigger, as going for a second look won’t be nearly as easy as past summers. And, there will be more “by appointment” business that will result in big ticket sales for the shopkeepers.

Areas with bigger acreage will get hot.

Pools will continue to be en vogue.

There will be lots more beaching and bbqing this summer.

Year over year comparison of YTD total volume:

’09 – $97mm *Lowest total yearly volume.
’10 – $153mm
’11 – $124mm
’12 – $191mm
’13 – $116mm
’14 – $238mm *$1bn+ year.
’15 – $203mm
’16 – $286mm
’17 – $247mm *$1bn+ year.
’18 – $344mm *$1bn+ year. Highest total yearly volume.
’19 – $244mm *$1bn+ year.
’20 – $232mm

Remember, what doesn’t break us makes us stronger and we ain’t breaking!

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On a Positive Note…

Interestingly enough, this pandemic is causing some people to want to buy more than ever on Nantucket. I had a client call me the other day and he said, “This pandemic has put my priorities in perspective. I love Nantucket. I can afford to buy, so what am I waiting for? Send me some listings and let’s plan on getting a deal done when I’m there this summer.” He understands the market is probably not going up in the short term, but he knows it inevitably will in the long run. Couple that with his purchasing power due to the historic low interest rates and he’ll ultimately be making a great lifestyle and financial investment.

As you can see, 2020 was shaping up to be another strong year, but sales volume is a lagging indicator. So, will be telling to see where these numbers are next month…

Year over year comparison of YTD total volume:

’09 – $69mm *Lowest total yearly volume.
’10 – $117mm
’11 – $86mm
’12 – $109mm
’13 – $81mm
’14 – $190mm *$1bn+ year.
’15 – $175mm
’16 – $223mm
’17 – $199mm *$1bn+ year.
’18 – $289mm *$1bn+ year. Highest total yearly volume.
’19 – $182mm *$1bn+ year.
’20 – $202mm

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Time To Invest?

With interest rates at all time lows and rents stable on Nantucket, could be a great time to buy. Let’s say you purchase a $2mm property that would gross $150k in rent. You put down $600k and get a $1.4mm, 30 year fixed loan at 2.9%, so your payment is ~$6k/mnth., ~$72/yr. Deduct other expenses of ~$68k, including commission, and you cash flow $10k. Assuming the Nantucket real estate market trends very similarly to the S&P 500 over the long run, knowing the S&P 500 has appreciated 4.5x over the last 30 years and assuming that trend will continue over the long run, the $2mm property will be worth $9mm in 30 years, so you gained $8.4mm in equity on your $600k investment, a 14x cash on cash return. And, that doesn’t take into account appreciation in rents (yes, expenses will go up, too, but your biggest one, mortgage payment, is fixed) or other benefits like depreciation and use of the property. This is very much simplified, but sounds compelling.

The market continues to crank.

Year over year comparison of YTD total volume:

’09 – $37mm *Lowest total yearly volume.
’10 – $81mm
’11 – $57mm
’12 – $73mm
’13 – $61mm
’14 – $144mm *$1bn+ year.
’15 – $137mm
’16 – $156mm
’17 – $124mm *$1bn+ year.
’18 – $197mm *$1bn+ year. Highest total yearly volume.
’19 – $119mm *$1bn+ year.
’20 – $164mm

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The 2020 Annual Town Meeting Warrant has been adopted by the Select Board and the debating is set to start on April 4th at 9am. There are always a few articles that have the potential to drastically change the value of certain properties. The most obvious are zoning change articles. Let’s say you own a 2 acre lot which is currently in 2-acre zoning, but there’s an article on the Warrant to change the zoning from 2-acre to 1-acre, which would then allow you to sub-divide. If the article passes, all of a sudden you go from owning a, for example, $1.6mm 2 acre lot, to owning two $1.2mm 1 acre lots. Almost like owning Tesla stock… And then there are more subtle ones, like a current pool article that would only allow pools within certain zones that have a minimum lot size and setbacks. If the article passes and you happen to have a property that falls under this article that has an existing pool, but does not meet the requirements of the article, your property value just went up because of your now, pre-existing, non-conformity.

Fair weather, record high stock market and historically low interest rates are keeping the Nantucket real estate machine cranking.

Year over year comparison of YTD total volume:

’09 – $28mm *Lowest total yearly volume.
’10 – $42mm
’11 – $30mm
’12 – $43mm
’13 – $39mm
’14 – $74mm *$1bn+ year.
’15 – $96mm
’16 – $100mm
’17 – $85mm *$1bn+ year.
’18 – $128mm *$1bn+ year. Highest total yearly volume.
’19 – $77mm *$1bn+ year.
’20 – $117mm

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Good Neighbor

If all transactions were included, the 2019 total volume was $1.005bn. If non-arm’s length transactions are excluded, like affordable housing and some conservation purchases, the total volume was just under $1bn. Being the upbeat real estate broker I am, I’m going with Nantucket had another $1bn+ year.

If you go to sell on Nantucket, it often pays to have neighbors, especially high-end neighbors, because there is a decent chance your neighbor will be the highest bidder for your property. A few examples just from 2019 where the neighbor bought the listed neighbor’s property:

40 Shawkemo Road, $23.9mm
36 Low Beach Road, $5.5mm
60 Walsh Street, $4.5mm
9 Cliff Road, $3.9mm
4 Shawkemo Road, $2.0mm
36 Crooked Lane, $1.98mm
12 Fulling Mill Road, $1.7mm

So, if you’re going to sell your Nantucket property, make sure you’re a good neighbor.

