“If we had no winter, the spring would not be so pleasant: if we did not sometimes taste of adversity, prosperity would not be so welcome.”
–Anne Bradstreet (1612-1672), ‘Meditations Divine and Moral’, 1655
In real estate, if we had no downturns, or not even just an occasional slow period, the boom times might not feel so good. Bullish economists like to say that with each downturn or slow period, the seeds of the next boom market are being sown. To put it simply, my father once said: “real estate markets are like pogo-sticks, they all bounce up and down.” Or even simpler still: “what goes up, must come down.” With the first quarter of 2008 in the books, let’s take a look.
For the first three months of 2008, there have been 71 total transactions (houses, land, condos, timeshares, commercial, etc) worth a total of approximately $151 million. By comparison, in the first quarter of 2007 there were 86 total transactions worth approximately $163 million. The number of transactions (all sales) is down about 17% compared to this point in 2007 and the total dollar volume of those transactions is down about 8% from this point in 2007. Thanks to a handful of sales over $5 million, the average home sale in 2008 (thru March) is hovering around $2.8 million, up from about $2.26 million at this point in 2007, while the median home sale is $2,050,000, up from the $1,760,000 median home sale for the fist quarter in 2007.
By comparison, for the first quarter of 2008, the median home price in Manhattan is somewhere between $855,000 and $945,276, depending on which report you read, which is up about 13% from the first quarter of 2007. “You have had a disproportionate sale of high end properties,” says Jonathan Miller, President and CEO of Miller Samuel Real Estate Appraisers. The number of sales, though, declined in the first quarter of 2008 by 34.3% from the first quarter of 2007, according to Miller Samuel, the largest drop the firm has reported since it began measuring sales in 1989.
In the first quarter of 2008, there were 43 homes sold on Nantucket with a total dollar volume of about $122 million, a drop of 25% in the number of homes sold and a drop of 5% in the dollar volume of home sales versus the first quarter of 2007, when there were 57 homes sold on Nantucket for a total of about $129 million
So far in 2008, there have been a total of 5 vacant lot sales with an average sale price of $1,032,000, there were 10 vacant lot sales to this point in 2007, with an average sale price of $2,847,500. One explanation for the precipitous drop in average sale price for vacant land is a lack of speculation. With an uncertain market ahead, it takes a strong stomach to buy a vacant lot, build a house, and hope that after a year or so (typically how long it takes to build a house on Nantucket) your investment is worth equal to, or more than, what was spent. It wasn’t that long ago (2004, 2005 and 2006) that vacant land was appreciating at more than 50% per year, a clearly unsustainable rate.
In 2007 there were only 127 new single-family building permits issued, the slowest year since 1990 and 1991 (112 and 114 respectively). There have been 15 issued so far in 2008, a pace that is about half of what it was in 2007.
Perhaps some hopeful news for buyers, though not necessarily for sellers, is that the average sales price for homes under $1 million has dropped by about 12% from 2007 levels in this price category, which represents only 3% of the total Nantucket market. Through the end of March, 78% of the real estate market on Nantucket is comprised of home sales over $1 million, while no home sales have taken place in 2008, as of the end of March, for under $500,000.
Typically spring on Nantucket brings renewed interest in real estate and more often than not, the second quarter is stronger than the first. Clearly it is too soon to tell how 2008 will compare with previous years, however in terms of sales volume and total dollar volume, the first quarter of 2008 is the weakest in five years. The pogo-stick is still bouncing .. Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996 as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for Nantucket Comparable Sales service, a subsidiary of Nantucket Listing Service, Inc., – the source for all your Nantucket real estate information, statistics and market analysis needs.
April 15th, 2008
“Every economy is uncertain. Referring to this or any economy as “uncertain” is an unnecessary and pessimistic redundancy.” –Bo Bennett
Uncertainty in the national economy, and in many housing markets around the country, is an almost constant topic in most financial discussions these days. Nantucket, although somewhat shielded from national economic woes, often still feels the undertones of national economic issues, though usually after somewhat of a lag or to a lesser degree than many other markets. So, after two months, how ‘uncertain’ is 2008 so far? Let’s take a look.
For the first two months of 2008, there have been 52 total transactions worth a total of approximately $111 million. By comparison, in the first two months of 2007 there were 49 total transactions worth approximately $91 million. The number of transactions (all sales) is up about 1% compared to this point in 2007 and the total dollar volume of those transactions is actually up about 23% from this point in 2007. Thanks to a handful of sales over $5 million, the average home sale in 2008 (thru February) is hovering around $3 million, up from about $2.5 million at this point in 2007, while the median home sale is $2,100,000, up from the $1,625,000 median home sale at this point in 2007.
