Spring 2023 Atlantic East Nantucket Real Estate Newsletter

SPRING

Spring has sprung, seemingly overnight, and we are grateful. Daffodils, forsythia, sunshine that is actually warm and longer days are a hallmark of spring on Nantucket. Daffodil weekend is in a few weeks, the antique car parade is sold out and we look forward to seeing old and new friends alike on-island.

As our Annual Town Meeting is fast approaching on May 6th, the debate about vacation rentals continues to rage. It is unfortunate that so much of the information being circulated is false, causing confusion amongst voters. At last year’s ATM, voters established a work group to gather data, define issues and come up with proposed solutions. The Short Term Rental Work Group has met 10 times since October. It quickly became clear that there was an acute need for accurate data on the vacation rental market on Nantucket. The Nantucket Association of Real Estate Brokers (NAREB) voted unanimously to fund a study with a thirdparty consultant to evaluate data on vacation rentals. This is data that is only available through NAREB. We will be making the aggregated information available to the community in an effort to better inform the discussion. In the meantime, unsubstantiated information is flying around our community in the weeks leading up to ATM. We have the power, with our Town Meeting form of government, to determine our own future and each of us has a responsibility to become informed and to participate. Last year a contentious article passed by one vote.

The numbers are in for the first quarter of 2023, and it is no surprise that the number of transactions and dollars are down considerably from Q1 of 2022. Primarily driven by the low number of properties on the market, the number of sales are down 48% and the dollars represented by those sales are down 41%.

After the pandemic-driven years of 2020 and 2021, the market in 2022 performed very closely to 2019 in terms of the number of sales (485 in 2022 vs. 474 in 2019). However, it comes as no surprise that the dollars represented by these sales were up 64% in 2022 compared to 2019.

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MARKETNEWS

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The average sale price of a property on Nantucket is now $3,323,000. In 2022 it was $3,448,000; in 2021 it was $2,832,000; in 2020 it was $2,792,000 and in 2019 it was $2,150,000. As is the case in many special places, the average price has increased considerably (+38%) since 2019. The average price of a residential property selling on Nantucket this year is $3,726,000, down 4% from $4,143,000 at the end of 2022. The median sales price of a home is $2,485,000 (-17% from 2022). Vacant land is selling, on average, for $3,194,000 (an astounding increase of 27% over 2022) and the median price of a vacant lot is $1,900,000 (+12%). The demand for vacant land is way outstripping the supply right now. It has been estimated that there is less than 4% of vacant land that could be built on remaining on Nantucket. There have been only 2 commercial sales to date in 2023 due to the lack of inventory. The average commercial sale is $2,800,000. The average time on the market (all properties) has consistently been 5 months, as it has been for the last 4 quarters. This is the shortest amount of time from list to sale since we started tracking it, but we do expect this number to increase. The average selling price, as a percentage of list price at the time of sale, slid from 94% in 2022 to 91% for the first quarter of 2023. Properties are now selling for 170% of the assessed value, down from 181% in 2022. It is important to note that an island-wide revaluation will occur in 2024 which will significantly alter this number

On Nantucket, as is the case in many desirable places, the primary challenge in the real estate market is the low number of properties for sale. Today, there are only 80 listings on Nantucket. A “normal” market would have between 300 - 400 listings. There are only 3 listings under $1 million on Nantucket, all of them vacant land. There are only 12 listings between $1-$2 million. The average price of listed properties is $5.7 million (42% higher than the average selling price).

We are starting to see a number of new listings coming on the market, as is typical for springtime. Quality properties, in a variety of locations, that are move-in ready with a high level of amenities are in the highest demand and continue to move fairly quickly. Those that may need work or updating tend to have a smaller pool of buyers and may take longer to sell.

We are reluctant to predict the market based on only one quarter of data and look forward to seeing how the market performs this summer. Although there are some solid indications that inflation is slowing, stay tuned to see what the rest 2023 brings.

