We welcome the new year feeling grateful in so many ways. Grateful to live in a community of people who look out for each other. Grateful to be in such a beautiful place where we can be outdoors most of the year. We are grateful to have the best agents on the island working with us at Atlantic East Nantucket Real Estate. And we are grateful that, after numerous challenging years, the real estate business on Nantucket is solidly recovering. For our company, 2013 is a year of some new traditions and some transitions. After six years at 5 North Water Street, we are delighted to report that we have purchased another property in town and will be moving in April. Stay tuned!
2012 was a great year for Nantucket Real Estate: The total number of sales was 510 properties for over $839 million dollars, an increase of 47% and 58%, respectively over 2011. Last year was, by far, the best year since 2007. Perhaps more importantly, the average price of a Nantucket property is now on the rise. At the end of 2011, the average selling price was $1,523,000; at the end of 2012 it is $1,645,000. At the height of the market the average selling price was $2,316,000.
What sold in 2012? There were 409 homes (including condominium and cooperative properties) sold in 2012 (the low was 205 sales in 2009). In 2012 there were 79 vacant land sales; in 2008 there were 26. And 22 commercial properties sold last year. In 2009 there were only 2 sales of commercial property. The increase in the number of both vacant land and commercial sales indicates that buyers feel more confident about the future and that businesses are on more solid footing than they were at the depth of the recession.
Properties are now selling, on average, for 92% of list price (at time of sale) and 105% of the assessed value. This compares to 90% of list price in 2009 and 89% of assessed value in 2010, interesting because the assessments have not changed since then. The Town of Nantucket did a state mandated revaluation for fiscal year 2013 and the Town Assessor anticipates that the new assessments should be available late winter. Current Market Conditions: The market is experiencing declining inventory, partly due to the increased volume of sales. There are currently only 320 active sales listings on the market; in 2009 there were over 500. It takes a Nantucket property, on average, 9 months to sell. In 2008 it was taking nearly 12 months. Interest rates continue to stay extremely low; local banks have residential fixed rate mortgages in the 3.5% range now. So we are in a climate of reduced number of listings, very favorable financing and renewed buyer confidence. It still remains a good time to buy compared to a few years ago. A word of caution to sellers: although market conditions are improving, we are a long way from the market levels (in terms of property values) of the previous height in 2004 and 2005.
There is a significant rise in the number of vacant land sales: In 2012 there were 79 sales of vacant land compared to 39 in 2011. If a buyer is unable to find a house that suits their needs, they are increasingly willing to buy vacant land and build. For the first time since 2007, the sale of vacant land is on the rise, largely because buyers have fewer choices than they did during the recession. The number of building permits being issued is increasing, another good sign for the local contracting economy. Many of the top contractors on-island report being booked out one year or more with building work at this time.
The 4th Quarter of 2012 was wildly busy: Because of uncertainty about the federal budget and changes in the tax laws, there was a mad rush to close as many properties as possible before the end of December. There were 193 closings in the last quarter of 2012, compared to 100 in 2011. The dollars represented by these sales totaled over $339 million, more than twice what it was in 2011. Many local lenders and attorneys commented on the pace being busier during the fourth quarter than at the previous height of the market.
What next? We are very optimistic about the coming year. Nantucket remains an exceptional place to be. No other place has the beaches, natural beauty, historic architecture and great culture and fine dining that we do – all 30 miles at sea! We believe that market corrections can, in the long run, be a good thing for the island. It forces people to slow down and take stock of what is really important. However, we are very happy, as we welcome 2013, that the effects of the recession on Nantucket are fading in the rear view mirror!