Seemingly, Nantucket real estate is booming compared to this point in 2007 right? Well, not exactly. In the first two months of 2008, there were 28 homes sold with a total dollar volume of about $84 million. During the first two months of 2007, there were 34 homes sold for a total of about $83 million.
So far in 2008, there have been a total of 4 vacant lot sales with an average sale price of $1,128,000, there were 4 vacant lot sales to this point in 2007, with an average sale price of $1,287,500.
In all of 2007, there were 5 commercial sales. There have been 4 already this year.
In 2007 there were only 127 new single-family building permits issued, the slowest year since 1990 and 1991 (112 and 114 respectively). There have been 11 issued so far in 2008, a pace that is about half of what it was in 2007.
If new home permits are used as an indicator for Nantucket real estate, 2008 is not looking very strong, although this can be an imperfect indicator on Nantucket, with relatively little available land to build on, even in boom years.
Perhaps some hopeful news for buyers, though not necessarily for sellers, is that the average sales price for homes under $1 million has dropped by about 10% from 2007 levels.
Over the past twenty or so years, another real estate trend indicator for Nantucket has developed: (as shown in the nearby chart). Nantucket’s real estate market tends to track the Dow Jones Industrial Average, with about a six to twelve month lag time. With the Dow seeming to test current lows recently on an almost daily basis, the worst for us is probably still to come, (sales above $5 million notwithstanding!) .. Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996 as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for Nantucket Comparable Sales service, a subsidiary of Nantucket Listing Service, Inc., – the source for all your Nantucket real estate information, statistics and market analysis needs.
March 11th, 2008
“Recession is when a neighbor loses his job. Depression is when you lose yours.” –Ronald Reagan
Well, recession, depression or somewhere in between, everything is relative. Typically, January is a strong month in Nantucket real estate, with January 2008 being no exception - relatively speaking.
In January 2008, there were 31 total transactions worth a total of approximately $69 million. By comparison, in January 2007 there were 40 total transactions worth approximately $79 million. The number of transactions (all sales) was down about 23% compared to January 2007 and the total dollar volume of those transactions was down about 13% from January 2007. The average home sale in 2008 (this is where it gets interesting) was $3,422,000, a huge jump of about 52% from the average home sale in 2007, while the median home sale in January was $2,750,000, another huge jump of about 76% from the median home sale in 2007.
In January 2008, there were 15 homes sold with a total dollar volume of about $51 million. In January 2007, there were 28 homes sold for a total of about $72 million.
In January 2008, there were a total of 3 vacant lot sales with an average sale price of $1,370,000 (there were 4 vacant lot sales in January 2007, with an average sale price of $1,287,500).
In January 2008, there were 2 commercial sales. There were 5 altogether in 2007.
In 2007 there were only 127 new single-family building permits issued. The slowest year since 1990 and 1991 (112 and 114 respectively). Three more were issued in January 2008.
According to Nantucket’s versions of multiple property listing services, there are approximately 500 listings of properties for sale (houses, condos, vacant lots, etc). Prices range from $275,000 for a condo unit near the airport, to $19,750,000 for a waterfront property in Squam. The average sale in January 2008 took place at about 78% of its asking price and average time on the market averaged about 15 months. With time on the market increasing and sales price to listing price ratios declining, these statistics alone combine to indicate a slow or slowing market.
January 2008 was quite strong in average home price relatively speaking, perhaps a good sign for the market, but don’t get your hopes up just yet. Januaries compared to each other can be a prophetic statistic for Nantucket real estate: January 2004 was stronger than January 2003 and January 2005 was stronger than January 2004, both 2004 and 2005 were stronger than their respective preceding year.
January 2006 was weaker than January 2005 and 2006 ended weaker than 2005. January 2007 was weaker than January 2006 and 2007 was a slower year than 2006. January 2008 was weaker than January 2007 … Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for “denby.com” – the source for all your Nantucket real estate information, statistics and market analysis needs.
March 11th, 2008
March 2008
Nantucket is a town, a county, and an island destination resort located 21 miles south of Cape Cod, 91 air miles south of Boston, and 207 air miles east of New York City, in the Commonwealth of Massachusetts off the east coast of the United States. Some 14 miles long and 3 1/2 miles wide, the island has a perimeter of 55 miles of sandy beaches facing the Atlantic Ocean on the south and east and Nantucket Sound on the north and west.
Though losing about six acres per year from shoreline erosion, particularly along the south and east shorelines, the island’s total area is about 50 square miles, or 30,000 acres. It has been predicted that a warming atmosphere and rising ocean levels may cause the island to disappear in 700 years.