2023 Sales by Price Sector, as of Q1

UPDATE FOR OWNERS ON VACATION RENTALS

Although the local registration system for regulation of short-term rentals (those of 30 days or less) was supposed to be up and running by January 1, 2023, there has been a delay in implementing it. Health Department officials inform us that the on-line registration portal is likely to be available sometime this summer. 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 $250 annual 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 occurrance, posting of the local registration number in any advertising or promotion of the property, and quarterly reporting to the Town on the number and 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. Please be aware that the deadline for registration for 2024 will be in November of 2023. The Town has contracted with an outside vendor, Granicus, who will be overseeing the program and tracking and responding to issues such as noise violations and overcrowding.

The Short Term Rental Work Group has been formed and has 9 voting members plus alternates, none of whom work in the real estate industry on Nantucket. To date they have established procedural rules, identified policy levers, evaluated controls and met with folks from other communities. We continue to hope that the STRWG will define what the real issues are and then make informed recommendations to address the issues 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.

Agendas and Meetings

$500K (all covenant)

SAFE HARBOR FROM DEVELOPMENT

In1969,theMassachusettslegislatureaddedlanguagetotheaffordablehousinglaw(40b)toaddressregionalhousingdisparities.Each communityinthestateissupposedtobeworkingtowardshavingatleast10%oftheiryear-roundoccupied housingstockincludedintheSubsidizedHousingInventory(SHI). Thisinventoryaddressesaffordable housingforlow-incomepeople,andissubsidizedbyafederalorstateprogram. Goodfaithprogresstowards thisgoalqualifiesacommunityfor“SafeHarbor”. Whenacommunitystaysin“SafeHarbor”itisprotected againstunfriendly40bdevelopments. Atthistime,Nantucketmusthave490housingunitsthatqualifyunder theSHIlisttomeetthe10%requirement. Nantucketcurrentlyhas297unitswhichis6.07%. Bearinmind, thatthenumberofunitsthatconstitutethe10%isconstantlychanging,baseduponthenumberofunitsonislandthatareoccupiedyear-round(alsoconstantlychanging). Notsurprisingly,rightnowAreaMedian IncomeonNantucketis$136,100forafamilyoffour Theincomethresholdtoqualifyforaffordablehousing is80%ofAMIwhichworksoutto$94,150forahouseholdof4people.Bothrentalandownershipproperties thatarerestrictedto80%ofAMIinperpetuitycounttowardsthegoal.

PROPOSED NEW TITLE V REGS

The Mass Department of Environmental Protection (DEP) has proposed amended Title V environmental regulations to enhance protection of embayments and estuaries - on Cape Cod, the Islands and Southeastern Massachusetts - from eutrophication caused by nitrogen pollution originating primarily from wastewater. Public hearings were held late in 2022 and the final regulations are expected to be issued shortly. Many of those who attended the public hearings were shocked to learn that homeowners might be required to pay for new septic systems themselves without any aid from the state.The cost to replace a traditional septic system on Nantucket starts at around $40,000. In addition to older, compromised septic systems, there are other causes of excessive nitrogen loading including storm water and agricultural runoff. The good news for owners with septic systems on Nantucket is that our local Board of Health regulations have been more stringent than the state for some years now and we are, as a community, ahead of many on the Cape in terms of mitigating the causes of nitrogen loading.

