We are nicely settled into our new home at 82 Easton Street and are appreciating some unexpected things about our new neighborhood. We can hear the ferry whistle loud and clear, the Nantucket Hotel (across the street) has a really good lobster roll and it is easy to navigate out of town from this location! There is always a cool breeze on our front porch and we encourage you to stop by for a visit.
This summer is shaping up to be the busiest one in many years. Rental bookings, usually a harbinger of sales activity, are very strong and many people booked earlier than usual in order to have secured the property that best met their needs. In the 30 years that we have been practicing real estate on Nantucket, we do not recall a market changing as rapidly as this one is. The current market is defined by declining inventory (40% fewer listings than one year ago at this time) and increased sales activity as buyers feel more confident about economic prospects in general. Although interest rates have recently risen slightly, we never thought we would be seeing fixed rate mortgages in the 4% range. It is very clear to us that the bottom of the market is solidly behind us.
The Federal Reserve recently reported that, buoyed by a healthier housing sector and a soaring stock market, American households continue to regain ground lost during the financial crisis and the severe recession that followed. Without adjusting for inflation, the net worth of American households is now higher than before the recession struck nearly six years ago.
The number of sales on Nantucket is exactly the same this year as it was for the first half of 2012 – 177 sales. The difference is how it breaks down: in 2012 there were 153 houses, 16 parcels of vacant land and 8 commercial sales. This year, there were 135 houses, 30 parcels of vacant land and 12 commercial properties sold. This confirms what we have intuited: with the shrinking inventory, buyers are once again willing to purchase vacant land and build in order to get the Nantucket property they want. The rise in commercial sales by over 30% indicates that business owners feel that the economic climate on Nantucket is a more convincing bet than it was a few years ago.
Although the average and median selling prices are slightly down from one year ago, this reflects the number of lower priced properties that transferred during the first half of the year. Many were distressed properties that finally sold, contributing to the decline in inventory. Distressed properties tend to be in the lower price ranges and constituted less than 1% of the market. The average selling price of a property on Nantucket is now $1,334,000; the median price is $764,000. These numbers will rise by the end of 2013 as the last half of the year is when the most expensive real estate typically transfers. More good news is that the average selling price as a percentage of assessed value is now 104.59%. The assessed values, set by the Town of Nantucket for purposes of taxation, lag behind the market, sometimes by a few years. The average selling price as a percentage of list price is 94%.
Pending Sales: Right now, as we head into our busiest time of the year, there are 87 pending sales, which is about 20 percent of the market. This puts the absorption rate at a little less than 9 months. Pending sales range from a .25 acre lot in the Mid-Island area that was listed for $175,000 to a large home on Lincoln Circle in the Cliff area with very strong water views, listed for $10,900,000. Areas that are hot right now are Town, Sconset, and the Cliff and properties with water access or strong views.
The number of building permits issued by the Town of Nantucket is on the rise for all types of construction – new homes, additions, renovations and for moving houses from one location to another.
The 177 closings during the first half of 2013 represented over $236,000,000 in sales. This number would have been higher but nearly 100 sales were pulled from early 2013 into December of 2012 in order not to be subject to the changing tax laws. The total value of property sold on Nantucket in 2012 was over $830 million, compared to only $531 million in 2011. We are confident that this year will be similar to 2012 based on current market conditions. There have been two years that real estate transfers on Nantucket exceeded 1 billion dollars: 2004 and 2005, right before the recession.
With the gains in the financial markets, if history is an accurate barometer, Nantucket real estate is poised to start appreciating once again. We believe that the rate of appreciation will be less precipitous than in the past – likely a good thing for long-term stability and future markets. Of course, owning property on Nantucket has the added benefit of being able to enjoy all that the island has to offer. And this summer has made us appreciate these benefits more than ever. Please let us know if we can help you enjoy the island in any season!