The year-round population, according to the Town Clerk, on June 10, 2005, was 10,610, up from 6,012 in 1990 - a growth rate of over five percent annually - and up from 5,087 in 1980. 43% of registered voters participated in the 2006 Annual Town Election. Voter registration at April 3, 2007, was 8,013, of whom 34% voted in the local election on that date. During the three-month summer season the number of people on the island swells to over 50,000 on any given day. The Nantucket school system includes grades K through 12, with an enrollment in June 2007 of 1,250 students. Each high school class for the foreseeable future will include between 80 and 100 or more students. In managing the harbor, a popular destination resort for recreational boating, the Marine Department issued 2,141 mooring permits for small boats.
In the twelve months ending in June 2006, there were 153 births, 253 marriages, and 68 deaths on the island . At the end of 2006 there were an estimated 22,000 autos registered on the island. Median annual family income for Nantucket residents for 2000 was estimated at $55,522 by the 2000 US Census and at $42,393 by the Bureau of Economic Analysis . That is up from $40,331 in 1990 and was the second highest in the state, after Sandwich on Cape Cod.
Travel to and from the island is by boat from Hyannis, or airplane from Hyannis, New Bedford, Boston, or New York. Nantucket’s Memorial Airport is second in New England in the number of flights, with an estimated total of 261,000 passengers departing in 2007, well below the 302,161 in the year 2000. In the year 2007, the Woods Hole, Martha’s Vineyard, and Nantucket Steamship Authority, created in the early 1960s as the island’s lifeline, transported some 550,000 passengers to and from America to Nantucket. 70,000 cars and 48,000 trucks were carried from Hyannis to Nantucket and return in 2007. The privately operated Hy-Line, licensed by the Steamship Authority, carried some 385,000 passengers roundtrip from Hyannis.
During the “palmy days” from 1750 to 1850, Nantucket was the whaling capital of the world, with her locally-built sturdy whale ships and crews representing the first Americans traveling far into the Pacific Ocean in search of spermaceti. With their successful voyages, the island became the second richest community in New England. But after the discovery of petroleum in Pennsylvania, Nantucket’s Great Fire of 1846, the development of rail transportation to New Bedford, and the 1849 gold rush, Nantucket’s whale fishery declined rapidly. The islanders gradually encouraged the summer visitor and tourist trade, and along with construction of new homes, this is the leading industry today.
A real estate boom began in the mid-1960s and continued through 1989 before correcting severely during the savings and loan crisis, with the average home value dropping about 35% and the average vacant lot declining 50% over four years. The bottom was reached in 1992-93 and the market improved until 2000, a year that finished as the most successful in Nantucket‘s history, followed by 2003 and then came the blockbuster year of 2004, which broke through a billion dollars for the first time. In 2005 the billion dollar figure was again exceeded, though some $137 million represented commercial properties. 2006 represented a slower market in tune with the general downturn in the mainland housing market, and the slower trend continued in 2007 and so far in 2008, with the national “sub-prime” mortgage problems seeming to be having an increasingly direct effect on Nantucket.
New construction has averaged over 200 houses per year providing a high level of income and steady year-round employment in the construction trades. In 2005 there were 212 permits issued, including 19 for the Sherburne Commons assisted-living project. In 2006 the annual rate was slower than in recent years, at 156. 127 permits were issued in 2007, the lowest construction rate since 1991. The slowdown continues in 2008, with an annual rate of just 60 so far.
According to a recent Planning Board study, there are more than 7,400 homes and another 1,100 secondary dwellings on the island. With existing approved lots, there appears to be potential for at least another 7,000 or more primary homes on the island, and possibly an additional 8,000 second dwellings. While it is unlikely that all of those houses will actually be constructed, it would seem that extreme “buildout” on finite Nantucket will not occur for another 40 years or more.
The island’s isolation and high freight rates have contributed to “The Nantucket Factor”, a cost of construction that is perhaps 35% higher than in most other places in America. Depending on quality, per square foot costs range from a low of $95 to a high of over $500, according to local contractors and insurance adjusters. We are now estimating standard “no frills” construction at a bare minimum of $300 per foot. Modular homes can be finished faster and for about three-quarters of that figure.
According to a June 2002 study for the Nantucket Planning and Economic Development Commission, the cost of living on Nantucket is higher than on Cape Cod, measured by cost of gasoline (+40%), retail rents (up to 150%), groceries (8% to 25%), electricity (base rate +55%), and heating oil (+48%). However, our unemployment rate hovers below 2% for most of each year. The median income according to HUD for 2007 was $81,800.
Property taxes in Nantucket County continue to be the third lowest in Massachusetts. The assessed valuation for the entire island as of January 1, 1994, was $3.036 billion, rising to the latest figure as of January 1, 2006, of $20.4 billion. The mil rate for residential property was $3.30 for 2005, $2.85 for 2006, and is $2.49 for fiscal 2007. The source of property tax revenues, and a graphic indication that Nantucket properties are 89% owned by off-island taxpayers, is shown on the attached pdf.