BACKTO BASICS ON VACATION RENTALS

Fouryearsago,nooneonNantuckethadheardoftheacronymSTR. WhenACK-Now decidedthatlimitingvacationrentalswouldbebeneficial,“STR”wascoinedandthey havecontrolledthenarrativeaboutvacationrentalssince,blamingthemforallofthe challengesonNantucket. Wehaveyettofullyunderstandwhatthegoalisotherthan disruptingtheeconomicengineoftheisland.Nantucketisapopularplacewitha tourism‐basedeconomyandalonghistoryofpeoplerentinghomesinthesummer months.Housesarebuilttobeoccupiedandwillbeoccupiedduringtheseasonby someone‐bytheowner,familyandfriendsorvisitingvacationers.Itisafallacythat limitingrentalproperties,orhowtheyrent,willsomehowreducethepopulationof Nantucketduringthesummermonths. Includedamongthebundleofpropertyrightsinthiscountryistherighttorentone’shome,whetheritisforalongtermora shorterterm.Thisrightexistsuntilitistakenawayormodified.Tosaythatvacationrentalsare“illegal”onNantucketis simplynottrue.HowisitpossibleforthestatetotaxrentalsandfortheTowntoregulatethemiftheyarenotalegaluse?If short‐termrentalsareillegalunderourzoningby‐law,thensoareallrentals. Asacommunityweneedtobeverycarefulaboutthelong‐termramificationsofwhatwedecideattheAnnualTown Meeting.Articles59,60and61,allzoningarticlesrelatedtoshort‐termvacationrentals,eachrequireamajorityvoteof2/3 topass.TowncounselinformedthecommunityatthemostrecentSelectBoardmeetingthatArticle60(EmmyKilvert, sponsor)isdeficientbyform,dangerousinimplementationandwillhaveunintendedconsequencesincludingthepotential grandfatheringinperpetuityofallcurrentshort‐termrentalpropertiesonNantucket,makingithardertoregulatetheminthe future.TownleadershipisaskingthecommunitytowaituntiltheShort‐TermRentalWorkGrouphasanopportunitytosee thedata,finishtheirworkandpresentrecommendationsatthespecialTownMeetinginNovember.Whatisnotbeing broadlydiscussediswhatwouldhappenifArticles59and61(LindaWilliams,sponsor)weretopassatATM.TownCounsel saysthatiftheypass,theywillstopthelawsuitsbroughtbyneighborsagainstneighborsbutwouldnotimpedetheabilityof theSTRWGtofinishtheirjob.

On the Waterfront

We recently had the pleasure of meeting with Sheila Lucey, Nantucket’s Harbor Master, to get the real story on private moorings. Sheila first came to the island with the Coast Guard (she was the Chief at Station Brant Point) and she then stayed on afterwards as Assistant Harbor Master and then our Harbor Master. There are 1,800 moorings in 11 mooring fields on Nantucket. The Army Corps of Engineers licences all moorings. Contrary to what many think, a mooring cannot be sold when a property transfers. There is a long waiting list to get a mooring in one of Nantucket’s harbors because there is, obviously, a limited capacity and very high demand. When a property sells, the mooring rights revert to the Town. The new owner can apply for a mooring and go through the same process as everyone else. Each mooring is sized for a specific location and size of boat. Any questions, please reach out directly to Harbor Master Lucey at 508.325.4100 x5032.

Nantucket: Sales by Area Q1

ITHOUGHTTHATWAS MYTREE?

Before you go cutting down any tree on your property, especially if you live in Town, you had better find out who owns it. Nantucket has many old and stately trees, mostly in Town and there are regulations in place regarding planting, care, and removal of trees. Many of the trees in Town are actually “Town trees” and subject to Town By-Law regulations. If you are unsure about the status of your tree, please contact the Town of Nantucket prior to doing anything to the tree.

Fromthecode: anytreewillbedesignateda"Towntree"bymeetinganyoneofthefollowingconditions:

· The tree was purchased, or its planting was paid for, by the Town.

· The tree stands on or has its trunk partially on Town-owned property.

· The tree was donated or otherwise conveyed to the Town.

· The tree has been maintained more than once by use of Town funds, equipment, or personnel during the last 20 years, with the visits separated by more than one year

· Town trees shall be marked with a medallion, the presence of which shall be conclusive of the status of the tree as a Town tree.

The Land Council has published a booklet that identifies some of the more special trees in Town. Here is more information on the Town Tree By-Law.

Alison

Erikka

Mary

We believe in doing one thing and in doing it well!

Penny Dey, GRI, ABRM, Broker/Owner Ken Beaugrand; Linda Bellevue, GRI, CBR; Heidi Drew, ABR, RSPS, SRS; Peter DuPont

K. Forsgren, SRES; Angel Conrad Frazier; Mary D. Malavase, GRI, ABR, RSPS, SFR; Jane Miller, ABR, RSPS

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

O’Donnell, Office Manager; Yesenia Valer Perez, Office Assistant