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Summer on Nantucket started with a bang and shows no sign of slowing down as we head into the thick of it. The weather has been beautiful and all of the snow from last winter is, thankfully, a distant memory. There have been some big changes around the island. As promised, the larger new Stop & Shop store opened up on time next to the former store on Pleasant Street. The Nantucket Boys & Girls Club renovation is finished and the club is twice the size of the old one. There are four major construction projects underway in close proximity in the heart of Town: Bookworks is building a new bookstore on Broad Street, the Mooney Building (corner of Federal and Broad) is being transformed into, among other things, a culinary arts center, and there is a large inn under construction where Dexter Collins used to sell seashells across from the Town Building. Lastly, a new theater will be built on North Water Street. Many people returning to the island have commented on all of the changes this year which do seem more visible and numerous than in past years. This activity is yet another sign that the economy is improving and folks are willing to take risks on commercial projects. The last week of June saw a huge number of very optimistically priced listings come onto the market. The climate is reminiscent of 2004 and 2005 when many sellers thought that the sky was the limit. We know this is not the case with the number of sales for the first half of the year at 182, compared to 224 last year. The dollars to date in 2015 are at just over $312 million, compared to $380 million last year at this time. The lower numbers are attributable to a number of factors. The number of properties on the market is 30%+ lower than it was at the height of the recession, giving buyers fewer choices. Buyers are willing to wait to get the property that they want and, in many cases, are buying land and building a home, a process that can take nearly two years with the permitting and construction requirements on Nantucket. Many buyers who were on the sidelines through the recession have now purchased. The average price of a house on Nantucket continues to climb and is currently at $2,044,000. The median price of a home is $828,000. More than half of the sales in the first half of 2015 were for properties under $1 million, bringing the overall 2nd Q numbers down. There was an influx of lower-priced properties into the market in the Mid-island Continued on Page 2.... area, impacting the numbers for the first half of the year.
Nantucket: Home Prices 2001 - 2015 2nd Q 2015
2500
2378
Avg Home ($OOO)
2271
Median Home ($OOO)
2164
2103 2035 1945
2000
1672
1666 1550
1500
1478
1726
1528
1495 1425
1297 1187
1000
1275 1150
1190 1100 1013
970
917 827.5
2044
1970
1050
999 828
775
500
0 2001
2002
2003
2004
2005
2006
2007
2008
M A R K E T
2009
2010
2011
2012
2013
2014
2015
N E W S : 2
Nationally, the pending home sales index has increased year-over-year for 8 months straight and is at its highest level since May 2006. The Federal Reserve has been holding off on raising the benchmark interest rate but we expect to see an increase in the fall, with more evidence in of stronger economic growth. Across the country home prices are, on average, just slightly higher than they were 10 years ago and by the end of 2015 this will likely be the case on Nantucket, a discretionary market. On a broader scale, housing prices will rise only as income levels rise. Solid hiring since 2014 and relatively low mortgage rates have stirred up demand and helped generate more buyers, though rising sales have propelled prices because relatively few properties are for sale. How does all of this impact the Nantucket real estate market? On Nantucket, primarily a second or third home market, confidence plays a major part in the marketplace. Generally if the stock market continues to perform well then folks feel better about investing in a non-essential real estate purchase. Our friend, the late H. Flint Ranney, a student of the real estate and stock markets, believed that the market on Nantucket followed the stock market over time. Decades of evidence support this view. There are currently just over 400 properties listed for sale on Nantucket. The median price is $2,200,000. The average time it takes a property to sell is now only 6.24 months, the lowest it has been since before 2000. Properties highest in demand right now are new houses, or those that have been completely renovated, with the latest in amenities (such as pools) and design features. Some of the most eye-opening prices this year are for such properties. The market in, or close to, Town is strong as is the waterfront market (non-eroding). The balance of 2015 will tell us how much price resistance there may be to the pricing of the current inventory. The average price of vacant land has dropped, from the end of 2014, to $828,000. The median price is now $625,000. This is largely due to the influx into the market place of a substantial number of lower priced vacant land listings at the end of 2014 and the beginning of this year, most of them located in the Mid-Island area. Continued on Page 4... Page 2
Why Are Property Taxes So Low on Nantucket? People are often surprised at how low property taxes are on Nantucket relative to the value of real estate. The primary reason for this is that over 80% of our taxes are paid by non-resident tax payers who are not using Town services on a yearround basis. Every three years the State Department of Revenue requires a revaluation of all of the properties on-island in order to establish property values for the purpose of fair distribution of the tax burden. The assessed value is determined by activity in the real estate market and general economic conditions for the three years prior to the revaluation project. The latest revaluation will reflect market values as of FY 2016 and is already in progress. It will reflect market activity during 2015, 2014 and 2013. Factors that are examined for each property are: location, size, quality of construction, age of improvements, topography, utilities and zoning restrictions. The data collection phase of the project includes physical inspections of the exterior of properties. Appraisers then view the collected data and apply determining factors of sales analysis to come up with a value for each property. Information on assessed values for the entire island is available to the public. A revaluation does not necessarily increase property taxes. If the values go down, the rate goes up and vice-versa. In simple terms, the property tax revenue for the Town of Nantucket is established by multiplying the total assessed value of all properties by a tax rate (currently $3.76/$1,000 for the residential rate). For instance, if you own a property assessed at $1,000,000, your property tax bill would be $3,760 annually. There is a residential exemption for year-round residents of Nantucket, currently $336,917 or $1,216.27 of property tax. The Town also has a senior citizen work program that will allow Nantucket residents over the age of 60 to receive a credit of up to $750 on their tax bills in exchange for volunteer work performed for the town. To qualify, an applicant must meet the age requirement and be the owner of record of a Nantucket home used as a residence.