Nantucket land and property values escalated rapidly until 1989, with appreciation rates sometimes exceeding 15% per year for homes and 25% per year for vacant land. As shown in the attached pdf, the average price for a buildable lot peaked at $226,000 in 1989, then declined to $123,000 as of the end of 1993, down 50% in four years, with a monthly low that year of $109,000. The average vacant lot sale in 2006 was up 94% and the median was up 52%! As the number of vacant lots dwindles, the very strong trend appears likely to continue. In 2007 the average lot was up 4%, while the median advanced 17%. For the first two months of 2008 the market has slowed drastically.
The average dwelling sale price rose steeply after 1980, peaked in 1989 at $504,000, then declined about 35% into 1993. In 2006 the average home sold at $2,378,000 with a median of $1,550,000. Homes over $1 million have constituted over half of the entire residential market. Just 1% of the home market is in the $225,000 to $500,000 “affordable” range. In 2002 home prices declined as shown in the attached pdf, but have been rising since July of 2003 and finished at a record average sale price of $2,438,000 in 2006. A slower pace in 2007 resulted in a decline in the rate of average home price increases for the first time since 2002. With only three months under our belt so far in 2008, and the number of transactions off 17% from last year, it is too soon to predict a trend for the year, though vacant land sale prices have declined sharply in the first quarter.
Due to the unique consideration that Nantucket properties are 82% owned by non-resident taxpayers, we can see market trends similar to those of the Dow Jones Industrial Average in the attached pdf.
Different neighborhoods of the island have different price appreciation rates, as shown in the graph of average home sale price averages comparing selected areas to overall Island sales in the attached pdf. These figures can change dramatically when several high or low-priced home sales occur in an area to alter the overall average figures.
Between 1988 and 1990 volume also declined, a factor stemming from the 1987 stock market crash, higher interest rates, the 1986 “Tax Reform Act” that had a disastrous effect on real estate values, and a general recession in the northeastern United States. Although foreclosures represented 7% of the market for 1992 and 2% in 1993, that is below the 11% seen in 1990 and 1991. Since 1994 the rate has been less than 1%.
The rate of Planning Board approval of new subdivision lots has been as follows, with 102 new residential building lots created in fiscal 2003, 37 in 2004, and 100 in 2005 (see attached pdf).
The volume of property sales has been generally strong since 1990:
Year Lots Homes Commercial
1990 153 161 19
1991 201 203 18
1992 231 257 19
1993 235 319 7
1994 293 315 19
1995 236 325 9
1996 288 325 19
1997 232 349 15
1998 269 418 32
1999 201 388 32
2000 185 389 15
2001 137 240 14
2002 125 302 11
2003 148 361 16
2004 176 468 41
2005 117 398 22
2006 59 284 9
2007 46 301 5
2008 5 43 4
(thru Mar 08)
Average time on the market for all listings as of March 2008 had increased to 13 months, while average sale price as a percent of listing price is estimated at 79%. Sales are taking place at 110% of the January 1, 2007, (most recent) assessed values, on average.
Contributing to values on the island is a strong interest in and community support for conservation of the remaining open lands. Since the early 1960s, groups such as the non-profit 1,800 member Nantucket Conservation Foundation (NCF), the Trustees of Reservations, and the Massachusetts Audubon Society, have collectively purchased or been gifted nearly 40% of the island. NCF owns some 8,450 acres (28% of the Island), the Trustees some 921 acres, and Audubon about 874 acres.
In addition, the Nantucket Islands Land Bank was created by the state legislature in 1983 for the purpose of taxing each Nantucket County real estate transfer and using the funds to purchase land in the public interest. It is operated by a five-member publicly-elected commission. Commission records, which must be completed by buyers and sellers under penalty of perjury and a 2% tax paid prior to transferring title in the Registry, provide an accurate record of real estate transfers. A transfer cannot be recorded in the Registry of Deeds without prior Land Bank approval.
According to IRS, the Land Bank tax represents, not a deductible sales tax but an increase in the cost of purchase. The Land Bank has acquired some 2,200 acres of land (6% of the Island), at a cost far exceeding $100 million. About $20 million was collected through this fee in each of 2004 and 2005.
Nantucket is a desirable destination resort for the millions of people living in the eastern quarter of the United States, many of whom will continue to support this real estate market. Relatively fast population growth over the past few years has resulted from Nantucket providing a safe environment for raising children combined with our historic ubiquity, as well as modern computer and increasingly reliable and fast internet connections.
