The end of 2010 brings promising news for the real estate market on Nantucket. We are happy to report that the total number of sales in 2010 was 364, up from 238 in 2009. The dollars that those sales represent increased 47% to $695 million from $435 million in 2009. The average selling price of a Nantucket house is now $1,970,000, up slightly from 2009; the median price is $1,100,000. The average selling price of vacant land is $1,095,000, compared to $970,000 in 2009. The median price of vacant land is $845,000, compared to $700,000 in 2009. We are closely watching these numbers over the next few quarters to see if there is a consistent increase in median and average values. This will confirm that the bottom of the market is behind us.
Because owning property on Nantucket is discretionary, the market does not perform like a primary home market. Factors that exert pressure on the real estate market are different on an island where property is naturally and geographically limited. Nearly 50 percent of property on Nantucket is now held by conservation groups, or is under conservation restrictions – an astounding figure that we can be proud of. Every person who has purchased property on the island since 1983 has participated in this reality by paying the Land Bank fee. Since the Land Bank started, it has purchased over 2,675 acres for use as open space to be enjoyed by visitors and islanders alike. Several economic studies have shown that preserving open space has a positive economic impact on a given community.
How does the value of Nantucket real estate perform over time? In the past ten years the average selling price of a Nantucket home has increased from $970,000 to $1,907,000 – up 197%. The average selling price of vacant land has increased from $570,000 to $1,073,000 today, an increase of 189%. The Dow Jones Industrial Average is 4% lower than it was 10 years ago. The NASDAQ is up 8% and the S&P 500 is down 6% from where it was 10 years ago. However, owning a Nantucket property is about so much more than just an investment. It is about having a home in this special place and enjoying the island with family and friends.
Properties are now selling, on average, for 91% of list price, up slightly from 2009. The lowest this figure has been in the past decade is at 90% (2003) and the highest it has been was 95% in 2000. The lower figures reflect more realistic sellers pricing their properties.
Properties are now selling, on average, for 89% of the assessed value. The assessed value is determined by the Town of Nantucket for purposes of setting the property tax rate. There was an island wide revaluation in 2009 and the total value of all property on the island dropped by 17%. This number would have been higher but the revaluation period was based on market activity from 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. Property tax bills for FY 2012 have been sent out and there is small window to apply for an abatement. Please contact the Town Assessor’s Office (508-228-7211) if you feel that you have a basis for an abatement claim.
As of the end of 2010 there are 432 properties listed for sale. This compares to 488 at the end of 2009 and 497 at the end of 2008. There were 67 pieces of vacant land ranging from $240,000 for a 1/4 acre lot in the Mid-Island area to $15.5 million for over 9 acres with frontage on Nantucket Sound. There were 346 houses, condos, and cooperatives listed that ranged from $295,000 for one side of a duplex in the Mid-Island area to $23.7 million for a large compound with a main house, guest house, pool, and private beach stairs on the North Shore. There were 19 listings of commercial properties, ranging from $475,000 for a condo on Amelia Drive to $4.995 million for the Captain Tobey’s building on Straight Wharf.
The average time that a property is listed for sale is 8.5 months. In 2008 this figure was 11 months. In 2002 it was 8 months. The average for the past 10 years has been 7-8 months. With the increased amount of inventory on the market, it is taking longer for listings to sell. Another indicator that the bottom of the market is behind us will be when the average number of months that a property is listed for sale starts to decline.
How long will it remain a good time to buy? This is the question we get asked most often and, of course, we cannot predict the future. We do know with certainty that there are still a number of great opportunities for buyers on Nantucket right now. The last market decline was in 2002, following 9/11, and then there was an enormous (and, it turns out, unsustainable) escalation until 2006 when we started to see signs of the recession. Properties are now selling, on average, for 20 – 25% less than they did at the previous height of the market.
What if I am trying to sell right now? People sell their properties for many reasons, usually due to a change of circumstance, and not always a financial one. If you need to sell your property in the current market you must price it correctly. You need to be able to put yourself in a buyer’s shoes and become familiar with the listings that your property is competing with. Have a market analysis done for your property by your broker and make the time to evaluate it carefully. Experienced brokers are the ones in the field who are most in touch with market conditions and the vagaries of change. And, remember, if you are not willing to price it correctly, take the property off the market until the market gets stronger.
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