The Land Bank and Nantucket Conservation Foundation made some great buys in 2019. Notably:

LB – 174 Orange Street and 2 Milestone Road, 9 acres abutting the Monomoy Creeks.
LB – 39 Almanack Pond Road, 11 acres abutting hundreds of acres of conservation land.
LB – 101-103 Hummock Pond Road, 15 acres to continue to be used as farmland.
LB – 246 Milestone Road, 3 acres across Milestone Road from hundreds of acres of conservation land.
NCF – 204 Cliff Road, 14 acres abutting Maxey Pond.

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10 Signatures

Nantucket has an annual Town Meeting to legislate all matters concerning the Town. Generally, all of the actions taken during Town Meeting determine how the Select Board and Town departments will be able to serve the public throughout the year. In my opinion, this is a great system; it really puts the control of the Town’s destiny in the voters’ hands. However, it doesn’t come without flaws. For example, a citizen can file a Citizen’s Warrant Article with just 10 signatures from registered voters. Once published in the Warrant, a Citizen’s Article has potential to wreak havoc on certain industries.

For example, there is a Citizen’s Article on the 2020 Warrant that will drastically reduce the ground cover on all zoning districts that have setbacks, which is 18 out of 20 zoning districts. Once the Warrant is published in January, any building application that does not comply with this Citizen’s Article will be frozen until the outcome of whether this Article passes or not is determined at Town Meeting in April. So, a large part of Nantucket’s second biggest industry, construction, will be on hold from sometime in January until early April. And, that only took 10 signatures…

Year over year comparison of YTD total volume:

’09 – $402mm *Lowest total yearly volume.
’10 – $629mm
’11 – $504mm
’12 – $726mm
’13 – $725mm
’14 – $949mm *$1bn+ year.
’15 – $815mm
’16 – $945mm
’17 – $985mm *$1bn+ year.
’18 – $1.09bn *Highest total yearly volume. $1bn+ year.
’19 – $931mm

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Long Miacomet

I’ve always thought Miacomet was an undervalued area, but now with the brand new Miacomet Golf Clubhouse about to open, I think it is really undervalued. I imagine we’ll see a similar effect to the area as Cliff saw after The Westmoor Club was built, albeit not as profound. My friend, who is a scratch golfer, said Miacomet played better than Sankaty Head Golf Club and Nantucket Golf Club this past summer, and Sankaty and Nantucket are world class courses. Time will tell, but I’m long Miacomet.

Year over year comparison of YTD total volume:

’09 – $339mm *Lowest total yearly volume.
’10 – $569mm
’11 – $430mm
’12 – $639mm
’13 – $640mm
’14 – $866mm *$1bn+ year.
’15 – $728mm
’16 – $848mm
’17 – $919mm *$1bn+ year.
’18 – $945mm *Highest total yearly volume. $1bn+ year.
’19 – $810mm

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Real Estate Broker

“A real estate broker, real estate agent or realtor is a person who represents sellers or buyers of real estate or real property.” – Wikipedia

“A Nantucket real estate broker represents sellers or buyers of real estate or real property, coordinates vendors, locates missing pet(s), moves cars and cleans, among many other services.” – Dalton T. Frazier

Being 30 miles out to sea, our clients have to rely on us, their real estate broker. We love it and love taking care of our clients, our friends. There’s a lot more than meets the eye with a Nantucket real estate broker. And, beyond what meets the eye is why we succeed.

Year over year comparison of YTD volume:

’09 – $281mm *Lowest total yearly volume.
’10 – $468mm
’11 – $373mm
’12 – $526mm
’13 – $525mm
’14 – $735mm *$1bn+ year.
’15 – $626mm
’16 – $714mm
’17 – $815mm *$1bn+ year.
’18 – $813mm *Highest total yearly volume. $1bn+ year.
’19 – $698mm

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Window Boxes

Nantucket continues to up its game in every capacity. New playgrounds, new infrastructure, new hospital, new bike paths, amazing restaurants that seem to get better with every season, no major crime, tons of non-profits, The Revivalists and the list goes on. Blend that with the stunning natural beauty and all of the fun things to do on Island – fish, surf, bike, hike, etc. – and you have an incredible experience.

The bar is constantly getting set higher. I mean, have you seen some of the window boxes?!

Market’s moving.

Year over year comparison of YTD volume:

’09 – $194mm *Lowest total yearly volume.
’10 – $345mm
’11 – $314mm
’12 – $453mm
’13 – $406mm
’14 – $531mm *$1bn+ year.
’15 – $508mm
’16 – $595mm
’17 – $626mm *$1bn+ year.
’18 – $617mm *Highest total yearly volume. $1bn+ year.
’19 – $582mm

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All in the Detail

Many of the newly built/recently renovated homes on Nantucket are truly works of art showcasing the latest styles and materials. Definitely a perk of my job is being able to see these properties, especially the ones that end-users built, as with these, budgets were commonly not a top priority. To create one of these works of art requires extreme attention to detail. If the developer/owner does not put the time in to pay attention to the detail, it’s blatantly clear and the property becomes disproportionately less valuable compared to any savings on time by not paying attention to the details. It’s all in the detail…

Market continues to fire.

Year over year comparison of YTD volume:

’09 – $161mm
’10 – $272mm
’11 – $260mm
’12 – $338mm
’13 – $324mm
’14 – $453mm
’15 – $425mm
’16 – $485mm
’17 – $499mm
’18 – $535mm
’19 – $494mm