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S U M M E R Summer on Nantucket is in full swing and we are happy to be on island with access to the water and a daily ocean breeze. There are lots of activities for everyone, ranging from sailing, classes in the decorative arts at the Nantucket Historical Association to strawberry picking at one of the farms. All of the restaurants are open and, with a little planning, it is possible to have some great dining options. There are lots of new shops and old favorites to explore as well. It is always interesting to assess the Nantucket real estate market in the context of the bigger picture. There is a lot of speculation about a potential economic shift in the near future. It is likely that the Federal Reserve will be cutting interest rates at some point this year, for the first time since the end of 2008, as economic risks mount and inflation remains stuck below target. Stocks continue to inch toward record levels with the S&P 500 up 6.3% in June alone. A rate cut would help to counter economic headwinds, some of which is related to the trade war. After the longest economic expansion period in history, it feels as if we may be poised for a change. The real estate market on Nantucket typically follows the financial markets. We are seeing a rising amount of inventory, what we will call “optimistic pricing� on the part of many sellers and buyers for whom a Nantucket purchase is entirely discretionary. These factors, combined with general uncertainty about the future, are contributing to the apparent slowdown in the market on island. At the end of Q1, the number of sales on Nantucket were down 35% and the dollars were down 49%. By the end of Q2, the gap had closed somewhat with the number of sales (and the dollars) down 20% from one year ago at the same time. This is a significant shift in recent patterns. Continued on Page 2...
M A R K E T ( c o n t i n u e d
N E W S f r o m
P . 1 )
The total number of sales to date in 2019 is 194, compared to 243 in 2018. The total dollars are $392 million, compared to $492 million in 2018. The average price of a sale on Nantucket was $2,214,000 in 2018; this year it has declined 9% to $2,024,000. The average price of a residential property is now $2.3 million, down from $2.6 million at the end of 2018, a decline of 11%. The average time a property is on the market has dropped to 8 months, a positive sign. The average selling price, as a percentage of list price at the time of the sale, is 88%. And the average selling price, as a percentage of assessed value (established by the Town) is 120%, down only 3% from 2018. The picture for commercial real estate is quite positive - the total number of commercial sales (land and improved property) is 14, the same number as for all of 2018. The dollars represented by these commercial sales are up over 19% compared to all of last year. It is evident, with the number of new businesses on Nantucket, that people feel that it is a good place to do business, even with the seasonal nature of our market. A quick snapshot of the current inventory: at the end of Q2 there were 470 properties listed for sale (including residential, vacant land, commercial, condos, co-ops and designated affordable properties). The average list price is $4,075,000 and the median list price is $2,777,500. At this time there is only one free market house listed under $700K. In the dead middle of all the listings is a Sconset cottage for $2,750,000. There are currently 27 properties listed over $10 million, most of which are located on the water, are updated with the latest amenities and have privacy. In spite of all of this uncertain news, by extrapolating market activity for the past 10 years, we are actually on track to exceed $1 billion in sales again in 2019. The first two quarters of each year average 39.8% of annual sales and 36.7% of annual sales dollars. The last two quarters of each year average over 60% for volume and 63.3% for dollars. Of course, a lot could happen in the next six months.
Nantucket Total Sales Dollars in (000's) As of Q2 2019 $1,400
$1,200
$1,000
$800
$600
$400
$200
$0 Total Sales Dollars
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$614
$1,065
$1,186
$917
$852
$574
$434
$694
$531
$809
$748
$1,005
$882
$972
$1,066
$1,202
$393
Page 2
Nantucket: Sales as % of List Price and Assessed Value As of Q2 2019
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Avg Sale as % of List price
90%
94%
93%
91%
93%
93%
90%
79%
82%
84%
88%
90%
91%
90%
90%
90%
2019 88%
Avg Sale % of AV
151%
135%
135%
152%
130%
114%
99%
95%
106%
89%
81%
139%
141%
103%
127%
123%
120%
Generation Safe The Nantucket Fire Department offers a community service for residents 65 years or older. A free home assessment can be made to check a property for hazards and safety issues that may lead to falls and/or injuries. The Nantucket Fire Department will also install and inspect smoke and carbon monoxide detectors. Once enrolled, there will be an annual inspection to change the batteries in the detectors and re-assess any new safety concerns. What a fabulous service! Please call Sean Mitchell at 508-228-2324 X6 with any questions or interest.
