N
A
N
T
U
C
K
E
T
N A N T U C K E T
WINTER As we launch into this new year it is with great appreciation that we thank all of you for your support over these past 20 years. When we founded Atlantic East, it was based on the principles of integrity, respect, knowledge of all things related to real estate on Nantucket, and the simple principle of treating people as we would like to be treated. We are especially grateful to our agents who are the most experienced and creative on-island. Check out the testimonials on our web site! It is no surprise that the number of real estate sales on Nantucket in 2023 declined 31% from 2022; and the dollars were down 30%. After the pandemic-driven rise in both the number of transactions and selling prices, the last 24 months are clearly showing a market correction. However, the total dollar volume for 2023 still exceeded $1.168 billion. For perspective, in the years leading up to 2020 annual sales averaged slightly over $1 billion; in 2020 it was $1.895 billion, in 2021 it was $2.336 billion (the highest ever) and in 2022 it was $1.672 billion. The average selling price of a residential property on Nantucket is still climbing at $4,281,000 (+3%) and the median home price is the same as it was in 2022 - $3,000,000. The average selling price of vacant land is now $1,960,000 (-22%) and the median lot price is $1,450,000 (-15%). Historically, Nantucket averages around 500 real estate sales annually; in 2023 there were only 333 sales. A number of factors are contributing to market stasis: the fast acceleration of interest rates, sellers who have over priced their properties, thinking it is still 2021, and people holding on to their Nantucket properties (contributing further to the low turnover and number of listings). When buyers feel they do not have good choices, they are likely to adopt a wait and see position. Add to this the fact that we are now in an election year and no one HAS to buy in a discretionary market. As is the case in many special places, the average selling price on Nantucket has increased over 35% since 2019 and prices continue to hold, or increase slightly, in the current market. Continued on page 2...
MARKET NEWS (continued from page 1)
Predictably, the largest number of sales in 2023 were in Town (82), followed by the Mid-Island (68), Sconset (29), Miacomet (18), Surfside (17), Cisco/Hummock Pond (16), Cliff (12), Tom Nevers (12), Brant Point (11), Madaket (9), Naushop (7) and Polpis (6). There have been 4 or fewer sales in Dionis, Monomoy, Nashaquisset, Shimmo, South of Town and West of Town. There were only 2 sales in Fisher's Landing, Middle Moors, Pocomo and Quidnet and one sale each in Madequecham, Quaise, Shawkemo, Tuckernuck and Wauwinet. The average time on the market (all properties) is the same as it was in 2022 – 5 months. The average selling price, as a percentage of list price at the time of sale, slid from 94% in 2022 to 91% in 2023, in response to overpricing. Properties are now selling for 152% of the assessed value, down from 181% in 2022. The largest number of sales in 2023 were in the $2-$3 million range (78), followed by the $1-$2 million range (69). It is sobering to see how the sales break down by price sector since the millennium. In 2000 there were 231 sales under $500,000; in 2023 there were only 10 (all restricted for affordability). In 2000 there was 1 sale over $10 million; in 2023 there were 14. There is no question that the popularity of Nantucket, with our history, open spaces, beaches, fine dining, and shopping, continues to drive this market. There were 134 properties actively listed at the end of 2023. Today, there is only one residential property listed for less than $1 million on Nantucket – it is a condominium property in the Mid-Island area. There are only 12 residential properties listed for less than $2 million, many of them condominiums. There is one parcel of vacant land currently listed for sale under $1,695,000. There are 3 commercial properties currently on the market. The average price of listed properties is $6.3 million (44% higher than the average selling price of all properties which was $3.510 million in 2023). This is a market with extreme new challenges for our island. Stay tuned to see how 2024 shapes up.
