Real News - May 09

June 2nd, 2009

“Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body – the producers and consumers.”
–Herbert Hoover, 31st President of the United States, 1874-1964

What a difference a month makes. Last month I wrote that the Nantucket market had not seemingly begun to show signs of the real estate weaknesses sweeping many markets around the country. Now, a month later, we are beginning to actually see signs of weakness in the numbers. It was only a matter of time.  Let’s take a look.

In the first five months of 2009, there have been a total of 84 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 102 in the first five months of 2008. The total dollar amount of real estate changing hands so far in 2009 is now approximately $106 million, while in the first five months of 2008 it was approximately $203 million and approximately $286 million in the first five months of 2007. The number of transactions (all sales) through May of 2009 was down about 18% compared to the same period in 2008 and the total dollar volume of those transactions for the same period was down about 48% in 2009 versus 2008.

During all of 2008, there were 174 homes sold on Nantucket, which is roughly equivalent to about 15 homes being sold a month. So far in 2009 (through May), there have been only 43 homes sold on Nantucket, or roughly half the monthly average we saw in 2008. Approximately 20% of the home sales so far in 2009 have been foreclosures, now making up nearly 10% of the market dollar volume. This is a sharp increase over 2008 numbers, which show foreclosures making up less than 1% of the total market in 2008.

The decline in the number of sales taking place, coupled with lower sales prices, is spilling over into the average and median home sales categories as well. So far in 2009 the average home sale is about $2 million, down about 21% from the approximate $2.561 million average home sale in 2008, while the median home sale so far in 2009 is $1.415 million, down about 20% from the $1.775 million median home sale for all of 2008.

In 2008, there were a total of 32 vacant lot sales with an average sale price of $1.550 million, there were 46 vacant lot sales in 2007, with an average sale price of just over $2.4 million. There have been 9 vacant lot sales so far in 2009, with an average lot price down about 28% from 2008 levels.

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. Early annualized predictions for 2009, based on permits issued to date, indicate a total of about half as many new single-family building permits being issued in 2009, as were issued in 2008.

So far in 2009 (the first five months), the Nantucket real estate market has just crested the $100 million dollar sales mark. In each of the past five years, it only took three months to surpass $100 million in sales (only one month in 2005 and 2006!). Not surprisingly, given the national economic picture, 2009 has begun on a much slower note than we are used to. Typically, the Nantucket real estate market is stronger in the second half of the year.  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