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HERE COMES THE SUN Somehow, this spring seems especially welcome after the past two years. The early daffodils are in full bloom, the forsythia is about to pop and the sun actually has some warmth to it (when the wind is not blowing!). We are enjoying being outside again and re-connecting with friends from near and far. The escalation in real estate activity and prices that began in early summer of 2020, driven largely by the pandemic, appears to be shifting. The average number of sales on Nantucket between 2017 and 2020 was 521 per year; in 2020 there were 679 sales; in 2021 there were 825 sales - an all-time high. Nearly two years' worth of inventory closed last year (an increase of 22% over the previous year), leaving the lowest number of properties for sale ever on Nantucket. This is the case, not just on Nantucket but also in many other sought after communities. Total sales dollars for 2021 were $2,336,000,000 ($2.336 billion, an increase of 23%), the first year ever that real estate sales on Nantucket exceeded $2 billion dollars. So far in 2022 - the number of transactions are down 40% compared to Q1 of 2021, and the dollars are down 21%. It is more accurate to look at 2019, prior to the pandemic, to understand where we are now. The first quarter of this year tracks very similarly to 2019 when there were ninetyone sales ($152 million) compared to 94 sales this year ($276 million). Because of the frenzied real estate activity in 2020 and 2021, we continue to experience low inventory, high demand, and rising prices. Due to the foresight of people beginning in the 1960's, nearly 70% of Nantucket is forever preserved (Land Bank, Conservation Foundation and deed restrictions). This is a huge benefit to the community but has also put more economic pressure on what remains. The average selling price of all properties on Nantucket is $2,941,000 (+4%). The average selling price of a house is now $3,719,000 (+8%) and the median house price is $3,363,000 (30%). Vacant land is selling, on average, for $2,316,000 (+61%) Continued on Page 2... and the median price of land is $1,154,000 (+5%).
2022 Sales by Price Sector, as of Q1 $7-$10M 5
$5-$7M 9
Under $500K (all land) 4 Over $10M 2 $500K-$1M 11
Under $500K (all land) $500K-$1M $1-$2M $2-$3M $3-$4M
$4-$5M 7
$4-$5M $5-$7M $1-$2M 23
$7-$10M Over $10M
$3-$4M 13 $2-$3M 13
MARKET NEWS (continued from page 1)
The average time a property is for sale on Nantucket is only 6 months, the shortest it has ever been. Properties are currently selling for an average of 95% of list price (compared to 89% in 2019) and for 170% of assessed value (compared to 126% in 2019) at the time of sale. How it breaks down: there were only 4 sales under $500,000 in the first quarter - all of them vacant land. The price sector with the greatest activity was between $1-$2 million (23 sales), followed by $2-$3 million and $3-$4 million (13 sales each). The least expensive residential single-family home (not restricted for affordability) to sell this year was a 745 s.f. cottage located on a 3,000 s.f. lot at the edge of Town that sold for $980,000. The least expensive piece of land to sell was a 5,000 s.f. lot on a dense development near the airport that sold for $335,000. The costliest property to sell in the first quarter was in the Shawkemo area, with privacy on an acre, and strong views of Nantucket Harbor and Town. This custom designed and built home with a pool sold for $11M. With inflation at the highest level since 1982, we are solidly in an environment of rising costs and rising interest rates. The inflationary climate this country is now experiencing has been driven partly by quirks and partly by demand, and they are connected. On the quirk side, the pandemic caused production to shut down which limited supply, pushing prices higher. Additionally, the rise in oil and gas prices is impacting travel and commerce. On the demand side, rising prices mean that many homeowners are sitting on a lot of equity. Historically, real estate has been a less volatile investment over the long run than the financial markets. The Fed raised the funds rate by .25% last month marking the switch from an easy money policy to a more aggressive fight to control inflation. It is highly possible that rates could increase by an additional 2.5% by the end of the year. Stay tuned.
