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S P R I N G Greetings from Nantucket. We often say that, on Nantucket, we are all in the same boat. This has never felt more true than during the past three months. Islanders, with clear guidance from Nantucket Cottage Hospital, followed directions to stay at home, wash our hands and practice social distancing. We looked after one another. When the hospital put the word out in mid-March that they needed more personal protective equipment for health care workers, the community responded quickly and generously. Community members, both summer and year-round, have taken out their sewing machines to make thousands of masks. Some locals have set up networks to help those that are housebound get their groceries, medications and mail. Nantucketers have generously supported local COVID-19 relief efforts, including the Nantucket Food Pantry, for our friends and fellow islanders. People and small businesses, many of them hurting, have continued to stay open for curbside delivery and donated food to workers on the front lines of the pandemic. This is the kind of community one wants to live in at a time like this, and we are grateful. With the advent of spring, a little late but finally here, we are looking forward to getting outside more and to calmer waters ahead. Real Estate Update: Uncertainty, uncertainty, uncertainty is the best way to describe the current climate in terms of real estate on Nantucket. The market finished 2019 strong with total sales exceeding $1 billion (for the fifth, non-consecutive, year). The average sale at year end was $2,177,000, compared to $2,214,000 at the end of 2018, a decrease of only 2%. Properties were selling, on average, for 89% of the list price at the time of sale and for 120% of the assessed value. The first quarter of 2020 was rolling along with an increase of 20% in sales dollars and a decline in the number of sales of 9%. Then COVID-19 arrived. Snapshot of the Market: As of the end of April, the price of an average home on Nantucket is still $2,589,000, an increase of 4% over last year. The median price of a home is now $1,795,000, compared to $1,690,000 last year. The average vacant lot on Nantucket is selling for $1,216,000, down 16%, and the median lot is $700,000, down 28% for 2019. Continued on Page 2...
M A R K E T
N E W S
Commercial sales were strong in 2019 with 19 properties selling for a total of $77+ million, a 31% increase over commercial activity in 2018. To date through April there have been only 4 commercial sales. By the end of April the number of sales on Nantucket (103) had declined 18% from one year ago. Remember that these sales largely reflect properties that went under contract before we were feeling the full impacts of COVID-19. A small spot of bright news is that the dollars represented by these sales were down only 1%. Market Trending: One of the most significant changes is the length of time it takes to sell a listing in the current market. As of the end of 2019 the average time on the market was 10 months (up from 9 months in 2018). Today it is up to 12 months, and we expect to see this number rise over the next quarter. The factors that determine real estate value are: location, condition, perceived value (pricing) and motivation level of the seller. It is a fair bet that the latter will be one of the biggest factors in play for the balance of 2020 and into 2021 on Nantucket. Simply put, there will be opportunities for some nimble buyers, but overall, it is likely to take longer for properties to sell on Nantucket. Current Inventory: At the end of 2019 there were 286 active listings, roughly the same as it has been for the past few years at this time. Today there are 280 properties actively listed on Nantucket. At the end of 2019 the average listing price was $3.6 million, the median listing price was $2.6 million (higher than the average selling price) and the average time on market was 264 days. Of the 280 properties currently on the market, the majority are single family homes (198), 49 parcels of vacant land are for sale, 12 condominium or cooperative properties, 14 commercial properties, 5 multi-family and only 2 covenant houses (restricted affordable in perpetuity). Single family homes currently range in price from $425,000 to $26 million. There are only 10 single-family homes on Nantucket listed under $1 million. Vacant land ranges from $330,000 to over $19 million. Sales Breakdown YTD: There were only 5 sales under $500,000 through April, and most of those were restricted for affordability. There were 16 sales between $500,000 and $1 million. The most active price sector so far this year is $1$2 million with 35 sales. This was followed by $2-$3 million with 17 sales; $3-$4 million with 8 sales, $4-$6 million with 11 sales and $6-10 million with only 2 sales. Lastly, there has been 1 sale in excess of $25 million. Summary: There is no way to accurately predict where the real estate market on Nantucket is heading in the short term. At the end of 2019 we thought that 2020 was going to shape up to be very similar to 2019, but obviously, that has changed dramatically. There are some strong indicators that the market has shifted very rapidly into a buyer's market which will require tempered expectations on the part of sellers who need to sell their Nantucket property. There will likely be opportunities for qualified buyers across all of the different market sectors. We are looking forward to this fall when we will have a better sense of where we are, in so many respects. 2020 Nantucket Sales by Price Range (in 000's as of Q1) 40 35 35
30
25
20 17
16 15
11 10
8 5
5 2
1
0 Under $500K
$500-$1,000
$1,000-$2,000
$2,000-$3,000
Page 2
$3,000-$4,000
$4,000-$6,000
$6,000-$10,000
Over $10,000
Nantucket: Sales as % of List Price and Assessed Value As of Q1 2020
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Avg Sale as % of List price
94%
93%
91%
93%
93%
90%
79%
82%
84%
88%
90%
91%
90%
90%
90%
89%
86%
Avg Sale % of AV
135% 135% 152% 130% 114%
99%
95%
106%
89%
81%
139% 141% 103% 127% 123% 120% 132%
Be Aware
Drive In Movies!
