We are so pleased to report some more positive news about the real estate market. Nantucket had an excellent third quarter with over $201 million worth of transactions, $150 million during the month of September alone. This is a healthy increase of 39% over the 3rd quarter of 2009. The year to date total is $448M with the 4th quarter still to come, historically one of the strongest quarters. We are on track for a total of around $640M of sales this year, compared to $435M in 2009 and $574M in 2008. It is fair to say that the bottom has been reached. The next indicator of a change in the market will be a consistent rise in the average and median selling price of a Nantucket property over the next few quarters. The average price of a Nantucket home is now $1,942,000; last year at this time it was $1,887,000. The median price of a home is now $1,070,000; last year it was $1,275,000. There are currently just under 700 properties for sale on Nantucket. The average price of vacant land on Nantucket is now $1,206,000; the median price is $845,000. This compares to $881,000 for the average and $700,000 for the median in 2009.
A word of caution to sellers. A primary reason for the increase in market activity is the fact that many sellers are pricing more correctly to the current market than they were a few years ago. The market is at the same price levels as it was in 2004, just prior to the rapid escalation in values. And buyers are generally feeling more confident about the economic and market conditions translating into greater sales activity. It is likely to be some time before we see prices return to the previous height of the market.
It remains a great time to buy. Many buyers have recognized that this is the best time to buy in nearly a decade. Buyers can get a good deal, with prices down around 30% from the previous height of the market. Mortgages are inexpensive now. At 4.4% on average for a 30 year fixed rate mortgage, costs to own are down by a fifth from two years ago. Owning a Nantucket property provides some inflation protection. Historically, appreciation over time outpaces inflation. There is a lot to choose from with nearly 700 listings on Nantucket. And, sooner or later, the market will rebound and we think it has already started to.
There has been progress on the national front. Housing starts rose 10.5% in August to an annual rate of 598,000 homes, the most since April, according to the Commerce Department. Existing home sales rose in August according to the National Association of Realtors. Total housing inventory declined .6 percent at the end of August, representing an 11.6 month supply at the current sales pace, down from a 12.5 month supply in July. On Nantucket there is currently a 2 year supply of inventory at the current sales pace which is consistent for a second home market. The average time a property is on the market is now 9 months, down from 9.75 months in 2009.
Properties are now selling, on average, for 90.63% of the list price and 89% of the assessed value. The assessed value is determined by the Town of Nantucket for purposes of setting the property tax rates and the island recently underwent the state mandated revaluation. The total value of real estate on the island dropped by only 17% because the period under consideration was 2006 – 2008. The new assessed values are supposed to reflect market activity during the 3 years preceding January, 1, 2009 which means that the recession was not fully accounted for in the new assessments.
Make sure that you are informed. If you are following the real estate market on Nantucket, the best way to stay informed is through your broker and our multiple listing service, LINK Nantucket. Contact your broker to get complimentary client access to stay up to date on the market happenings. We are excited to see what the 4th quarter of the year brings!