Real News - Aug 09

September 17th, 2009

“A bank is a place that will lend you money if you can prove you don’t need it.” –Bob Hope (1903 - 2003)

Perhaps if lending standards over the past few years were truly as rigid as Bob Hope suggests, we might not be seeing the number of foreclosures we are currently seeing. Generally speaking, however, economic crises tend to feed on themselves from a variety of sources. Blaming banks does us no good now. In fact, perhaps, banks may help get us out of the economic mess we are still languishing in. Let’s take a look.

For the first eight months of 2009, there have been a total of 132 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 178 in the first eight months of 2008 and 271 for the same period in 2007. The total dollar amount of real estate changing hands so far in 2009 is now approximately $175 million, while in the same period of 2008 it was approximately $381 million and approximately $510 million in the first eight months of 2007. Clearly, we have come down well off the most recent market highs. The number of transactions (all sales) through August of 2009 was down about 26% compared to the same period in 2008 and the total dollar volume of those transactions for the same period was down about 54% 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 (one home sold every two days or so). So far in 2009 (through August), there have been 76 homes sold on Nantucket, or roughly three-quarters of the monthly average we saw in 2008. Foreclosures and foreclosure related transactions are currently making up approximately 10% of the overall market so far in 2009.
As of the end of August in 2009 the average home sale is hovering just under $2 million, down about 22% from the approximate $2.561 million average home sale in 2008, while the median home sale so far in 2009 is $1.350 million, down about 24% from the $1.775 million median home sale in 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 15 vacant lot sales so far in 2009, with an average lot price down about 46% from 2008, which in turn was down about 36% from 2007.
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. Annualized predictions for 2009, based on permits issued to date, indicate a total of less than half as many new single-family building permits being issued in 2009, as were issued in 2008.

The first eight months of 2009 indicate the Nantucket real estate market is still showing real indications of continued declines in both overall dollar volume and sales prices. August 2009 was the slowest August in dollar volume and number of total transactions since 1997. It is too soon to determine if the market declines we have seen to date are slowing, or stabilizing, or even forming the bottom point before a rebound. After the last major downturn in Nantucket real estate (early 1990’s), it took several years before any real “upturn” took hold. So, even if we are near a market bottom, I would not expect a rapid recovery.

Look on the bright side; mortgage rates are still historically very low, and despite stricter lending standards (just prove you don’t need the money!), this really is a buyer’s market! 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.