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N A N T U C K E T
A U T U M N We love autumn on Nantucket. Everything is still open and the pace becomes more leisurely. Of course, the weather is unpredictable as evidenced by the 4 days with no boats or planes last week, but it reminds us that we live at sea and that we are really not in charge! Fall on Nantucket is special: scallops, cranberries, cozy fires, the moors changing colors and, of course, Whaler’s football! It is a time to get caught up with other islanders after the fast pace of summer. The real estate market on Nantucket was unpredictable for most of 2019 with some significant drops in both the number and dollar volume of sales for the first half of the year. The good news is that the market seems to have stabilized a bit with the third quarter. There have been 317 sales (-14%) for $662 million (-11%) as of September 30th. The average sale is now $2,090,000, compared to $2,214,000 at the end of 2018, a decrease of 6%. Properties are currently selling, on average, for 89% of the list price at the time of sale and for 120% of the assessed value. The price of an average home on Nantucket is now $2,422,000, down 7% from $2,615,000 in 2018. The median price of a home is now $1,624,000, compared to $1,750,000 last year. The average vacant lot on Nantucket is selling for $1,113,000, down 37% from 2018, and the median lot is $863,000, down 6%. One of the most significant changes is the length of time it takes to sell a listing in the current market. As of Q3, the average time on market is up to 11 months, a significant increase over 2018 when it was 9 months. As always, there are a number of factors involved including overpricing by many sellers, high amount of inventory, lack of urgency on the part of buyers and a generally unsettled feeling about the economy. 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
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As of the end of the third quarter there were 478 listings, compared to 402 last year and 383 in 2017 at this time. For these listings the average listing price is $4.1 million and the median listing price is $2.7 million (higher than the average selling price). There are currently 371 single-family residences for sale, 60 parcels of vacant land, 15 condominium properties, 14 commercial properties, 9 multi-family, 5 cooperative and only 1 covenant house (restricted affordable in perpetuity). Single family homes range from $449,000 to $35 million. There are only 14 single-family homes on Nantucket listed under $1 million. Vacant land ranges from $419,000 to $11.7 million. The US economy has held up fairly well during the third quarter after a volatile start to the year. After nine rate increases that began in 2015, the Fed reversed course in August and cut rates (.25%) in reaction to the yield curve inversion which has been uncharacteristically flat, tariff uncertainty and slowing economic data. In September there was another rate cut, also .25%. Consumer confidence, although slightly below recent highs remains encouraging. Nationally, housing starts jumped double digits to a 12 year high supported by higher wages, low cost of borrowing and full employment (unemployment is currently below 3.5%). However, overall recent economic data suggest a more cautious view heading into the last quarter of 2019. The current expansion has been the longest in US history and a slowdown at some point is to be expected.
Funding Available for Sellers to Create Affordable Covenant Housing Because of the Nantucket Housing Needs Covenant Program over 80 affordable properties have been created since the inception of the program. The Town’s Affordable Housing Trust Fund, in conjunction with Housing Nantucket has recently started a pilot program to help property owners create Covenant Lots. Loans of up to $10,000 are available, interest free and on a first come first served basis, for each owner to use for the initial cost of creating the affordable lot. The money is to be used for such things as surveying and engineering fees, legal fees, recording fees and consulting fees. The loan will be paid back (to enable someone else to create another affordable lot) upon creation/transfer of the newly created lot. We have been working hard to remove some of the barriers to creating more affordable housing. In a market as challenging as the one we have on Nantucket, solutions will come in many forms.
Nantucket 3rd Quarter Sales Comparison 300
250
200
150
100
50
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Houses
70
104
112
184
128
72
105
53
60
77
82
93
107
108
108
105
130
103
107
Land
26
30
35
48
27
14
14
13
9
14
10
22
31
25
33
17
20
20
15
3
1
3
7
8
3
3
2
0
1
1
4
2
2
4
0
4
1
1
99
135
150
239
163
89
122
68
69
92
93
119
140
135
145
122
154
124
123
Commercial Total
Page 2
Nantucket: Average Months on Market All Properties As of Q3 2019 12
11
10
9
8
7
6
5 Average Months on Market
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
9
7
7
7
8
11
9.75
10
10
11
10
9
8
9
8
9
11
Signs That Predict a Slowing Real Estate Market 1. Inventory increases: the number of properties for sale increases. This can be difficult to follow here on Nantucket, since many sellers remove their properties from the market for the winter and return them to the market in the spring or early summer. We have a record number of listings this fall of 478 at the end of Q3! 2. Price Reductions: buyers are not making offers so sellers need to reduce their prices. We have had 159 price reductions in the last 60 days. 3. Days on Market: the average days on market (DOM) starts to increase. 4. Mortgage interest rates start to rise: rates started to rise in the fall of 2018 and in January started to drop again. Thankfully the rates remain at historic lows. 5. Accelerated appreciation plateaus: you cannot run a marathon forever and the same with appreciating prices‌ they plateau, take a rest and then start to fall.
