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One of our favorite times of the year on Nantucket, fall has arrived in full force. Family scalloping season starts this week, the moors are starting to show their colors and the cranberry harvest will begin in mid-October. Fall restaurant week is underway now giving an opportunity to sample some of the best dining out anywhere at more affordable prices. The island is noticeably more quiet during the week although weekends are busy with weddings and visitors. Last week's national job numbers are encouraging with the unemployment rate falling below 6% for the first time since 2008. Interest rates remain relatively unchanged but, if the labor market (and broader economy) continues to pick up steam, that may increase the chances of the Federal Reserve raising interest rates in the spring of 2015 instead of waiting until the summer. One local lender recently shared with us that many of the people that got pre-qualified for loans during the summer are turning into actual borrowers now. She often hears, “Well we vacationed here for the last 5 years and decided that it is now time to buy!” The September jobs report also confirms what the rest of the world seems to know. The U.S. economy is much stronger than the rest of the world. And Nantucket has an economy of its own. As an island Nantucket is finite. This is further limited by the fact that over 50% of the island is held by various conservation groups as open land, never to be built upon. Real estate appreciation is driven by, among other factors, lack of supply and rising demand, demonstrated very clearly by current market conditions. We believe strongly in Nantucket real estate, not only as an investment, but as an investment that can be enjoyed for many years. Market is Strong: We continue to be amazed at the rapid pace of the recovery for the real estate market on Nantucket. With the 3rd Q numbers in, the total sales dollars are $659,937,000 – compared to a year-end total of $748,866,000 in 2013. The 4th Q is typically the strongest for Nantucket real estate averaging over 33% of sales dollars for the year. Based upon historical performance we will exceed, by a significant margin, last year's total sales. The number of sales to date in 2014 is 361 compared to 469 for all of 2013. The market is on track to exceed $1 billion which has occurred in only 2 other years – 2004 and 2005, just Continued on page 2... prior to the recession.
Nantucket: Home Prices 2001 - 2014 3rd Q 2014
2500
2378
Avg Home ($OOO)
2271
Median Home ($OOO)
2164
2103 1945
2000
1970
1913
1672
1666
CHART 1550
1500
1478 1297 1187
1000
1150
1528
1495 1425
1204
1190 1100 1013
970
917 827.5
1726
1050
999
775
500
0 2001
2002
2003
2004
2005
2006
2007
2008
M A R K E T
2009
2010
2011
2012
2013
2014
N E W S
On the Move: The average price of all property sales on Nantucket is now $1,828,000 (including all properties - residential, vacant land and commercial). In 1997 the average price of a Nantucket property was $475,000 and in 2013 it was $1,597,000. Home Prices on the Rise: The average price of a Nantucket home is now $1,913,000, compared to $1,726,000 in 2013, an increase of 11%. Perhaps more telling, the median price of a home on Nantucket has risen to $1,204,000 from $999,000 at the end of 2013, an increase of 21%. Expect these numbers to be even higher by the end of 2014. Land Prices Climbing: The average price of a lot on Nantucket is now $1,372,000, compared to $1,258,000 at the end of 2013, an increase of 8%. The median land price is now $832,000, up from $688,000 at the end of 2013, up 17%. Many buyers today, unable to find a house that meets their needs, are willing to take the time to go through designing, permitting and building – very good news for the construction industry on-island. Properties Selling More Quickly: It now takes only an average of 6.8 months for a Nantucket property to sell, the shortest time in over two decades. In 2008 the average time on the market was 11 months. We have recently had numerous situations with multiple offers on a property, a situation that was scarce throughout the recession. Properties Selling Closer to List Price: Nantucket properties now sell, on average, for 95% of list price at the time of sale, the highest percentage since well before 2000. Currently properties are selling, on average, for 131% of assessed value. The number of properties listed for sale is down 50% from 3 years ago. Some Trends: One noticeable recent trend is the sale of houses that are less than 10 years old wherein the new owners have elected to remove the existing house and build anew. What makes this different is the relative age of the houses being removed. The good news is that any house being removed must be offered up for re-use within the community before permission for demolition will be granted. Another trend is that more and more buyers want a swimming pool and/or private tennis court. Page 2
