Fall 2022 Atlantic East Nantucket Real Estate Newsletter

N A N T U C K E T

AUTUMN

We love the fall on Nantucket. The past few months have rewarded us with cooler days, spectacular sunsets, a fairly good start to family scalloping season and the opportunity to catch up with friends. It is easy to get into restaurants now and a treat to be able to get out on the water one more time before it gets cold. It does seem that the secret might be out about fall on Nantucket, especially on the weekends!

The real estate market on Nantucket in Q3 is slowing down, especially compared to the unprecedented pandemic years of 2020 and 2021. The number of sales through Q3 is 327, down 39% from last year. The dollars these sales represent is $1.1 billion YTD, down 25% from last year but still more than the total sales for the year in 2019 (what we think of as the last “normal” year). Total sales dollars exceeded $2 billion in both 2020 and 2021, for the first time ever.

The average price of a property selling on Nantucket is $3,364,000 which is up 19% from last year. Fewer properties are selling but those that do are selling for more. The average price of a residential property on Nantucket is $3,994,000 (+16%) and the median price is $2,958,000 (+14%). Vacant land is selling, on average, for $2,648,000 (an astounding increase of 84% over last year) and the median price of a vacant lot is $1,700,000 (+55%).

The average time on the market has been 5 months for the last two quarters, the lowest it has ever been. The average selling price YTD is 96% of list price at the time of sale. Properties are now selling for 181% of the assessed value. The Town of Nantucket has completed its FY 2022 Interim Year Adjustment analyses of all real property on-Island. As required by MA General Law, these assessments are based on sales that occurred during the calendar year 2020 and theoretically represent market value as of January 1, 2021. It typically takes some time for assessments to catch up with the reality of the market.

MARKET

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The story of commercial real estate on Nantucket is interesting. A commercial property purchased in 2010 is now worth 182% more, on average, than it was then. Each year since then, with the exception of 2011 and 2019, has seen growth in the value of the commercial sector. There are many different types of commercial properties on Nantucket from a small condo in the Mid-Island area to a large Main Street building in Town.

Commercial properties in the core district of Town remain the most valuable over time, in spite of the parking challenges. The number of commercial sales averaged 16 per year for the four years preceding the pandemic. In 2021 there were 41 commercial sales on Nantucket. In 2022, YTD, there have been only 11, due to the lack of inventory. The average price of a commercial property in 2017 was $4.4 million, in 2018 it was $3.7 million, in 2019 it was just north of $4 million, in 2020 it was $2.5 million, in 2021 it was $4.6 million and to date in 2022 it is $2.85 million.

On Nantucket, as is the case in many desirable places, the primary driver of the market right now is the low amount of inventory for sale. There are only 127 active listings (residential, vacant land, and commercial). There are only 3 properties currently listed under $1 million on Nantucket. There are only 20 listings between $1-$2 million. The average price of listings is $6.5 million (48% higher than the average selling price year to date) with a very low average time on the market of less than 4.5 months.

With inflation at its highest levels in 40 years, the five Fed rate hikes for a total of 3 full percentage points and more expected before the year is out in order to further slow the economy, we are in new territory. It is possible that we could see the Prime rate at 7.5% by the beginning of 2023. Adjustable rate mortgages can be as much as 2 percentage points lower than a 30-year fixed. Interest-only loans, for the short term, may also ease the pain with a lower payment. There is no question that some home buyers are waiting for prices to drop before they make a move. The year-to-date bumpy ride in the stock market is expected to continue. Buckle up for what could be a challenging new chapter

2022 Sales by Price Sector, as of Q3

$500K

NEW LOCALRENTALREGULATIONS

The landscape of rentals, especially short-term rentals, is changing quickly on Nantucket. The Select Board voted to accept the recommendations of the Board of Health for registration and regulation of short-term rentals beginning in January 2023. This new program is in addition to the existing required state regulations and collection of taxes. Among the requirements for owners so far: property registration with the Town for a fee, limits on occupancy, posted information about exits and nighttime light pollution, attestation that the property conforms to Town building and zoning codes, contact information available for an individual who can be at the property within 2 hours to handle any issues, insurance coverage of up to $1 million per occurance, posting of the local registration number in any advertising or promotion of the property, and quarterly reporting to the Town on length of rentals, including how many guests and vehicles. The Health Inspector has said that the initial year will be about getting rental owners to register and setting up basic compliance. The Town has contracted with an outside vendor who will be overseeing the program and responding to issues such as noise violations and overcrowding. Ironically, none of these regulations apply to rentals of 32 days or longer. Nor does the state Room Occupancy Tax.

The Short Term Rental Work Group has been formed and started meeting. Astonishingly, there is no representation by anyone in the real estate industry on Nantucket on the work group. We can only hope that the group will define what the real issues are and then make informed recommendations to address them based upon factual information. The community deserves no less. We are actively following the meetings and will keep you apprised as more information becomes available. STRWG Agendas and Meetings

After a very busy summer, we are already right back in the thick of booking rentals for next year. Thank you to those of you who have already been in touch regarding rates and availability for 2023. We love hearing from you!

This and That

AtlanticEastisaproudsponsoroftheannualHalloweenHappeningParadeonMainStreetandalsotheTurkeyPlunge,heldthedayafter Thanksgiving,whichbenefitstheNantucketAtheneum. Freezin’forareason: itisnottoolatetosignup!

TheNantucketHousingBankbillfailedtogarnerenoughsupportattheMassachusettsStateHouseandwasnot enactedthislastsession. Thebillwouldhaveplacedaone-halfpercentfeeonsalesover$2million,paidbythe seller,tohelpaddresstheaffordablehousingcrisisonNantucket.