Why Not Rent for 32 Days? At the end of 2018, the Governor of Massachusetts signed a new tax bill into law that assesses (currently) an 11.7% tax on all short term rentals. Any property that is rented for 14 days or less in a calendar year or any rental of 32 days or more is exempt from the tax. If you are a tenant, you should consider renting a home for 32 days or longer which would exempt the rental from the tax. Many homeowners will pro-rate the weekly rental rate for a multi-week stay as long as it doesn't break up a high season week. For example, if your vacation was for 4 weeks starting the first week in July, adding a half a week at the end of June may save you a few dollars and get you more time to spend with friends and family on our beautiful island. Please keep this in mind while planning your 2020 vacation. If you are a rental owner, there is the advantage of having fewer tenants for an extended time period and it may make it easier for our guests to facilitate ferry reservations. In addition you will have fewer turnovers to deal with if you secure longer term tenants. Please remember that November 1, 2020 is the deadline for registering your rental property with the Department of Revenue (DOR) of the Commonwealth of Massachusetts. We will need a copy of your Certificate Number in order to continue to rent your home. The actual certificate, per the legislation, will need to be posted in an obvious place in your home. Please call us with any questions. Page 3
how hard is it to build on nantucket? It depends. There can be many steps to go through in order to build or renovate on Nantucket. Some of these steps can be done concurrently and they are specific to each property. Local commissions and boards have certain statutory requirements for giving notice to the public and neighbors who are allowed a voice at the various public hearings. Before applying to any of these entities, an owner will need a current and updated survey which will largely inform what is possible to do on the property. Following is a list of the various permitting authorities, in no particular order: Nantucket Conservation Commission (Con Comm): The Conservation Commission is tasked with enforcing the state and local wetlands protection acts. Any property that is located within 100 feet of an area defined as a wetland falls under their jurisdiction. There is a no-disturb zone between the wetland and the 25' buffer zone. It is sometimes possible to have some landscaping within the 25'-50' buffer zone and sometimes building is permitted within the 50'-100' buffer zone. The process involves two steps: the initial application is a Request for Determination and the second step is a Wetlands Review which may result in a Certificate of Compliance. The Con Comm determines where structures can be built on the lot relative to the wetlands (which could be defined as wetlands vegetation and not actually be “wet�). The Con Comm also has a say in NHESP applications which deal with priority habitats of rare species (please see below). This process can take months, depending upon various factors. The Natural Heritage & Endangered Species Program (NHESP): This is the state agency that is responsible for the conservation and protection of hundreds of species that are not hunted, fished, trapped, or commercially harvested in the state, as well as the protection of the natural communities that make up their habitats. The Massachusetts Division of Fisheries and Wildlife has some jurisdiction over this. Only certain properties are subject to NHESP, typically in more rural areas of the island. Historic District Commission (HDC): Because the entire island is a designated historic district, any changes to the exterior of a structure (including paint colors and fenestration) must be approved by the HDC. There is a useful guide, available at both local bookshops, called Building with Nantucket in Mind. We highly recommend that an owner work with a local designer or architect. Once the house plans are set and submitted to the HDC, the process can take some months before the plans are approved. Nantucket Zoning Board of Appeals (ZBA): If the lot does not conform to current zoning regulations it triggers a visit to the Zoning Board of Appeals for relief which is granted either by a Special Permit or a Variance. The Variance has a much higher standard to meet for relief than a Special Permit. One of the jobs of the ZBA is to make sure that new development is not contributing to an increase of non-conformity on a particular property. Nantucket Planning Board: The Planning Board's mission is to review residential subdivisions; review secondary dwelling permits; and review special permits for major commercial development, moorlands management district developments, major residential developments, multifamily developments, and second curb cuts. They operate under the Massachusetts Subdivision Control Law (Chapter 41 of the General Laws). Nantucket Board of Health: Among other things, the Nantucket Health Department is responsible for making sure that all island wells and septic systems comply with state and local Title V health regulations. The Title V regulation applies only to those properties that are on a septic system instead of Town sewer. Nantucket Building Department: Usually the last stop on the pre-construction journey is the local Building Department which is responsible for issuing the building permit for the project. They have an itemized checklist of requirements from the other various boards and commissions (outlined above) that need to be satisfied prior to the issuance of the building permit. Once the completed building permit application is submitted the Building Department has up to 30 days, by statute, to issue the permit. Once the permit is issued construction can begin.