Page 2
PROPERTY RIGHTS (continue to be) CHALLENGED The discussion about short-term rentals (STR'S are defined as rentals of less than 32 days) continues to rage on Nantucket. Two years ago, a privately funded non-profit group called ACK-Now attempted to regulate and limit STR's based upon an unsubstantiated opinion that STR’s are impacting the quality of life in the summer and the year-round housing market. There is no question that Nantucket faces many challenges due to increased popularity, but the year-round housing market is a parallel market to the summer housing market. A four-bedroom house in Polpis with a pool will never, ever be affordable housing. The ACK-Now article at the 2021 Annual Town Meeting was resoundingly defeated 2-1. They are back with Article 43 for this year's ATM which would permit STR's to occur by right ONLY in the primary residence of a year-round owner (not the cottage, apartment, or tertiary unit). No other owner would be allowed to rent on a short-term basis unless they received permission from the Zoning Board of Appeals. The article is flawed. It treats two different classes of ownership differently. Where does the resident who is renting their primary residence move to in the summer? Vermont? Their boat? It is, at a minimum, unfair, and it may also be unconstitutional. The Planning Department, in response to the will of the voters and with the approval of the Finance Committee, has sponsored two companion articles that seek to establish a framework for registration of STR's and sensible regulations based upon the collection of real data. The Nantucket Association of Real Estate Brokers, along with other groups, including the Committee of Non-Voting Taxpayers, endorses these two articles (39 and 42). We are curious why ACK-Now, who purports to want controls on rentals is not in support of the Planning Board articles. Why is this an issue only on Nantucket and not on Martha's Vineyard? In this country, the government has four powers over property that is privately owned. Those powers include taxation, eminent domain, and police powers (which include such things as zoning, rental controls, building and fire codes and regulation of safety hazards) and escheat. Inherent property rights include the right to rent one's private property (unless they are taken away). If you are registered to vote on Nantucket, please make time to show up at Annual Town Meeting this year which begins at 5:00 PM on Monday, May 2, 2022. As we know, every vote counts. LINK TO OP-ED PIECE “THE FACTS MATTER” IN INQUIRER & MIRROR on March 24, 2022 LINK to Letter from Committee of Non-Voting Tax Payers March 2022 LINK to Logic Matrix for the STR Articles $4,000,000
$3,500,000
Nantucket Average and Median Home and Land Prices
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Median Lot
$845,000
$970,000
$750,000
$688,000
$730,000
$668,000
$800,000
$660,000
$920,000
$975,000
$975,000
$1,100,000
$1,154,000
Average Lot
$1,095,000
$1,769,000
$1,483,000
$1,258,000
$1,130,000
$965,000
$1,027,000
$811,000
$1,756,000
$1,453,000
$1,521,000
$1,437,000
$2,316,000
Median Home
$1,100,000
$1,013,000
$1,050,000
$999,000
$1,400,000
$1,525,000
$1,525,000
$1,600,000
$1,750,000
$1,670,000
$2,434,000
$2,588,000
$3,363,000
Average Home
$1,970,000
$1,528,000
$1,666,000
$1,726,000
$2,124,000
$2,133,000
$2,276,000
$2,373,000
$2,615,000
$2,481,000
$3,225,000
$3,423,000
$3,719,000
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Here We Go Again The warrant for our Annual Town Meeting this year has over 107 articles in it, many of which pertain to zoning map amendments or by-law changes. Of particular note is Article 50 which addresses tertiary (third) dwelling units. In certain zoning districts, one is allowed to have a main house, a secondary dwelling unit and a tertiary unit (which could be in the same structure as one of the other units). If passed, the article would increase the gross floor area for the tertiary unit from 650 to 900 square feet. Article 51 is a zoning by-law amendment for tertiary lots that would allow the division of a property into three lots if one of the secondary lots is subject to a Nantucket Housing Needs Covenant-Ownership Form or to be occupied by a qualified family member as a covenant house. The effect of this is to make it possible for families, in certain zoning districts to subdivide, by covenant, to enable extended family members to remain on the property as owners. We heartily support both of these articles and think this is a perfect example of how zoning should be used creatively. Article 8 is the general funding article for the operations of the Town of Nantucket. The total is $104,523,366 this year, an increase of 7% over FY 2022. Surprisingly, this article usually gets passed without much discussion. Article 10 appropriates general funds for capital expenditures. The total requested this year is $36,150,150 for many necessary things including replacing an ambulance, upgrades to the Town's wireless network and GIS systems, costs associated with coastal resiliency planning, comprehensive planning for Baxter Road and funding affordable housing initiatives. HERE is a link to the Warrant for the 2022 Annual Town Meeting.
FOOD PANTRY DROP OFF
COVENANT FORMATION ASSISTANCE
The Nantucket Food Pantry is accepting donations on Tuesdays, Wednesdays, and Thursdays from 3-6 PM at their 10 Washington Street location in Town. Food insecurity is a serious issue on Nantucket. Please consider donating unexpired packaged food. There is also a drop-off bin located inside at the front of the mid-island Stop & Shop for non-perishable items.
The Covenant Formation Assistance Program (CFAP) is a Town program to assist with funding for owners who are creating a covenant lot. No interest loans, for up to $10,000, are available to help owners with the associated costs of creating the covenant property including surveying, legal, septic work and permitting. The loan gets paid back when the covenant property sells.