NANTUCKET NO. SALES BY PRICE SECTOR 2012 -2023
7 8 8 27
9 5 3 30
>$500,000
$500,100 - $1,000,000
$1,000,100 - $2,000,000
$2,000,100 - $3,000,000
$3,000,100 - $5,000,000
$5,000,100 - $7,000,000
$7,000,100 - $10,000,000
<$10,000,000
9 6 14 49
55
6 5 9 43
54
36 77
6 11 15
70
10 10 17
13 13 22
5 12 16
53
67
52
16 20 51
114
61
26 33 41
23
14
27
17
45
37
87
64
143
80 76
131
67
150 134
143
129 163
143
139
86 168
78
161
163 166
197 156
137
119
136
64 101
88
2012
93
105 82
2013
2014
243
144
68
2015
63 2016
48 2017
Page 2
96
81 43
23
27
16
20
37
11
10
2018
2019
2020
2021
2022
2023
Nantucket: Home Prices As of Q4 2023 4500
4281
Avg Home ($OOO)
4143
Median Home ($OOO)
4000
3436
3500 3225
3000
3000
2022
2023
3000 2615 2500
2378
2276
2271 2124
2103 1945
2000 1550 1500
2133 1750
1726
1528
1425
1525
1525
2015
2016
1600
1670
1400 1100 970
1000
2373
2434
1970 1666
1495
2588 2440
1013
1050
2011
2012
999
500
0 2006
2007
2008
2009
2010
2013
2014
2017
2018
2019
2020
2021
HEADS’ UP - MORE REGULATIONS COMING On January 1, 2024 the Nantucket Board of Health instituted new regulations that require the owner of a property with a private well to have the well tested for PFAS prior to transfer by sale. This new regulation also applies to all new well permits. PFAS are chemical compounds that are dangerous and carcinogenic if they are present in drinking water. Complete regulations can be found on our web site, www.NantucketRealEstate.com. Expect to see movement in 2024 on the establishment and regulations of the new Coastal Resiliency Districts which have yet to be defined but are likely to effect a large part of our island. We thank the Nantucket Select Board for listening to the community regarding the new Community Impact Fee on rentals that was approved at the most recent Special Town Meeting. Due to some confusion about collection, the Select Board has deferred the implementation and enforcement of this fee until October 15, 2024. The fee of 3% is levied on owners who have 2 or more short-term rental properties on the island. It is likely that the fee will be passed on to tenants who are already paying 11.7% in taxes in addition to the rent, which would raise rental taxes to 14.7%. There will clearly be an impact when this is enacted, especially on those vacationers who are renting in the more affordable price ranges. Still in the wings is an additional fee for wastewater treatment which, so far, our Select Board has declined to opt. The funds generated by this tax on Nantucket rentals are not specifically earmarked for wastewater issues onisland but would go to other communities on the Cape and islands, many of whom lag behind Nantucket in dealing with wastewater issues. Page 3
THE FUTURE OF VACATION RENTALS ON NANTUCKET? Today there are three pending lawsuits brought by individuals against their neighbors alleging the short term rental of one's private home is a “commercial use in a residential zoning district.” The lawsuits are happening because a local non-profit, ACK-Now, actively sought plaintiffs to bring suit. ACK-Now are funding a significant part, if not all, of the plaintiff's legal expenses. Over the past four years ACK-Now has actively supported numerous citizen articles at Town Meeting attempting to impact how people use their private properties. None of these have passed. The Nantucket voter has clearly stood up for property rights every time one of the articles has come to a vote. These lawsuits are another avenue trying to shape policy within our community without the assent of voters. The first of the suits filed was brought by Ms. Ward on Silver Street against the Grape Family and the Town of Nantucket. After two days of a bench trial (that ended January 3rd) to determine whether or not the plaintiff has standing to bring suit, the Land Court judge has taken the case under advisement and will issue a decision “soon”. Either way, we expect his decision to be appealed. After a few false starts, a new outside vendor has been chosen to develop the software for the Nantucket Short-Term Rental Registry. A beta version of the software is currently being tested by the Town. The Board of Health has stated that rental owners will not be required to register (and pay $250 annual fee) until this fall, with full compliance expected in 2025.