Buying or selling a home that was built before 1980? Be on the lookout for asbestos in old floor or ceiling tiles, roof shingles or insulation on the pipes and in the walls. Asbestos is a tiny floating particle in the air that can cause lung damage when the material is disturbed. State law requires that it has to be removed by a licensed professional. For more info: https://www.epa.gov/asbestos/protect-your-familyexposures-asbestos
An exciting new idea for a drive-in theater is in the works for this summer and beyond. The plan will allow for potentially 80 cars and a separate area for lawn seating with social distancing in mind. A large 40 x 20 foot screen will be erected and the sound will handled by a cellular phone application or an FM transmitter in each vehicle. The theater plans to be in operation from July through September at a soon to be disclosed location. The Dreamland Theater has organized this plan and were seeking to raise $139,000 and they have raised over $175,000 to date.
A Trip Down Memory Lane Like most towns across the US, Nantucket had no formal regulations for land development in the early days of the island. It took decades and lots of false starts before organized regulations were implemented. In 1928, Nantucket voted to create a Planning Board to generate rules and guidelines for future development, but no one was appointed to the board. Years later at a 1951 Town Meeting a zoning proposal was shot down by 2/3 of the voters. In 1966 a zoning committee was finally authorized, and the first master plan was created 2 years later. Zoning, along with some other land use regulations, was finally adopted in 1972 as a reaction to the Nantucket Sound Island Trust bill. Also, known as the Kennedy Bill, this proposed federal legislation was focused on turning Nantucket and Martha's Vineyard into a National Land Trust, much like the Cape Cod National seashore. Many felt this bill was a federal seizure of the island so it did not pass, but it compelled Nantucket to move forward with an island wide Historic District Commission, the Conservation Commission and the Nantucket Planning and Economic Development Commission. Better late than never! Page 3
COVID-19 ON NANTUCKET On May 18, the governor of Massachusetts lifted the mandatory “Stay at Home” order and a “Safer at Home” advisory was instituted for those at higher risk. On the same day we entered Phase I of a four phase plan to safely reopen the economy of the commonwealth. Among other things, Phase I requires that everyone wear a mask or cloth face covering in public, that we continue washing our hands frequently, and that we practice social distancing (6 feet apart). There is also an advisory that anyone traveling to Massachusetts from out of state self-quarantine for 14 days. Nantucket Cottage Hospital has expanded testing for COVID-19 and is encouraging anyone with any symptoms to get tested. There is a robust tracking program (local Board of Health and the hospital) in place on Nantucket in an effort to try to contain any future outbreaks. Nantucketers took responsibility for their behavior these past few months which has resulted in only 14 known cases or coronavirus (as of this writing). We anticipate that there will be more cases as our population increases and it is imperative that everyone on island continue to act responsibly. Thank you for your consideration.
Nantucket: 1st Q Comparison Sales Dollars (000's)
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
2004
2005
2006
2007
2008
Dollars 1st Q. (000's) $152,158 $251,239 $229,730 $171,902 $150,468
2009
2010
2011
2012
2013
$53,322
$108,095
$73,874
$96,132
$74,334
2014
2015
2016
2017
2018
2019
2020
$174,073 $156,176 $196,271 $184,719 $297,448 $151,934 $185,339
It's only spring, but 2020 has already been an interesting year for rentals on Nantucket. The COVID-19 pandemic is affecting different people in different ways. Some tenants have legitimate concerns about traveling at this time and have decided to stay home this year. Others are chomping at the bit to get away after a long winter in isolation. One common thread we are seeing is those who are coming seem to want to stay for longer periods of time. Many tenants who booked one week last fall are looking to extend to two or three weeks. Many others who hadn't booked yet are looking for rentals of 2 or 3 months, with pools and good Wi-Fi. In a normal year, it would be next to impossible to find a multiple week rental period available this late in the spring, but because some people have decided to stay home this year there may be options available depending on your needs. The governor of Massachusetts recently changed the Stay at Home order to a Safer at Home advisory for those at higher risk. He also moved the state into Phase I of a four phase plan for re-opening the state of Massachusetts. Part of the Stay at Home order and Phase I of the re-opening plan restricts short term rentals to essential workers only. Therefore anyone else wanting to rent a home on island had to lease for 32 days or longer. That restriction is likely to be lifted when Phase II begins, not before June 8th, but it has not been a hurdle for some. Booking for 32 days or longer has the added advantage of exempting a tenant from the 11.7% Massachusetts rental tax. So if you, like many others, are now working from home, consider making Nantucket your home for the summer. Page 4
WHAT TO EXPECT THIS SUMMER The summer of 2020 will surely be different than summers past. The pace is likely to be slower and we will be practicing safety measures for the protection of everyone. There are still many unanswered questions as we are only in Phase I of the four phase re-opening plan. It looks like our beaches will be open, with social distancing. Retail shops will be open, with new guidelines. Many restaurants are now open but are offering only take-out curbside delivery. Some restaurants are exploring the possibility of additional dining outdoors. Summer camps may be able to start to open in Phase 2 with new rules. We are still waiting to hear about museums, theaters and cultural sites. There will not be any large gatherings and most of the non-profit fund raisers will not be held in the traditional way that they have been in the past. There are lots of moving parts here and the hospital and local government are doing their best to balance economic recovery while protecting public safety. The Select Board and Board of Health, in conjunction with the hospital, have spent countless hours meeting about how best to safely re-open the island. Please think in terms of spending time with friends and family in smaller groups. Try to spend time outside, whether on Nantucket’s beautiful beaches or the many open spaces. Please remember to support local restaurants, either through take-out or the purchase of gift cards. This is going to be one of the hardest hit sectors on Nantucket and we can all help.