This and That A citizen sponsored article for this year’s Town Meeting seeks to ban the use of fertilizer on Nantucket. The island currently has a fertilizer program to provide landscape professionals and homeowners science based guidelines for fertilizer use and other landscape practices that, when followed, reduce the loss of soil nutrients from excessive, incorrectly timed, or inappropriate fertilizers. On Nantucket, lost nutrients find their way rapidly to the coastal waters, harbors, ponds, and streams where they may cause contamination that is harmful to aquatic organisms as well as to human health and welfare. Fertilizer Program. The Seastreak is again providing fast ferry service from New York to Nantucket on Fridays and Sundays during the season. They continue to provide daily service between New Bedford and Nantucket. Shorten the time in the car, park easily and take advantage of this fast and comfortable way to get to the island. Seastreak Ferry Service. Atlantic East was a proud sponsor of the 3rd Annual Nantucket Litter Derby, held on April 2 and 3. Over 8 tons of trash and recyclables were picked up across the island by different teams. Among the items was 1 refrigerator, 2 engines with parts, a wooden armoire, 7 boats, a campsite (?!?) and a fake Christmas tree. Thank you to Melinda Vallett who was on the NAREB team! Page 4
Welcome to Mary O’Donnell
As of Q1
Sales by Area
We are delighted to welcome the very talented Mary O'Donnell to Atlantic East as our new Office Manager. Mary has had a distinguished career in real estate on the other side of Nantucket Sound on Cape Cod and we are fortunate to have her joining our team. Mary grew up in the idyllic village of Chatham during a time when everyone knew everyone and “the sidewalks were rolled up after Labor Day”. After graduating from tiny Chatham High School, Mary left the comfy hamlet and matriculated at the University of Massachusetts in Amherst where she studied French. After graduation, Mary settled into the North End of Boston and worked in the financial district at the brokerage firm, Drexel Burnham Lambert. After several years, Mary earned her master's degree in French at New York University, and stayed on in NYC working at several French companies. In the mid 90's, Mary married, had children and moved her family back to the cape in search of a more rural lifestyle. When her children were old enough, Mary began her career in real estate as a sales agent helping many, many buyers and sellers. In 2017, she began visiting the island of Nantucket and fell in love with the cobble stone roads, historic homes, world class restaurants and pristine beaches! Mary has now started a new adventure living here on the island and assisting the Atlantic East team. Welcome Mary!
Dear Buyers... We would like to update you on the current real estate market conditions on Nantucket. We are sorry to report that there a very few listings on the market right now. There were 825 sales in 2021 which absorbed two years of inventory. Today, when a new property does come on the market there are often multiple interested buyers. People who are onisland have a distinct advantage over those who need some time to travel to Nantucket. It is not uncommon to see, within days of listing, a property go to sealed bid. In this case, a deadline is set, clear instructions are given to potential buyers and each buyer submits their final and best offer. Those who do not require a financing contingency are in a much stronger position during a negotiation. The seller evaluates the offers and chooses the one that best meets their needs. It may not necessarily be the one with the highest price; in fact, it is often the one with the fewest contingencies. For sellers, contingencies create risk. If a buyer needs 30 or 45 days to get a commitment from the lender for their mortgage, the seller may miss out on other opportunities during that time. A mortgage contingency also triggers an appraisal and in the current market appraisers are having difficulty substantiating current values relying only on historical data. The fewer contingencies there are, the more smoothly the transaction goes. Any market with less than 6 months of inventory is defined as a seller's market. Because the current market favors sellers, buyers today are not usually in a position of leverage. If you are a buyer, the best thing to do is to get your ducks in a row before you start looking at real estate. This way, when the right property does come along, you will be in an informed position and ready to act quickly. And, if the right property does not come along soon, be patient. Real estate markets typically go up and down (and then up again). Page 5
Nantucket: Sales as % of List Price and Assessed Value As of Q1 2022 190%
170%
150%
130%
110%
90%
70% Avg Sale as % of List price Avg Sale % of AV
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
91%
93%
93%
90%
79%
82%
84%
88%
90%
91%
90%
90%
90%
89%
93%
94%
2022 95%
152%
130%
114%
99%
95%
106%
89%
81%
139%
141%
103%
127%
123%
120%
123%
155%
170%
DON’T MISS OUT! The pandemic has brought about many changes in the last two years, but it's impact on the housing market may be the most surprising. The sales market has been exceptionally active, and the effects have trickled down to the rental market. Many homeowners have decided to take advantage of the booming market and historic sales prices and list their homes for sale. At the same time, many new and longtime homeowners are opting out of the rental market and spending summers enjoying their homes rather than sharing them with tenants. This has resulted in a marked decrease in established rental inventory and left tenants struggling to find a vacation home that perfectly fits their needs. Now the good news. Atlantic East is always searching for quality rental homes to supplement our current inventory and 2022 is no different. We have several new rental homes with pools including 78 Milk Street and 16 Cherry Street. We also have homes that are traditionally only available for one two-week period that have wider availability for the 2022 season. Some of those include 23 Brewster Road, a beautiful five-bedroom home with a pool in Monomoy, and 63 Monomoy Road, a four-bedroom home with a lovely yard, also in Monomoy. There are still many wonderful properties available. Contact your favorite Atlantic East Nantucket Real Estate broker to book your home away from home today.
Atlantic East NANTUCKET
REAL
ESTATE
Penny Dey, GRI, ABRM and Heidi Drew, ABR, RSPS, SRS, Broker/Owners Ken Beaugrand; Linda Bellevue, GRI, CBR; 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 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 2, Spring 2022