UPDATE ON SEWER TO MADAKET Nantucket has been ordered by both the state Department of Environmental Protection (DEP) and the EPA to solve the sewer issue in Madaket. We recently met with Richard Ray, Nantucket Health Inspector, to gain clarification on the situation. The good news is that the state (DEP) has recently re-rated the existing sewer beds in Surfside and determined that they now have ample capacity to handle wastewater from Madaket (and potentially other areas as well). When a property serviced by a septic system transfers, the seller of the property must have an inspection performed to determine whether or not the system passes the state's Title V ground water protection regulations. Nantucket regulations require a minimum of 6' of separation between ground water and the system and many systems are unable to meet the 6' separation. This is considered a “technical failure� but the septic system still works. Nantucket regulations are more stringent regarding ground water separation than the state regulations. In some cases the system actually passes the standards of the Commonwealth but not local standards. The seller of a property with a technically failed system has a few options: Install a new septic system, likely an alternative one (at considerable cost) knowing that the circumstances will change in the near future. Once Town sewer comes to Madaket ALL PROPERTIES will be required to hook into it regardless of whether or not the septic system is in working order. The second option is for the buyer of such a property to enter into an Administrative Consent Order with the Town of Nantucket. Each year an amount equal to 1/20th of the estimated septic system total cost would be paid into this forced non-interest bearing savings account. Mr. Ray thought it would be likely that an account would only be in place for 4-5 years while Nantucket finds a solution. The next steps are for Nantucket's Annual Town Meeting to approve the sewer concept and a method for funding it. Once there is an approved plan with funding mechanism in place, and once the sewer lines have been run to Madaket, owners will have up to 6 months to comply by hooking into Town sewer. At that point the escrow funds will be returned to the property owner. The only potential glitch for sellers and buyers of a property with a technically failed system is that some lenders may have concerns about writing a loan on the property. This is new territory and it should get easier as more of these types of sales occur.
Nantucket: Lot Prices 2001 - 2014 3rd Q 2014
Avg Lot ($OOO)
Median Lot ($OOO)
2500
2378
2000
1915 1769
1483
1500
1372 1258
1375
1190
1095 1000 1067
1000
1100
970 970
787 845 512
500
700
519
472
832 750
700
688
475 285
320 265
0 2001
2002
2003
2004
2005
2006
2007
Page 3
2008
2009
2010
2011
2012
2013
2014
VACATION RENTALS - What’s Up! We are just wrapping up a great summer with rentals and are already busy working on 2015 bookings. Increasingly our visitors expect a very high quality experience when renting on Nantucket. Rental homes should be well-maintained, a professional caretaker or property manager is a must as well as a professional cleaning service. Renters expect a rental house to have good beds, pillows and linens, to have a clean and working grill with extra propane supplies and to have functioning equipment (including wireless internet access). It is important also to have some decent landscaping for the outdoor living areas. If you are a homeowner who rents, now is the opportunity to take stock of your property, both inside and out, before next season. Pretend that you are your tenant! If you are a tenant considering a Nantucket rental the time to book is now. We are busy booking returning tenants already for next summer and the best choices are reserved early. This year by the end of April there were very few premium properties left for August. August is the most popular rental month, followed by July and then September and June. Rates are highest in August and tend to be slightly lower in July. During the shoulder seasons rents are even lower and it is a beautiful time to be on the island. We handle over 600 carefully chosen rental homes ranging from a one-bedroom cottage in Town starting at $1800 per week up to an estate with pool and excellent water views at $50K per week. With decades of experience and local knowledge we are committed to orchestrating smooth sailing vacations. And we have a solid track record of doing so. N a n tu c k e t S a le s O v e r $ 5 M 2 0 0 1 - 2 0 1 4 ( Y T D ) A S O F 9 .3 0 .1 4 3 5
3 0
2 5
2 0
1 5
1 0
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
H o u s es
3
1
1
0
2 8
2 2
3 1
2 0
1 2
2 4
9
2 0
1 5
1 8
V acant Land
0
0
0
0
8
3
3
1
0
0
4
3
3
2
C o m m e r c ia l
0
0
0
0
2
3
1
1
0
1
0
0
0
1