For more on our favorite subject (Nantucket), please contact us, and you are welcome to visit our web site at www.denby.com.
H. Flint Ranney Katherine Ranney Sayle Robert F. Ranney Yolanda Fernandez
© 2008 Denby Real Estate, Inc
January 24th, 2008
“It’s tough to make predictions, especially about the future.” –Yogi Berra
New years invariably start with predictions about the year ahead and commentary about the year just gone by. Predictions for real estate markets are most often based on previous years or past trends. Will 2008 continue the flat trend demonstrated by 2007? Will the Nantucket real estate market see an actual ‘down year’? (something many of us haven’t seen in over ten years) Or will 2008 surprise some of the economists who aren’t predicting a return to actual market appreciation until 2010?
In 2007, there were 446 total transactions worth a total of approximately $841 million. By comparison, in 2006 there were 475 total transactions worth approximately $917 million. The number of transactions (all sales) was down about 6% from 2006 and the total dollar volume of those transactions was down about 8% from 2006. The average home sale in 2007 was $2,253,000, down about 5% from 2006, while the median home sale in 2007 was $1,561,000, up about 1% from 2006. It seems that overall, 2007 remained relatively close to 2006.
In 2007, there were 301 homes sold with a total dollar volume of about $678 million. In 2006, there were 284 homes sold for a total of about $675 million.
In 2007, there were a total of 46 vacant lot sales with an average sale price of $2,407,000 (there were 59 vacant lot sales in all of 2006, with an average sale price of $2,311,000). The average lot sale price ended 2007 up about 4% from 2006, and the median lot sale price up about 17%.
In 2007, there were only 5 commercial sales. There were 9 in 2006.
Of all the real estate changing hands on Nantucket in 2007, 74% of all sales (houses, land, condos, timeshares, etc) were over $1,000,000. With prices still holding firm at the upper end of the market, 57% of all sales were over $2,000,000, while about 6 -7% of all sales sold for under $1,000,000. These percentages are slightly higher (1% respectively) than they were in 2006, providing evidence that generally speaking, sale prices have not really declined yet. Although, the average home sale price in the under $1,000,000 category has dropped 9% versus 2006 (in 2006 the average home under $1,000,000 sold for $828,000, while in 2007 it was $754,000).
In 2007 there were only 127 new single-family building permits issued. The slowest year since 1990 and 1991 (112 and 114 respectively). Couple this with the fact that there were no vacant lot sales at all in December 2007 and that 2007 saw the fewest vacant lot sales of any year in recent memory, and it looks like either Nantucket is running out of buildable land quicker than we thought, or the speculation of buying vacant land and building new homes has virtually evaporated, a sure economic sign of slower times ahead, at least in the near term.
According to Nantucket’s versions of multiple property listing services, there are just under 500 listings of properties for sale (houses, condos, vacant lots, etc). Prices range from $275,000 for a condo unit near the airport, to $19,750,000 for a waterfront property in Squam. The average sale is now taking place at about 88% of its asking price and average time on the market is now averaging about 9 months.
Frank Nothaft, chief economist at Freddie Mac, notes that recent weak economic reports have “renewed concerns about economic conditions in the near future.” This, in part, has caused average mortgage rates to come down recently, with some rates seeing their lowest levels since September 2005. Thus creating somewhat of a silver lining for homeowners looking to refinance.
Whatever the future holds, fundamentally, 2007 ended with very similar overall numbers as 2006 did. With a new year comes a fresh perspective, new hopes and a fresh look at old hind-sights. The nearby chart shows that scallop prices per pound and median home prices seem to move in relative tandem. While the only correlation to building permits seems to be that as the number of building permits declines, scallop prices and median home prices tend to enter relative flat periods, after which there are modest increases. Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for “denby.com” – the source for all your Nantucket real estate information, statistics and market analysis needs.
January 24th, 2008
“No real estate is permanently valuable but the grave.” –Mark Twain
2007 is coming rapidly to a close and good riddance! Take your wild Wall Street rollercoaster rides of the stock market, your housing market slump, your credit worries, your high oil and gas prices, your national foreclosure rates that scared the pants off all but the most hardened oldtimers who claim to have only seen worse during the Great Depression! Be Gone 2007!
For the first eleven months of 2007, there have been 425 total transactions worth a total of approximately $794 million. By comparison, through the first eleven months of 2006 there were 440 total transactions worth approximately $881 million. The number of transactions (all sales) is down about 3% from this point in 2006 and the total dollar volume of those transactions is down about 10% from 2006. It seems that overall, 2007 has remained relatively close to 2006, although with December still needing to be accounted for, 2007 seems a tad weaker. Not surprising given all the problems associated with the housing market nationally.
