Winter 2023 Atlantic East Nantucket Real Estate Newsletter

N A N T U C K E T

WINTER

This year we are celebrating our 19th year in business and are grateful that so many of our agents have been with us from the beginning! Winter is a special time on Nantucket: a time for reconnecting with friends, catching up on reading and projects, discovering new places to walk and enjoy the outdoors and reveling in the slower pace of life. Of course, if one is able to, it is also a great time to get away and experience a different culture or climate.

The frenetic pace of the last few years in the real estate market has tempered somewhat. Both 2020 and 2021 were driven by the pandemic as people sought special places to retreat to. Prior to 2020, the number of real estate sales on Nantucket averaged around 500 per year; in 2020 it was 679 and in 2021 it was 825. Last year saw a moderating of sales volume to 485, much more in line with the 472 sales in 2019, the last “normal” year prior to the pandemic. The dollars these sales represent is $1,672,485,000 up 64% from 2019 but down 28% from 2022. Fewer properties are selling, but those that are, sell for more.

A number of “firsts” occurred in 2022: the average price of a property selling on Nantucket in 2022 is $3,448,000, up 22%. The average price of a residential property on-island is now over $4,100,000 (+21% from 2021). The median home price is $3,000,000, up 16%. Vacant land is selling, on average, for $2,519,000 (an astounding increase of 75% over 2021) and the median price of a vacant lot is $1,700,000 (+55%). The number of commercial sales has declined considerably given the low amount of inventory.

The average time on the market (all properties) has been 5 months for the last three quarters, the lowest it has been since we started tracking it. The average selling price, as a percentage of list price at the time of sale, slid slightly to 94%. Properties are now selling for 181% of the assessed value. It is important to note that an islandwide revaluation will occur in 2024 which will significantly alter this number

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On Nantucket, as is the case in many desirable places, the primary driver of the market is the low number of properties for sale. At this time, there are only 70 active listings on the entire island. Today, there are only 3 listings under $1 million on Nantucket, all of them vacant land. There are only 14 listings between $1-$2 million (3 land, 3 commercial and the rest residential). The average price of listed properties is $5.8 million (41% higher than the average selling price) with the time on the market creeping up to 5.5 months.

As has been the pattern for the past decade, in 2022 the highest number of sales occurred in Town, followed by the Mid-Island area, then Cliff, Surfside and ‘Sconset (see chart on facing page). This is because these are some of the more densely built areas on-island, as well as remaining in high demand for a variety of different reasons. There were only 11 sales under $500,000 in 2022, 42 between $500K and $1 million, 117 between $1-2 million (most active price sector), 86 between $2-3 million, 53 between $3-4 million, 35 between $4-5 million, 45 between $5-7 million, 27 between $7-10 million and 23 over $10,000,000. By comparison, in 2021 there were 37 sales under $500K, 245 between $1-2 million and 28 sales over $10 million.

There are many factors that determine if, or when, someone decides to sell their Nantucket property. One of the reasons that someone may decide NOT to sell right now is the interest rate climate. If someone locked in a mortgage last year, prior to the seven rate hikes in 2022, they may be reluctant to sell if they need financing on their next purchase. Although the majority of the Nantucket market is not directly impacted by rising rates, it has created a more cautionary buying environment for some people. The Fed has a goal of bringing inflation under 2% annually. As inflation drops, so do mortgage rates. This year will be an interesting year for interest rates and the real estate market. Predictions are all over the place. What we know is this: rates will be driven by economic data. Signs of easing inflation and a weakening economy will drive rates down in response to lower bond yields. Banks are gearing up for slower loan originations and coming up with creative programs to help consumer borrowers. The lending market should get more competitive. Although there are some solid indications that inflation is slowing, stay tuned to see what 2023 will bring.

Nantucket: Home Prices As of Q4 2022

HOMEOWNER UPDATE 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 after January 23, 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 $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. Although they have met numerous times, they have had an 8 week hiatus over the holidays. They are unable to move forward until they have more factual data about housing and rentals on Nantucket. The Nantucket Association of Real Estate Brokers (NAREB), among others, is working hard to provide verifiable data to the community. 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. STRWG Agendas and Meetings

LOANLIMITSRAISED: TheFederalHousingAdministration(FHA)hasrecentlyraisedloanlimits. In NantucketCounty,whichisconsideredahigh-costcommunity,the2023limitsareasfollows: SingleFamily Home$1,089,300, Duplex$1,394,775,Triplex$1,685,850andQuadplex$2,095,200.