In2005therewasonlyoneknownBarnOwlonNantucket.TheMariaMitchellAssociationhasaprogramtohelp growthepopulationbyinstallingowlboxesscatteredaroundtheisland. Theyarecheckedinthespringandfallto assesshowtheBarnOwlpopulationisfaringonNantucket. Youcanhelptheseamazingbirdsbyhavinganowl boxonyourpropertyforanominalfee.Formoreinformationpleasegotohttps://www.mariamitchell.org/barnowl-program

IMPORTANTINFORMATIONFORBUYERS

Here are some important things to be aware of when buying property on Nantucket.

Land Bank Fee: The Buyer of property on Nantucket is required to pay a fee to the Nantucket Land Bank (currently 2% of the purchase price) upon closing on the property. First time home buyers (as defined by the Land Bank statute) are currently exempt up to $850,000. Note: The Land Bank fee is not tax-deductible but can be added to the cost basis of the property The Land Bank owns more than 3,400 acres that are maintained and open for the public to enjoy

Erosion: Nantucket Island is subject to coastal erosion and accretion. Some areas on Nantucket are more susceptible or are actively eroding currently. As real estate agents, we are obligated to disclose any known erosion but are not qualified to give any opinions on the coastal erosion. Atlantic East Nantucket Real Estate advises all buyer or seller clients to consult with experts, surveyors, engineers or other consultants or professionals for their opinions.

Flooding: Nantucket Island is subject to flooding in certain areas with potential in other areas too. As real estate agents, we are obligated to disclose any known flooding at a particular property and in what Flood Zone the property is located. We can connect buyer or seller clients with experts, surveyors, engineers or other consultants or professionals for their opinions.

Well Water and Contamination: If a residential property is serviced by a private well, please be sure to have a well water test performed. This is critically important in areas that may be proximate to the Nantucket Memorial Airport with the recent advent of high levels of PFAS (a carcinogen) found in residential wells in the area.

LOCAL

WeareoftenaskedforrealestateadviceandopinionsonareasoutsideofNantucket. However,Nantucketisour home. Wehavespentyearscultivatingexperienceandaknowledgebasecenteredaroundthespecificsof Nantucket'smarketanditwouldbeirresponsibletoofferopinionsonamarketwedonotworkin.Therearea myriadofreasonstoworkwithalocalrealestatebrokerwhensellingorbuyingyourNantucketproperty,some obvious,somelessso.

Weknowourwayaround.

Wehaveanin-depthknowledgeofthelocalinventory. Whatiscurrentlylisted,whatwasrecentlylisted,whatis undercontractandwhathassold.

Weunderstandthelocalzoningandthepermittingprocesseswhichcanbeverycomplex. Localrulesand regulationsoftendifferfromthestate.

Weknowhowtogetthingsdoneandhavesolidrelationshipswithlocalattorneys,surveyors,contractors,care takersandtradespeople. Goodcommunicationisthekeytoanytransaction,whetheritisthetransferofreal estate,vacationrentalsorarenovation.

Weknowtheoriginsoftheprocesses. Thisgivesusanadvantageinknowinghowtohelpfacilitatetheneedsof ourclientsandthecommunity.

We'veforgedgoodworkingrelationshipsbasedontrustwitheachotherandcooperatingbrokers.

Wetakeveryseriouslyourprofessionalcodeofethicsandconduct,andweunderstandtherules. Wearefamiliar withlocalformsgearedtotheislandmarket(contingencyandofferlanguage).

Becausewelivehere,ouragentsarepresentatallshowings. Wedonotuselockboxesforentry

Wehaveextensiveknowledgeaboutlocalaffordablehousinginitiativeswhicharevariedandcomplex.

ThecadenceofguidingtransactionsonNantucketisdifferentfromotherplacesandwedoitwell.

Wecanhelpfacilitaterentalsandbethetrueagentforourrentalowners(bootsonground!).

Weareresponsivebecausewelivehere. Andmostimportantly,thisisourhome,andwearecommittedtoour community

HEADS’UPRENTALHOME OWNERS

A question that has come up a lot recently is 'do I need to register my home as a short-term rental with the state of Massachusetts if I am renting it 14 days or less?'. The answer is yes. The law exempts tenants from the tax liability, but all other provisions are required. The IRS Tax Code currently allows an owner to rent for 14 nights or less and not pay federal taxes on the rental income. A homeowner who chooses to take advantage of the tax benefit of the two-week exemption must still register with the state and carry liability insurance of at thleast $1M per rental. The state deadline for claiming the 14-day exemption for each calendar year is January 15 of the year claiming the exemption.

If you are only renting for 32 nights or more at a time (which is not a short-term rental), then you are encouraged to register with the state, but not required.

A two-week (or less) rental is a great way to get your feet wet if you have never rented before. Many homeowners use a 14-night rental to offset the expenses of owning and maintaining a home in Nantucket while still being able to enjoy time on the island.

Atlantic East is a well-informed resource for Nantucket homeowners with questions about rentals, sales, or the island in general. If you know someone who is considering renting their home, we would be happy to discuss options to see if renting is right for them.

A t l a n t i c E a s t N A N T U C K E T R E A L E S T A T E

Penny Dey, GRI, ABRM, Broker/Owner

Ken Beaugrand; 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; Meg Ruley, ABR, RSPS; Lisa Sherburne, ABR, RSPS; Melinda Vallett; Geri Walker, RSPS, SFR

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 XVIII, Issue 4, Autumn 2022