Nantucket: Sales as % of List Price and Assessed Value 2nd Q 2015
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Avg Sale as % of List price
91%
90%
90%
94%
93%
91%
93%
93%
90%
91%
91%
92%
94%
95%
95%
Avg Sale % of AV
140%
121%
151%
135%
135%
152%
130%
114%
99%
89%
97%
105%
113%
132%
139%
Page 3
2015
T O P
O ’ T H E
M A R K E T
In 2014 there were 30 sales over $5 million on Nantucket. Of these, 7 properties never hit the open market. The dollars represented by these 30 sales were over $282 billion, accounting for 29% of all sales dollars on Nantucket in 2014. There were 24 residential properties, 3 parcels of vacant land, one multi-unit condominium property and 2 commercial sales. The average time on the market for these listings was 238 days and the average selling price, as a percentage of list price, was 95%. Only 12 of these sales occurred during the first half of 2014. The other 18 were between June 30 and the end of the year. Here is how they break down by price sector: $5-6 million - 10 sales, $6-7 million - 6 sales, $7-8 million - 3 sales, $8-10 million - 2 sales, $10-12 million 4 sales and over $12 million - 7 sales. The majority of these hyper high-end properties were located directly on the water (10 properties) or had strong water views (11 properties); and four of the sales were of multi-lot vacant land subdivisions, many of which are currently being built out. Two of the sales were for completely renovated homes in Town with the most current in features and amenities. The residential sales over $5 million averaged over 6,500 square feet of living area. It was no surprise that most activity was in the Cliff area with 11 sales, followed by Town with 7, two sales each in Pocomo, Polpis and Shimmo and 1 sale each in Dionis, Madaket, Madequecham, Mid-Island, Monomoy and Squam. To date in 2015 there have been 11 sales of properties over $5M, all residential except for one commercial property. There are currently 65 properties (63 single family residences and 2 parcels of vacant land) listed for sale over $5 million. The average time on the market is 207 days. There are 17 properties listed between $5-6 million, 10 between $6-7M, 9 between $7-8M, 5 between $9-10M, 6 between $10-12M, 4 between $12-15M and 10 between $15-35 million. Of these 65 properties, 15 have been listed for sale for more than one year and two have them have been listed for sale for over three years!
Big Changes Coming In Property Settlement There are changes to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) under the Dodd-Frank Wall Street Reform and Consumer Protection Act that go into effect on August 1, 2015. The new rule combines the Good Faith Estimate with the Truth in Lending (TIL) disclosure now called the "loan estimate" and the HUD-1 settlement statement with the final TIL, now called the "closing disclosure." Perhaps the greatest change is that the closing disclosure must be in the hands of the consumer three business days before closing. The goal is to improve consumer understanding of estimated settlement fees, simplify mortgage disclosure forms, aid in comparison shopping and prevent surprises at the closing table. Any deviations greater than $100 between the disclosures and actual costs automatically trigger a new waiting period of 30 to 60 days before a property can close. Lenders are now subject to very stiff fines if they violate any terms of the act. The regulations do not apply to reverse mortgages, home equity lines of credit or a creditor that makes five or fewer mortgage loans in one year. For more information please contact your broker or attorney.