RENTAL TAX UPDATE If you are a rental owner and have not yet registered your property with the Massachusetts Department of Revenue - now is the time to do so! The rental tax on short term rentals in Massachusetts is now 11.7%. Short term rentals are defined as those of 31 days or less in duration. It has become clear that there is some resistance on the part of tenants to this costly add-on to the already expensive rental rates on Nantucket. Please remember that Atlantic East charges no extra tenant service fee! Owners of Short Term Rental Properties must get a Certificate of Registration from the state of Massachusetts: As of July 1, you can register your property here: https://mtc.dor.state.ma.us/mtc/_/
Owners of Short Term Rental Properties must maintain a liability policy of $1,000,000 per rental on their rental property: And provide evidence of such a policy to the Commissioner of Insurance, also effective July 1, 2019. Please see the Massachusetts Department of Revenue (DOR) for additional information: https://www.mass.gov/info-details/room-occupancy-frequently-asked-questions Page 3
DO THE HOMESTEAD! Massachusetts has a law called the Homestead Act under which a homeowner has limited protection of the value of their home (up to $500,000), against unsecured claims. The act is designed to protect homeowners from an attachment and execution of a forced sale, so long as the owner, or other family members, occupies the home as their primary residence. Sec. 4 of MGL, Chapter 188 provides an automatic exemption of $125,000 to everyone in the state who owns a home (and lives in it). Filing a written Declaration of Homestead at the Registry of Deeds in the county where the property is located raises that amount to $500,000. There is a second category for those who are elderly (defined as 62 or older) or disabled, or if the property is held in trust, which may be higher than $500,000. Certain debts are not protected by the Homestead exemption such as federal, state and local taxes and liens, mortgages contracted for purchase of the home, debts and encumbrances that existed prior to the filing of the Declaration of Homestead, probate court executions for spousal or child support, and court ordered executions in cases of fraud, mistake, duress, undue influence and lack of capacity. For more information please contact your trusted financial advisor or attorney.
ATTENTION MADAKET HOMEOWNERS! Regulations for septic systems are all about protecting the groundwater and the harbors on island. When Town Meeting failed to vote the funding to bring Town sewer to Madaket, it triggered a slew of very expensive alternatives for private homeowners. Local Regulation 51, Town of Nantucket Board of Health Regulations Affecting Madaket, initially adopted in 1973, was amended in 2017. The Board of Health recently extended the July 1, 2019 deadline to September 19, 2019 for all septic systems in Madaket, upon transfer or sale of the property, to be upgraded to either a tight tank system or an I/A (Innovative/Alternative) system in order to meet the requirements of the Department of Environmental Protection and the Nantucket Board of Health. If your house is on the Smith's Point side of Millie's bridge, it will require a tight tank system (that gets monitored and pumped on a regular basis). Everyone else in Madaket will be required to have an I/A system which is a very costly and time-consuming proposition. No matter where on island one lives, if your property is on a septic system, the number one thing that you can do to prolong its life is to have the system pumped on a regular basis. The only thing going down our toilets should be what comes out of the body and toilet paper. That is it! If you live in Madaket, now is the time to contact the Nantucket Health Department to find out what exactly you have to do to bring your septic system into compliance. With the workload on Nantucket, engineers and installers can be backed up for months. The Health Department can be reached at 508-228-7200 ext 7014 or 7020.
SOME GOOD NEWS ON THE AFFORDABLE HOUSING FRONT In Massachusetts, if a community has less than 10% of its year round housing designated as “affordable” under the state definition of Subsidized Housing Inventory (the SHI list), then the community is vulnerable to 40b applications from developers. In order to meet the 10% Nantucket would need to have 490 properties that meet the requirements. Nantucket has recently reached a milestone by requesting approval, based on our current housing production plan, from the state Department of Housing and Community Development which would give us 2 years of “safe harbor” relief from any new 40b applications. Although Nantucket is currently only at 2.6% on the SHI list, the application was based on pending projects of both rental and ownership properties. At our annual Town Meeting in April, voters approved an article that provides $20 million as a funding source to create and obtain existing housing stock for affordable housing. The Affordable Housing Trust Fund has recently appointed a committee called the Neighborhood First Committee, comprised of both seasonal and year round residents, to develop criteria and a plan for moving forward on this innovative project. Stay tuned for the outcomes!