PROPERTYTAXESONNANTUCKETSETFORFY2023: TheTownAssessor’sOfficehaspublishedthe propertytaxratesfor2023. Residential: $3.21,OpenSpace: $3.05andCommercial: $5.46.Forinstance,ifa residentialpropertyisassessedat$2,000,000,theannualpropertytaxeswouldbe$6,420withoutthe residentialexemption. The2023residentialexemptionis$668,999whichgetsdeductedfromthetotalassessedvaluebeforecalculatingthe propertytaxes.TheresidentialexemptionappliestoownerswholiveonNantucketyear-round.

$4,500,000

$4,000,000

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

AVERAGE AND MEDIAN PRICES 2022

$0

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 $1,700,000

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 $2,519,000

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 $3,000,000

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 $4,143,000

‘SCONSET BEACH

The ‘Sconset Beach Preservation Fund has spent the past 10 years and over $15 million of private money on the geotube project at the foot of the bluff on Baxter Road. This was a private effort, permitted by the Town, to try to stop the extreme erosion and save homes. Sadly, the SBPF recently came to the conclusion not to continue the project. In order for it to be viable, it required cooperation from Town and State agencies, specifically the Nantucket Conservation Commission whose job it is to oversee the state wetlands protection act. Additionally, a small but very vocal group of local citizens have been against the project from the start. The ramifications of the SBPF decision to abort the project will be far reaching, expensive for all of us and yet to be fully understood. When the geotubes get removed from the beach, erosion will accelerate, threatening the homes and requiring the Town to move fast to provide alternate access and utilities. The situation reminds one of the Great Fire of 1846 when most of Nantucket Town burned down while the two fire companies argued about who would have the honor of throwing the first bucket of water on the flames.

Looking Back at Under $1 Million

August 2020: As of today, there are only 10 single family properties on the market for less than one million dollars. They range from a 2 bedroom/1 bath home located on Bartlett Road listed at $639,000 to a 3 bedroom/1+ bath home on Atlantic Avenue listed at $995,000. Properties in this price range generally require some upgrading.

January 2023:Today, there are no single-family properties on the market under $1,000,000. There are only 2 listed between $1-$1.5 million. The least expensive is an attached townhouse in Madaket with 3 bedrooms/2 baths listed for $1,200,000. And there are only 6 listed between $1.5$2 million. The least expensive listing in this price sector is a newly constructed home in a dense development betweenTown andAirport on a small lot with 3 bedrooms/2 baths for $1,650,000.

YOU WANTTO DO WHAT!?!

On Nantucket there is a zoning by-law (CH 139-26) called the Demolition Delay Zoning By-Law. The idea is to minimize the amount of demolition debris ending up in our landfill. A recent study estimates that construction and demolition (C&D) debris going to the landfill is in excess of 17,000 tons annually. Additionally, the by-law exists to create an incentive for the re-use of residential structures. Nantucket has a long history of moving and re-purposing buildings.

When someone applies to demo a building, the application is subject to review by the Building Commissioner or inspector to determine whether the structure has re-use potential. They have 20 days to offer an opinion. If it is determined there is value in the building and there are no physical barriers to moving it, the owner places an ad in the local paper for 30 days seeking interested parties. If there are no bona fide letters of interest received within the 30 days, then the demolition permit may be granted. DEMO DELAY BY-LAW

And Another State Tax

In the last election a majority of Massachusetts voters supported the Fair Share Amendment, also known as the “Millionaire’s Tax”. It is predicted that the amendment will generate about $2 billion annually for public education and transportation. The revenue will come from households with very high incomes. Only a tiny percentage of households in Massachusetts earn more than $1 million in taxable income each year. Those that do will be subject to an additional 4% income tax on that portion of a tax filer’s taxable income that is above $1 million. The amendment requires that these funds be used ONLY for public education and transportation in the Commonwealth of Massachusetts.

2022 Sales by Price Sector, as of Q4

Under $500K (all land)

SOME GREATHOMES STILLAVAILABLE

The 2023 booking season started with a bang in the fall of 2022 as many people re-booked the same homes. High demand was met with a rental inventory that has been shrinking for the past two years because more owners are using their properties now instead of renting. This seemed to result in a higher than normal level of angst around high season bookings. The holidays saw our normal drop off in activity while everyone's focus shifted to family, food and celebration. What seems a little unusual is the number of cancellations we are starting to see for traditionally desirable weeks in well established rental homes. Is this a sign of a shift in the market? Only time will tell. One thing is for sure, these cancellations as well as several new rental homes coming to the market, open up opportunities for those people who book their vacations 5 or 6 months in advance instead of 10 or 12 months which has been the norm for our market in the past. The Steamship Authority is now taking auto reservations through October. Check out the rental search page on our website, NantucketRealEstate.com to find the vacation home that's right for you.

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 Perez, 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 XIX, Issue 1, Winter 2023