Rental Arbitrage? Considered to be a “best-kept secret” for investors in the real estate industry, rental arbitrage is the act of securing a long-term rental on a property and then re-renting it on a short-term basis. It has been an attractive business model for many new real estate investors looking to reap generous profits with minimal investment. One of the biggest challenges for this strategy is securing the consent of the homeowner. In some areas the investor offers to pay a premium above the long term rental rate or offers an agreement for profit sharing. Now that travel has come to a halt, many investors are finding themselves in the red with no income and rent due to the property owner. Going forward, this business model will be viewed as very risky since the cancellation policies for most rental sites like VRBO and Airbnb are favoring the tenant, not the property owner or entity renting out the property. Nantucket homeowners should make it a priority to discern the intention of a potential tenant. You can protect your property from rental arbitrage by adding a “No Subletting” clause to your lease. Rest assured all of our leases at Atlantic East include this clause. Nantucket: Home Prices As of Q1 2020 Avg Home ($OOO)
2615
Median Home ($OOO)
2500
2378 2276
2271 2164
2124
2103
1672
1666
1750
1726 1525
1425
1150
1670
1600
1528
1495
1500
2133
1970
1945
2000
1550
2440
2373
1525
1400
1190 1100 1013
970
1000
1050
999
500
0 2004
2005
2006
2007
2008
2009
2010
2011
Page 5
2012
2013
2014
2015
2016
2017
2018
2019
Nantucket: Home Prices As of Q1 2020 Avg Home ($OOO)
2615
Median Home ($OOO)
2500
2378 2164
2124
2103
1672
1666
1750
1726 1525
1425
1150
1670
1600
1528
1495
1500
2133
1970
1945
2000
1550
2440
2373 2276
2271
1525
1400
1190 1100 1013
970
1000
1050
999
500
0 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
SHORTS This summer Nantucket Community Sailing will be offering equipment rentals, including stand-up paddle boards, kayaks and some smaller sail boats for a minimum of 1 week or longer. The rental program will be run out of the Shadbush location and they will help with delivery. This is a great way to get out on the water. For more info: www.nantucketcommunitysailing.org. The annual Town Meeting is being pushed to sometime near the end of June (maybe) and the Town’s leadership is coming up with a plan to have a short meeting, with social distancing, to vote on only the most important articles to keep the Town funded into the next fiscal year. The Town election is now scheduled for June, 16, 2020. The Town Clerk is encouraging people to vote by mail this election. Applications for a mail-in ballot can be found at https://www.nantucket-ma.gov/DocumentCenter/View/36319/2020-Municipal-EarlyBallot-Application-PDF. This will be good practice for the fall election. The Nantucket Association of Real Estate Brokers recently voted to donate $10,000 to the local COVID-19 Relief Fund through the Nantucket Community Foundation. The funds will be matched by a very generous donor.
Atlantic East N A N T U C K E T R E A L E S TAT E Penny Dey, GRI, ABRM and Heidi Drew, ABR, RSPS, SRS, Broker/Owners Ken Beaugrand; Linda Bellevue, GRI, CBR; Peter DuPont; Alison K. Forsgren, ePro, NAR Green, SRES Mary D. Malavase, ABR, RSPS, TRC, SFR, SRS; Jane Miller, ABR, RSPS; Erikka Perkins; Meg Ruley, ABR, RSPS; Lisa Sherburne, ABR, RSPS; Melinda Vallett; Christine Whelden, ABR; Geri Walker, Tanya Babaitsava We believe in doing one thing and in doing it well! 82 Easton Street Nantucket MA 02554 508.228.7707 NantucketRealEstate.com
Volume XVI, Issue 2, Spring 2020