So far the Nantucket market seems to be on the outskirts of some of the more dire effects of national economic woes. The big question is how long can we remain “30 miles out to sea” compared to the rest of the country. “A mild U.S. recession is now likely, with no growth for the year ahead,” Richard Berner, Morgan Stanley chief US economist, said this week. Housing continues to be the single most drag on the economy, economists say. The Mortgage Bankers Association said recently that nearly 20 percent of higher-cost subprime adjustable mortgages were past due in the third quarter. The number of prime mortgage loans in default is also climbing. It’s probably too soon to tell how much all of this affects our local market, since most of the properties on Nantucket are owned by non-resident taxpayers, typically as vacation or second homes, with most of those not under mortgage-based or even interest rate based, financial pressures.
As of the end of November 2007, there have been 286 homes sold this year with a total dollar volume of about $632 million. As of the end of November 2006, there had been 266 homes sold for a total of about $648 million.
Through November 2007, there have been a total of 46 vacant lot sales with an average sale price of $2,407,000 (there were 59 vacant lot sales in all of 2006, with an average sale price of $2,311,000). The average lot sale price is now up about 4% from 2006, and the median lot sale price up about 17%. These rates are drastically less than the 94% change in average lot price we saw in 2006 versus 2005.
As of the end of November 2007, there have still been only 5 commercial sales so far in 2007. There were 9 altogether in 2006.
So far in 2007 there have been 122 single-family building permits issued. If this pace continues, 2007 will be the slowest new single-family building permit year in a decade.
Of all the real estate changing hands on Nantucket so far in 2007, 73% of all sales (houses, land, condos, timeshares, etc) were over $1,000,000. With prices still holding firm at the upper end of the market, 56% of all sales were over $2,000,000, while about 6 -7% of all sales sold for under $1,000,000. These percentages are slightly higher (1% respectively) than they were in 2006, providing evidence that generally speaking, sale prices have not really declined yet. Although, the average home sale price in the under $1,000,000 category has dropped 9% versus 2006 (in 2006 the average home under $1,000,000 sold for $828,000, while in 2007 it is selling for $750,000). This is most likely due to a recent flurry in sales of so-called “affordable” houses, a result of 40-B housing developments.
According to Nantucket’s versions of multiple property listing services, there are just over 500 listings of properties for sale (houses, condos, vacant lots, etc) - a solid drop from last month when there were just over 600 listings. Prices range from $299,000 for a vacant lot on Williams Street, to $19,750,000 for a waterfront property in Squam. The average sale is now taking place at about 89% of its asking price and average time on the market is now averaging about 9 months.
As 2007 nears an end, thoughts begin to turn to 2008. Will 2008 continue the market trend lines of 2007? Will the market remain flat in 2008? Will 2008 see the bottom of the current cycle? Will 2008 see renewed market vigor? Do we have to wait till 2009 for rebound in real estate? Will there be a white Christmas on Nantucket? Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for “denby.com” – the source for all your Nantucket real estate information, statistics and market analysis needs.
December 27th, 2007
“In the business world, the rearview mirror is always clearer than the windshield.” –Warren Buffett
With September behind us, the real estate numbers for the first three quarters of 2007 are in and they don’t look quite as bad as they did earlier in the year. In fact, compared to 2006, 2007 is not too far behind, and actually ahead of 2006 in some comparisons.
For the first nine months of 2007, there have been 339 total transactions worth a total of approximately $620 million. By comparison, through the first nine months of 2006 there were 351 total transactions worth approximately $705 million. The number of transactions (all sales) is down about 3% from this point in 2006 and the total dollar volume of those transactions is down about 12% from 2006.
However, for just the months of July, August and September (the third quarter), 2007 was actually stronger than the third quarter in 2006. During the 2007 third quarter there were a total of 146 transactions, with a total dollar amount of about $289 million. In the third quarter of 2006 there were a total of 102 transactions with a total dollar amount of $220 million. Even if we take out the single largest residential real estate transaction in Nantucket history ($26.5 million in Eel Point, August 2007), the 2007 third quarter was stronger than the 2006 third quarter, measured in both dollar volume and total number of transactions.
Focusing just on home sales, as of the end of September 2007, there have been 217 homes sold this year with a total dollar volume of about $486 million. At this point in 2006, there had been 216 homes sold for a total of about $529 million. But just in the third quarter, 2007 saw 97 homes sold for a total of about $225 million, while the third quarter in 2006 saw only 67 homes sold for a total of about $185 million.
Through September 2007, there have been a total of 40 vacant lot sales with an average sale price of $2,559,000 (there were 59 vacant lot sales in all of 2006, with an average sale price of $2,311,000). The number of lot sales is about even with 2006, with the average lot sale price now up about 11% from 2006, and the median sale price up about 17%.