2023 Sales by Price Sector, as of Q4 Under $500K (all covenant)… Over $10M 14 $7-$10M 17
Under $500K (all covenant) $500K-$1M
$500K-$1M 26
$5-$7M 37
$1-$2M $2-$3M $1-$2M 69
$3-$4M $4-$5M
$4-$5M 25
$5-$7M $7-$10M Over $10M
$3-$4M 39 $2-$3M 78
PROPERTY TAX RATES ON THE RISE People are often surprised to learn that property taxes are lower on Nantucket than in many other mainland communities. This is due to the seasonal economy in which non-resident taxpayers (those who own property but do not live here all year-round) pay the majority of property taxes on Nantucket (close to 82%) but are not using municipal services on a year-round basis. Preliminary property tax rates for fiscal year 2024 have been set for Nantucket and are awaiting approval by the Massachusetts Department of Revenue. Although the rates in all three categories have gone down slightly, property tax bills will increase due to a 20% increase in the assessed value of the average single-family residential property and a number of tax spending overrides (less so for those who have the 25% residential exemption). The island's property taxes are calculated on a set rate per $1,000 of total assessed value. Bills are mailed out on a quarterly basis. 2024 FY Property Tax Rates: Residential: $3.17 per $1,000 of assessed value Commercial, industrial, personal property: $5.37 per $1,000 of assessed value Open space: $3.01 per $1,000 of assessed value Page 4
COVENANT PROGRAM UPDATE 2024 The Nantucket Housing Needs Covenant Program was created to offer home ownership opportunities to moderate income year-round islanders (those earning below 150% of Area Median Income, or AMI). Since it’s inception the Covenant Program has created 115 permanently deed-restricted ownership units for community members. The program allows a property owner with more than one dwelling on a parcel to sell one of those units at a permanently affordable price. It also now allows owners to sell off the development rights of vacant land for a portion of that parcel. The sale and resale of a covenant property is subject to a price cap which is based on the AMI (as determined by HUD) and current interest rates. It gets reset every January. The maximum sales price cap for 2024 dropped to $702,465 (largely a function of the higher interest rates). To qualify for the program, the purchaser’s household income must be at, or below, $204,450 per year with unrestricted assets less than $351,233. There is a standard transaction fee paid by the seller of $3,512. Nantucket’s Median Family Income is currently $136,300. When the program started twenty years ago, the qualifying income was $102,750 and the maximum sales price was $406,162. The highest sales price was in 2022 at $963,867 and it dropped significantly in 2023 to $767,511. It is worth remembering that these properties are providing stable, year-round housing and are not strictly an investment vehicle. The Housing Needs Covenant market functions alongside the free market and is one of the success stories for affordable housing on Nantucket. Nantucket Total Sales Dollars in (000's) YTD As of Q4, 2023
$2,500
$2,000
$1,500
$1,000
$500
$0 Series2
2006 $917
2007 $852
2008 $574
J
anuary
15: Martin Luther King, Jr. Day 23: SSA Ferry auto reservations on sale - have your rental booked.
2009 $434
2010 $694
2011 $531
2012 $809
2013 $748
F
ebruary
2014 $1,005
2015 $882
2016 $972
2017 $1,066
2018 $1,202
14: Valentines’ Day 19: Presidents Day
Page 5
2020 $1,895
2021 $2,336
2022 $1,672
2023 $1,168
M
A
10: Clocks spring forward!
25-28: Daffodil Festival!
17: St. Patrick’s Day
Rental Owners: Make sure your houses are open and ready for the season!
arch
2: Groundhog Day and Quahog Day on Nantucket
2019 $1,027
pril
GOVERNOR UNVEILS $4 BILLION HOUSING BILL Last October Governor Healey’s administration introduced the Affordable Homes Act, a plan to jumpstart the production of homes and make housing more affordable across the state. The bill represents the largest proposed investment in housing in the history of Massachusetts. It includes $4 billion in capital spending authorization, 28 substantive policy changes, 3 executive orders and two targeted tax credits. All are directed at reducing barriers to the production and preservation of housing, and giving communities more flexible tools to develop housing. The housing situation is more acute on Nantucket, with a median home price of $3 million, than in any other community in the state. Ten years ago, Nantucket was the first town in the state to advance a home rule petition that would establish a Community Housing Bank, to be funded by a 1/2 percent transfer fee on the sale of properties in excess of $2 million. This act has been modified slightly to allow for flexibility from communities that choose to opt in and is a main tenet of the legislative package. This could well pass in the current legislative session which ends July 31, 2024.
Atlantic East NANTUCKET
REAL
ESTATE
Penny Dey, GRI, ABRM, Broker/Owner; Linda Bellevue, GRI, CBR; Heidi Drew, ABR, RSPS, SRS; Peter DuPont; Alison K. Forsgren, SRES; Angel Conrad Frazier; Mary D. Malavase, GRI, ABR, RSPS, SFR; Jane Miller, ABR, RSPS; Erikka Perkins, Rental Manager; Meg Ruley, ABR, RSPS; Lisa Sherburne, ABR, RSPS; Melinda Vallett; Geri Walker, RSPS, SFR; Ken Beaugrand, Of Counsel Mary O’Donnell, Office Manager; Yesenia Valer, Office Assistant We believe in doing one thing and in doing it well! 82 Easton Street Nantucket MA 02554 508.228.7707 NantucketRealEstate.com
Volume XX, Issue 1, Winter 2024