No Third Cable (for now) For some years now National Grid has been exploring alternatives to installing a third undersea power cable to Nantucket to ensure that the electricity stays on. They recently collaborated with Tesla to install the largest battery storage system in New England which is located out by the airport. The back-up system is coupled with a generator and is capable of providing six megawatts of electricity per hour for up to eight hours. The project cost $81 million which will be borne by all National Grid customers, not just those on Nantucket. During most of the year either one of the two existing undersea cables is adequate to meet Nantucket’s needs. But when demand spikes in the summer, supply is often not enough to meet the increased demand. The heaviest usage is between 5-9 PM in July and August when folks return home from work or the beach and turn up the air conditioning. According to National Grid, electricity use on Nantucket is growing at five times the state average. With the upgraded back-up system in place, should one of the cables go down. there will be enough generation to keep the power on. Page 4
Feedback Matters The best vacation homes book quickly especially ones with an attentive homeowner who responds to feedback on their property. If something is amiss, soiled or broken, take steps to correct it promptly. When maintenance falls behind tenants notice and will usually speak up, especially on social media or in online reviews. This has a direct effect on future bookings. No one wants to rent a home that has not been well maintained and has had multiple complaints. Happy tenants makes for an easier summer for everyone.
Help Us Reduce Plastic Pollution! Nantucket's Single-Use Plastics Ban: Effective starting June 1, 2020 Nantucket will be banning the following single-use petroleum-based plastics from commercial sale or distribution: Straws and drink stirrers, six-pack can and bottle flexible yokes, drinking cups and lids, non-compostable plates and eating utensils, non-recyclable coffee pods and drinking water in polyethylene terephthalate (PET or PETE) containers of 1 liter (34 ounces) or less (Note: most single-use plastic water bottles are made of PETE, identifiable by the plastic resin code). Why??? The purpose of this bylaw is to protect the island aquifer, marine life and scenic visage, historical status and reduce litter. It will also help protect our oceans and the health and safety of present and future generations. For additional information: https://www.nantucket-ma.gov/1475/Single-Use-Plastics-Ban
Bella and Boomer Melinda Vallett's kitties, Boomer and Bella, brother and sister shelter cats, enjoy their life on Nantucket sleeping at least 23 hours a day, hiding in boxes or bags and chasing their tails. They are never more than a few feet from each other and they have been featured in the Kitten Calendar four times. What a life!
Nantucket: Home Prices As of Q3 2019 2615 2500
Avg Home ($OOO)
2378 2276
2271
Median Home ($OOO)
2164
1945
2000
1970
1672
1666
1750
1726 1600
1528
1495
1500
2133
2124
2103
1550
2422
2373
1525
1425
1642
1525
1400
1297 1150
1000
1190 1100 1013
970
917
1050
999
500
0 2003
2004
2005
2006
2007
2008
2009
2010
Page 5
2011
2012
2013
2014
2015
2016
2017
2018
2019
Nantucket: Lot Prices As of Q3 2019
Avg Lot ($OOO)
2500
Median Lot ($OOO) 2378
2000
1915 1769
1756
1483
1500
1375 1258 1190 1100
1067 1000
970
1000
1130
1095
1113 1027
970
965
845 787 700 519
750
700
920 800
688
863
811
730 668
660
475
500 320
0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
PAINTING YOUR HOME? Please have this important conversation with your painter: Let them know that the turpentine or mineral spirits cannot be dumped down your sink or disposed outside in the yard, driveway or street drain. The chemicals from these liquids poison our ground water and can destroy your septic system by killing the necessary bacteria in the system (similar to assassinating the beneficial bacteria in your gut). These chemicals can also damage our sewer processing system and have, as happened recently at the Sconset Sewer Treatment facility. Please help protect our ground water. Remember: if you dump it, we drink it!
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, 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 4, Autumn 2019