Page 4
Welcome to Mike Hagan
Wishing the Best to Ken Beaugrand
Mike Hagan joins us after his recent graduation from the University of Maine, Orono with a degree in Construction Engineering Technology. He is currently studying to obtain his Massachusetts real estate license and will be helping us in the office with most everything! Mike served as the Grand Scribe for the Kappa Sigma Fraternity at school while actively writing numerous articles for The Odyssey, a local Maine paper. He has been coming to the island since he was a year old and it has always been his “Happy Place�. Mike's grandparents have lived here year round since 2015, but on and off the island since the late 1980's. Fishing the island's beaches and boating are his favorite activities here. Mike believes the key to Nantucket is to spend as much time as possible enjoying all the beautiful sights that the island has to offer.
This spring, after a decades long career in real estate on Nantucket, Ken Beaugrand decided to take on a new challenge as the first Real Estate Specialist for the Town of Nantucket. Prior to moving to Nantucket Ken had worked for numerous companies, both public and private (national and international), but had not yet had the opportunity to work for government. We are confident that, with his breadth of experience and local knowledge, he will be a great asset to the community going forward. Consolidating the various real estate functions should be a good move for the Town. Ken will continue to serve the remainder of his term as the current President of the Nantucket Association of Real Estate Brokers (NAREB). We wish him all the best in this exciting new chapter!
Office Pets: Hunter
Tool for Seeing the Island a New Way
Linda Bellevue fell in love with the face of this puppy on line. Who knew little Hunter would travel from Michigan to make Nantucket his forever home. Hunter is a long haired Chihuahua weighing in at just under 7 pounds. Hunter loves to be at the office, sitting on Linda's desk and greeting all who come in. He has a very sweet temperament.
The Nantucket Conservation Foundation has just released a new app for eleven of their properties called ACK Trails. The app has maps of the properties, hiking trails, starting points, photos and information about the history of each property. The NCF has protected over 9,000 acres of distinctive natural areas from development and is the largest single landowner on Nantucket.
Nantucket: Home Prices As of Q2 2019 2615 2500
Avg Home ($OOO)
2378
2373
2164
2103 1945
1970
1672
1666 1550
1750
1726 1600
1528
1495
1500
2133
2124
2000
2319
2276
2271
Median Home ($OOO)
1525
1425
1525
1550
1400
1297 1150
1000
1190 1100 1013
970
917
1050
999
500
0 2003
2004
2005
2006
2007
2008
2009
2010
Page 5
2011
2012
2013
2014
2015
2016
2017
2018
2019
Nantucket 2nd Quarter Comparison Sales Dollars in Millions $300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Dollars 2nd Q. (000's) $97,170 $79,509 $251,106$280,298$238,203$169,052$105,941 $62,124 $139,175$147,671$185,262$163,870$209,818$154,576$220,862$206,791$194,792$240,789
Who DO WE WORK FOR? At Atlantic East we made a very deliberate and well thought out decision many years ago to practice only designated agency. In simple terms, this means that our agents will never represent a seller and a buyer in the same transaction. We feel that to do so would limit our ability to meet our fiduciary duties to our client required under agency and license law. Included in single agency responsibilities are: obedience, loyalty, disclosure of material facts, confidentiality, accounting of funds and reasonable care. Although a real estate licensee also has the obligation to be fair to all parties, it is virtually impossible to fully serve both a seller and a buyer simultaneously. We have years of experience practicing designated agency and it is clearly the right way to go. If you would like more information on designated agency please contact your agent.
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; John F. Trudel III, SFR; Melinda Vallett; Christine Whelden, ABR; Geri Walker, Michael Hagan We believe in doing one thing and in doing it well! 82 Easton Street Nantucket MA 02554 508.228.7707 NantucketRealEstate.com
Volume XV, Issue 3 Summer 2019