PROPERTY TAXES ON NANTUCKET Every three years on Nantucket there is a revaluation, required by the State Department of Revenue, of all properties on-island. The revaluation is necessary to establish property values within the municipality for the purpose of fair distribution of the tax burden. Assessed values are determined by activity in the real estate market and the general economy. An analysis is done on the 2 years before the completion of the revaluation project. 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 exterior physical inspections 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 is available to the public. A revaluation does not necessarily increase property taxes. The tax rate is based upon the entire assessed value of the island (currently $17.1 Billion). Simplistically, the property tax revenue for the Town of Nantucket is established by calculating the total assessed value by a property 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 per year. The average selling price of a Nantucket property as a percentage of assessed value is now 131%. The next island-wide revaluation project will commence in January 2016. Page 4
MORE HOUSING FOR ISLANDERS We are happy to report that there is another option for safe and secure home ownership for year-round folks on Nantucket with the advent of the Sachem’s Path development. The property is located on 10 acres of land in Surfside between Miacomet and South Shore roads. The project is slated to have 40 houses, four of which will be built by the local chapter of Habitat for Humanity on vacant lots. The homes will be 1, 2 and 3 bedrooms, they will have full basements and yards and they are designed to be energy efficient. The land was provided by the Town of Nantucket and the developer is the Housing Assistance Corporation, based in Hyannis, which has a solid record of positive results in the affordable housing arena. The project has been a long time in the planning and funding phases and is happening just as the real estate market on Nantucket is once again escalating out of reach of working families. The median price of a home on Nantucket is now $1,204,000, an increase of 21% in the past 12 months. Over 200 families have started the journey to home ownership at Sachem’s Path. The new owners must have a clean credit record and be preapproved for financing. The owners will be selected by a lottery system from the pool of those who qualify. The homes will range in price from $218,386 to $491,150 and are available to households making between 80% and 150% of median income for Nantucket County (now $92,800). This means that households making between $74,240 and $139,200 could qualify. Ground was broken on the project a few weeks ago for the infrastructure improvements and HAC anticipates that the first owners will be moving in early next summer. None of this would be happening without the perseverance and hard work on the part of local affordable housing advocates. In addition, the Community Preservation Committee has been a steady supporter of the project. Please contact your broker if you would like more information.
H E I D I
H O R T
Heidi Drew was the recipient of the Ruth Lerrigo Parker Award from the Nantucket Garden Club last month. The award is presented at the annual meeting to the person who has shown laudable dedication to the art and practice of gardening. To qoute a Garden Club member, this member ‘loves hort’. An avid daffodil grower, even before joining the Garden Club, Heidi won the Garden Club of America Williamsen award for Horticulture for a magnificent topiary she propagated. In addition she has won several major awards - in 2012 and 2013 the best miniature and the American Daffodil Society Award. In 2014, Heidi was awarded the greatest number of blue ribbons, the Best Pink Daffodil, the 25th Anniversary Award as well as the ‘Sconset Trust Award. She has also cochaired the Daffodil Show and is most deserving of the Ruth Lerrigo Parker Award. Congratulations to Heidi!
Nantucket: Sales as % of List Price and Assessed Value 3rd Q 2014
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Avg Sale as % of List price
91%
90%
90%
94%
93%
91%
93%
93%
90%
91%
91%
92%
94%
95%
Avg Sale % of AV
140%
121%
151%
135%
135%
152%
130%
114%
99%
89%
97%
105%
113%
131%
Page 5
2014
Nantucket 3rd Quarter Comparison Sales Dollars
$400,000,000
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0 Dollars 3rd Q. (000's)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
$94,357,799
$145,123,200
$206,390,746
$286,657,566
$333,835,163
$220,208,428
$286,437,000
$182,479,000
$122,162,000
$201,625,441
$141,263,000
$216,614,000
$238,599,000
I S L A N D
S H E E P
Nantucket Island has a long history of sheep grazing and the Nantucket Conservation Foundation has revisited this practice. Herds of sheep have been set free to graze on acres of conservation land as an experiment to control plant growth, reduce invasive species and encourage the growth of rare grassland plants. Temporary/movable fencing has been set up to contain the grazing locations and the animals. So far it has been a success and the herd is expanding with 53 new baby lambs born last spring. You can visit the sheep which are currently located in the Squam Farm area. If you would like to purchase wool or items from the sheep, go to: https://www.nantucketconservation.org/gift-shop/
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
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
NantucketRealEstate.com Volume X, Issue 4, Autumn 2014