As of the end of September 2007, there have still been only 3 commercial sales so far in 2007. There were 9 altogether in 2006.
So far in 2007 there have been 111 single-family building permits issued. If this pace continues, 2007 will be the slowest new single-family building permit year in a decade.
Of all the real estate changing hands on Nantucket so far in 2007, 72% of all sales (houses, land, condos, timeshares, etc) were over $1,000,000. With prices still holding firm at the upper end of the market, 55% of all sales were over $2,000,000, while about 6 -7% of all sales sold for under $1,000,000. These percentages are about what they were in 2006, providing evidence that generally speaking, sale prices have not really declined yet.
According to Nantucket’s versions of multiple property listing services, there are approximately 600 listings of properties for sale (houses, condos, vacant lots, etc). Prices range from $225,000 for a condo-unit near the airport, to $19,750,000 for a waterfront property in Squam. The least expensive vacant lot is currently listed for sale at $375,000, with the most expensive lot currently listed at $15,500,000. The number of listings has been slowly increasing over the past few months, with the average sale now taking place at about 90% of its asking price.
The relative ‘strength’ in the local real estate market seen in the third quarter has really taken what was shaping up to be a truly negative year, and made it more of a ‘break even’ year. After two billion dollar sales years in a row (2004 and 2005) and then a slower 2006 ($900 million), 2007 still appears to be continuing the mildly cooling trend. At the current pace, 2007 will likely end up mirroring 2006. With the national real estate market still very uncertain and experts disagreeing over the amount of time needed to shake off excess inventory, sub-prime woes, increasing foreclosures, and simply recover to a more normalized housing market; we’ll have to wait and see what the fourth quarter will bring. Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for “denby.com” – the source for all your Nantucket real estate information, statistics and market analysis needs.
December 11th, 2007
“In the United States today, we have more than our share of nattering nabobs of negativism.” –Spiro T. Agnew
Thanksgiving has come and gone, the Christmas Holiday season is gearing up and Christmas Stroll (which seems to come earlier and earlier every year) has arrived. As we approach the end of the year, with national credit worries and financial doom and gloom making nearly constant headlines, how is our local real estate market doing?
For the first ten months of 2007 (November’s totals aren’t in yet), there have been 390 total transactions worth a total of approximately $726 million. By comparison, through the first ten months of 2006 there were 398 total transactions worth approximately $798 million. The number of transactions (all sales) is down about 0.1% from this point in 2006 and the total dollar volume of those transactions is down about 9% from 2006. It seems that overall, 2007 has remained relatively close to 2006, although November and December still need to be accounted for. So does this mean Nantucket escaped the so-called ‘sub-prime mess’ and resulting credit crunch that has swept through financial markets and financial institutions across the country?
“There is no ‘national’ housing market,” says Jonathan Miller, director of research at Radar Logic, a New York-based real estate research firm. Different markets have different risk factors and fundamentals that drive prices, he says. “Consumers attempt to overlay national statistics on their own property or local housing market, resulting in significant confusion and frustration.”
As of the end of October 2007, there have been 258 homes sold this year with a total dollar volume of about $571 million. As of the end of October 2006, there had been 245 homes sold for a total of about $581 million.
Through October 2007, there have been a total of 43 vacant lot sales with an average sale price of $2,484,000 (there were 59 vacant lot sales in all of 2006, with an average sale price of $2,311,000). The number of lot sales is about even with 2006, with the average lot sale price now up about 7% from 2006, and the median sale price up about 32%.
As of the end of October 2007, there have still been only 5 commercial sales so far in 2007. There were 9 altogether in 2006.
So far in 2007 there have been 117 single-family building permits issued. If this pace continues, 2007 will be the slowest new single-family building permit year in a decade.
Of all the real estate changing hands on Nantucket so far in 2007, 72% of all sales (houses, land, condos, timeshares, etc) were over $1,000,000. With prices still holding firm at the upper end of the market, 55% of all sales were over $2,000,000, while about 6 -7% of all sales sold for under $1,000,000. These percentages are about what they were in 2006, providing evidence that generally speaking, sale prices have not really declined yet. Although, the average home sale price in the under $1,000,000 category has dropped 9% versus 2006 ( in 2006 the average home under $1,000,000 sold for $828,000, while in 2007 it is selling for $757,000).
According to Nantucket’s versions of multiple property listing services, there are just over 600 listings of properties for sale (houses, condos, vacant lots, etc). Prices range from $299,000 for a vacant lot on Williams Street, to $19,750,000 for a waterfront property in Squam. The number of listings has been slowly increasing over the past few months, with the average sale now taking place at about 89% of its asking price and average time on the market slowing creeping up too.