M A R K E T
N E W S : 3
Properties on Nantucket are now selling for, on average, 141% of assessed value, the highest since 2006. The average selling price, as a percentage of list price at the time of sale is now 95.54%, higher than it has been since before 2001. It is important to remember that these statistics include properties that have languished on the market for years as well as those that are newly listed and go under contract right away. It is not uncommon to have multiple buyers interested in the same property in the current market - a great situation for a seller. We see this more often with new listings than those that have been sitting on the market for some months or years. There are still opportunities for buyers, especially compared to 2004 and 2005. Remember that each situation is as different as the properties for sale. Sellers have many reasons for selling. The challenge of timing is to have your needs as a buyer intersect with those of the seller of a particular property. If you are ready to buy, work with a qualified real estate professional, discuss your needs and wishes and together and, in time, you will be able to find the property that works for you. Page 4
DO I NEED TITLE INSURANCE? It depends upon your tolerance for risk. When you purchase a property you are handed title to the property in the form of the deed. Someone, other than the owner, may have rights in the property that are not evident. There could be liens on the property (like a mortgage, tax or contractor's lien), or a zoning violation or encroachment. Maybe there is an easement for utilities that never got recorded or a disgruntled lurking relative of a previous owner that might come out of the woodwork to lay a claim to the property, or some portion of it, as theirs. In simple terms, title insurance protects you against future claims against the property and it will pay the legal costs and fees to defend against such claims. There are primarily two kinds of title insurance. If you are getting a mortgage to buy the property, your lender will require you to buy title insurance on the amount of money they are lending to you. This is called the lender's title insurance policy; the current cost is approximately $175, paid just once. As you pay down your mortgage, the lender's exposure to title issues diminishes and your exposure increases. The second kind of title insurance is called owner's title insurance and it covers your equity in the property (the difference between the mortgage and what you are paying for the property). The current cost of owner's title insurance for up to $1 million is $3.65 per $1,000, or $3,650 for $1 million. The rate drops as the value rises. The coverage of the policy is not necessarily limited to the face amount of the policy or the value of the property. You may want to consider, for a relatively small amount of money, purchasing an inflation rider that will increase the value of your coverage as the value of the property increases over time. Before agreeing to mortgage the property, the lender hires a qualified third party to do a thorough title search, researching the history of the ownership of the property. Their job is to confirm that there are no issues with the title in order to make sure that it is a good risk for them. The title search shows not only limitations on the use of the property and rights that others may have in the property, but also liens or monetary obligations that are outstanding against the property. By minimizing the risks of claims being made the title insurance company is able to offer its insurance policies for a relatively low, one-time fee which the buyer pays as part of the closing costs. And yet another good reason to work with a local attorney who is informed about these issues. Title insurance is a relatively low cost, one-time effective hedge against future issues with the property.
N a n t u c k e t S a le s O v e r $ 5 M 2 0 0 1 -2 0 1 5 (Y TD ) A S O F 2 n d Q 2 0 1 5 35
30
25
20
15
10
5
0
2 0 01
2 0 02
2 0 03
2 0 04
2 0 05
2 0 06
2 0 07
2 0 08
2 0 09
2 0 10
2 0 11
2 0 12
2 0 13
2 0 14
2 0 15
H o u s es
3
1
1
0
28
22
31
20
12
24
9
20
15
29
10
V ac an t L an d
0
0
0
0
8
3
3
1
0
0
4
3
3
3
0
C o m m e r c ia l
0
0
0
0
2
3
1
1
0
1
0
0
0
3
1
Page 5
No. of Current Listings By Price Range 5 10
6
3
4
6
4 Up to $500K 25
11
$500K - $1M $1 - $2M 63
19
$2-3M $3-4M
25
$4-$5M $5-6M $6-7M
49
$7-8M $8-9M 112
$9-10M $10-12M $12-15M $15-20M
86
Over $20M
ODDS & ENDS UBER!! On Memorial Day weekend Uber, the app-based ride share service, launched on Nantucket. Uber drivers do not have to adhere to the same regulations as taxi drivers, such as being licensed and regulated by the Town, or posting their rates. We recently tried to call an Uber ride few times only to find no cars available. Hopefully, more folks will have signed up to drive by now! It will be interesting to see if Uber works as a supplement to the existing taxi industry. GET THE REAL ESTATE SKINNY FAST: If you are interested in getting the news on Nantucket real estate quickly, you should make sure that you are signed up, through your agent, for access to our multiple listing system, LINK Nantucket. It is easy and free and you can get as much, or as little, information as you wish. Another great source is our web site, www.NantucketRealEstate.com, with an up-to-date blog featuring new listings, price changes and properties sold. The blog can be found front and center on our home page. RANTUM SCOOT and OTHER RAMBLINGS: The Nantucket Conservation Foundation offers a series of “Mornings for Members� walks, mostly held on each Wednesday during the summer, ranging from 1.5 miles to 3.8 miles. Have you always wanted to know more about the Serengeti? Or the Kettle Ponds? Or maybe the Milestone cranberry bog at harvest time? The Rantum Scoot walk format differs from the traditional format with longer and more strenuous walks. For more information, or to book on-line, please contact the foundation at www.nantucketconservation.org.
ATLANTIC EAST N A N T U C K E T R E A L E S TAT E Heidi Drew, ABR, RSPS Penny Dey, GRI, ABRM Ken Beaugrand; Linda Bellevue, GRI, CBR; Peter DuPont; Alison K. Forsgren, ePro, NAR Green, SRES Mary D. Malavase, ABR, RSPS, TRC, SFR; Jane Miller, ABR, RSPS; Erikka Perkins; Meg Ruley, ABR, RSPS Lisa Sherburne, ABR, RSPS; John F. Trudel III, SFR; Melinda Vallett; Christine Whelden, ABR; Gail Osona, Affiliate; Geri Walker, Office Manager; Renee Perkins, Office Assistant
We believe in doing one thing and in doing it well. 82 Easton Street Nantucket MA 02554 t: 508.228.7707 1.800.228.4070 Volume XI, Issue 3, Summer 2015