Real News - Feb 2010

March 8th, 2010

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
–Mark Twain (1835 - 1910)

After the past year or two, we are all familiar with “ banker’s rain” in the form of bad economic times, falling prices, foreclosures, job losses, etc. But, as with early hints of spring, some of the rain clouds may be easing slightly as far as Nantucket real estate goes. Does this mean umbrellas will be lent out again any time soon? Is the rain over, letting up somewhat, or are we just in between showers? Let’s take a look.

In first two months of 2009, there were a total of 33 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 52 during the same period in 2008 and 49 in 2007. The total dollar amount of real estate changing hands for the first two months of 2009 was approximately $36 million, while in 2008 it was approximately $112 million and approximately $91 million in 2007. The number of transactions (all sales) for the first two months of 2010 was up slightly (6%) compared to the same period of 2009, and the total dollar volume of those transactions through February 2010 ($69 million), was up about 92% versus the first two months of 2009 (thanks mostly to one $19 million sale).

During February 2010, there were a total of 21 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 17 in February 2009. In February 2010, of the 21 total transactions, there were 15 homes sold on Nantucket, not counting foreclosures, as opposed to 7 homes sold in February 2009. Foreclosures and foreclosure related transactions made up approximately 6% of the overall market in 2009, with approximately 25 – 30 foreclosures and foreclosure related sales taking place. This statistic continues in 2010, through February, with an estimated 6 foreclosures and foreclosure related transactions making up about 10% of the market so far in 2010.

The average home sale in 2010, as of the end of February, is hovering just above $3 million (yes you read that correctly – thanks again to that $19 million sale mentioned above), up about 35% from the approximate $2.236 million average home sale for all of 2009, while the median home sale in February 2010 was $1.4 million, down about 9% from the $1.538 million median home sale for all of 2009. Currently the average and median home sale prices are still hovering near 2004 - 2005 levels, having erased gains from 2006, 2007 and 2008.

There were 35 vacant lot sales in all of 2009, with an average lot price down about 48% from 2008, which in turn was down about 36% from 2007. Vacant land sales had begun to increase slightly in the past month or two, a potentially positive sign, however there were no vacant land sales at all in February 2010.

2008, on an annual basis, saw the fewest number of new single-family building permits being issued for any year since building permits were first required in 1972. 2009 is now the new record holder for the year with the fewest number of building permits being issued since 1972, with a total of only 44. Early estimates, based on permits issued to date in 2010, continue this slow building cycle trend.

February 2010 was the busiest February in the past four or five years in terms of overall dollar volume, but perhaps it is too soon to take anything meaningful from that statistic. Foreclosures are still weighing on the market. Volume, despite a so-called “blip” in February, is still sluggish. And, as I’ve been saying for months, even if we are at or near the market bottom for this cycle, any meaningful recovery will likely be slow and vague. We’ve seen some encouraging market indicators of late, but let’s not get too far ahead of ourselves. One sunny day in early March does not a spring thaw make. Spring will arrive in full force eventually. 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.

Entry Filed under: The Real News