As we all know, Nantucket is a costly market; the median home price through October was $1,600,000, which means potential buyers are the hardest hit by the tightening of credit. A portion of buyers, especially for so-called “affordable” homes with prices under perhaps the median home price, rely on “jumbo loans”- those above $417,000 - which cannot be insured by government lenders Fannie Mae or Freddie Mac. Thus, even potential homeowners with good credit are having a hard time getting a loan. In 2004, 2005 and even 2006, when loans were much easier to get, low adjustable, three to five year interest rates, seduced buyers into taking on bigger loans, and thus higher priced properties, than they could actually afford. The hope was to be able to cash-out again before the rates reset higher, counting on market appreciation to build equity. Now, with the initially low adjustable rates resetting at higher rates (on a monthly basis in some cases) and with the would-be gain in property (equity) value from appreciation almost non-existent, coupled with the increased difficulty in getting a new loan, refinancing might not be an option.
Generally, on Nantucket, real estate statistics are reported in year-over-year terms, due to the highly seasonal nature of the housing market, as prices and volume almost always peak in the second half of the year. What’s more, the average home sale price is almost always skewed on Nantucket by a handful of sales over ten or fifteen million dollars. At the current pace, 2007 will likely end up overall very similar to 2006. With the national real estate market still very uncertain and experts disagreeing over the amount of time needed to shake off excess inventory, sub-prime woes, increasing foreclosures, and simply recover to a more normalized housing market; 2008 could be even slower statistically than 2007. Stay tuned.
-Rob Ranney
- a student of the current real estate market, and a licensed real estate salesperson since 1987, Rob has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, REALTOR, and leading researcher and data collector for “denby.com” – the source for all your Nantucket real estate information, statistics and market analysis needs.
December 11th, 2007
“In the business world, the rearview mirror is always clearer than the windshield.” –Warren Buffett
Labor Day has left us with noticeably fewer traffic jams, and perhaps less stressful journeys to the grocery store. In many tourist towns, the end of summer often brings comparisons to previous years as to how ‘busy’ it was or how ‘good’ it was for local merchants. As for our real estate market, it is difficult to claim a ‘good’ summer as most sales take months to close, so those that do close during the summer have generally been in the works since the spring. But, looking simply at the closed transactions during July and August, the summer of 2007 was pretty good.
For the first eight months of 2007, there have been 271 total transactions worth a total of approximately $510 million. In the first eight months of 2006 there were 313 total transactions worth approximately $598 million. The number of transactions (all sales) is down about 13% from 2006 and the total dollar volume of those transactions is down about 14% from 2006.
However, for just the months of July and August, 2007 was actually a much stronger summer than 2006. In July and August 2007 there were a total of 78 transactions, with a total dollar amount of about $179 million. In July and August 2006 there were a total of 64 transactions with a total dollar amount of $113 million. Even if we take out the single largest residential real estate transaction in Nantucket history ($26.5 million in Eel Point, August 2007), 2007 was still a better summer than 2006, measured in dollar volume.
Focusing just on home sales, as of the end of August 2007, there have been 174 homes sold this year with a total dollar volume of about $397 million. At this point in 2006, there had been 188 homes sold for a total of about $436 million. But just in the months of July and August, 2007 saw 54 homes sold for a total of about $136 million, while 2006 saw only 39 homes sold for a total of about $93 million. In 2005, the best real estate year in Nantucket history in terms of dollar volume, there were a total of 62 homes sold for a total of about $136 million. Does this mean 2007 will end up like 2005? Not likely. Despite a strong summer, 2007 is still only on pace to fall just shy of 2006 dollar volume totals.
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September 21st, 2007
“Well, real estate is always good, as far as I’m concerned.” – Donald Trump
With July gone under a veil of fog, summer is half over and August is upon us. As for the real estate market, can we gleam anything useful from market statistics so far for 2007? Let’s take a look.
For the first seven months of 2007, there have been 222 total transactions worth a total of approximately $382 million. In the first seven months of 2006 there were 287 total transactions worth approximately $551 million. The number of transactions (all sales) is down about 23% from 2006 and the total dollar volume of those transactions is down about 31% from 2006.
Both the average home sale and the median home sale are still declining from the previous year. Although, the median lot sale is actually above (about 17%) what it was last year, after showing declines even just last month. The average sale price for all sales combined (home, land, condos etc) is down about 11% from 2006.
Through July 2007, there have been a total of 30 vacant lot sales with an average sale price of $1,926,000 (there were 59 vacant lot sales in all of 2006, with an average sale price of $2,311,000). The number of lot sales is about even with 2006, with the average lot sale price down about 17% from 2006, but the median sale price actually up about 17%.
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August 7th, 2007
