Fisher's Nantucket Real Estate Year in Review 2019

NANTUCKET R E A L E S TAT E

YEAR IN REVIEW

A COMPREHENSIVE ANALYSIS

by Jen Shalley Allen (508) 228–4407 21 Main Street, Nantucket, MA

2019 Nantucket Real Estate in Photos & Graphics NANTUCKET BUYERS

$23,183,349

TOP TEN STATES 2015–2019

HIGHEST HOME SALE 40 SHAWKEMO ROAD

BUILDING PERMITS FOR NEW SINGLE FAMILY HOMES

MA 39% 545 NY 13% 181 CT 11% 149 FL 7% 96 NJ 6% 81 CA 4% 51 TX 3% 38 PA 2% 35 MD 2% 29 DC 2% 28

2019

FY19:

2018

2017

* Excludes Nantucket-based buyers

$1.92

71% SINGLE FAMILY MEDIAN SELLING PRICE

301 TRANSACTIONS

14% LAND

59 TRANSACTIONS

10% CONDO/CO-OP/ MULTIFAMILY 43 TRANSACTIONS

14

5

$1.5M $1.48 $1.0M

$1.58

$1.90

$1.85

$1.24

$1,850,000

$0.5M

MEDIAN HOME SALE

4th Qtr

2013

2014

2015

2016

2017

2018

6 WEWEEDER AVENUE

2019

SFH INVENTORY

TRANSACTIONS

YEAR-END BY PRICE POINT

2019 SUMMARY BY TYPE

2017

MEDIAN RESIDENTIAL SALE

MEDIAN COMMERCIAL SALE

89 WASHINGTON STREET

$2.85M MEDIAN LAND SALE

$1.09M

80

<$1M

2018

$1M–$2M 73

2019 $2M–$3M

$3M–$4M

70

DECEMBER SFH INVENTORY

$1.85M

LONGEST MARKETING

175

$1.63

$0.0M

1173 DAYS

FY17:

$2.0M

Sales

1st Qtr

152

SINGLE FAMILY HOMES

TRANSACTIONS BY PROPERTY TYPE

19 TRANSACTIONS

FY18:

MEDIAN SALE PRICE

2019 SALES

5% COMMERCIAL

147

60

55

53 50

49

47

40

37 29

30 20 10

10 11

13

32

15

Photo credit for cover images: Matt Kisiday and Jeffrey Allen

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2019 YEAR IN REVIEW

Nantucket Real Estate Year in Review: Jen Shalley Allen Principal Broker

What we saw in 2019… )) THE OVERALL MARKET… Considering how the year started off, the 2019 Nantucket Real Estate market ended up on a very solid note. Excluding foreclosures and non-market rate transactions, dollar volume fell just shy of $1 billion, marking the fourth best year on record. On the other hand, transaction volume declined for the fourth consecutive year, falling six percent year-over-year. The median property sale value declined modestly, while the average price declined seven percent on account of fewer high-end sales than 2018. Here’s what we witnessed in each market segment:

)) RESIDENTIAL SALES… Single-family home transactions declined for another consecutive year, but anecdotal client evidence suggests some of this was due to available property inventory not meeting buyer expectations. Speculative home sales enjoyed another vibrant year, particularly if you include vacant land sales with private construction contracts, as with the success of the Hawthorne Park development. Sales metrics were largely steady while marketing times for sold properties set a record pace. Average inventory climbed higher than previous years, but pent up demand in certain price points suggests quality and/or pricing of inventory may have been partially to blame.

)) VACANT LAND SALES… Vacant land sales also saw a decline in the number of transactions from a stellar 2018 performance.

Some of this was due to fewer high-end parcels available for sale as compared to the prior year.

There was also a reduced number of available parcels in new developments as inventory was absorbed rapidly in 2018. Unlike residential properties, average inventory levels declined from previous years.

)) COMMERCIAL PROPERTY… The commercial real estate segment saw a record year in both transaction and dollar volume. The majority of the activity stemmed from sales of core, in-town properties, including a $25.1 million portfolio sale of a collection of B&B related buildings. But even without this transaction, it was still among one of the best years for the commercial real estate sector.

What we expect to see in 2020… ))Based upon a robust start to the year, a continued rise in global wealth and record - low interest rates, we anticipate the 2020 market could enjoy another solid year. This said, we know our market is highly sensitive to stock market volatility which could be more active in an election year.

)) While residential inventory has expanded in recent years, we expect we may see another year of reduced transaction activity for single-family homes due to the mismatch in buyer expectations on price and quality in certain pricing segments.

)) Buyers will remain interested in income-producing properties, and in turnkey properties with desirable amenities and strong locations. We feel this is particularly true in the high-end and ultrahigh-end of the market.

))We expect to see continued success in the sale of finished speculative properties, though anticipate supply may be lower than in recent years as development opportunities have been fewer.

© 2 0 2 0 F I S H E R R E A L E S TAT E

(508) 228–4407 21 Main Street, Nantucket, Massachusetts

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Sales Trends & Performance Metrics M A RK E T DATA

• While Fisher Real Estate’s figures put the 2019 Nantucket real estate market at just under the $1 billion mark with a total of 423 transactions, excluding foreclosures and non-market rate transactions, it was nonetheless an impressive year.

This is particularly true if you consider that the first quarter of 2019 trailed the first quarter of 2018 by a respective 39 percent and 47 percent on a transaction and dollar volume basis. Throughout the year, each quarter built more momentum than the last and, all told, 2019 ended up trailing 2018 by just six percent in transactions and ten percent in dollar volume -- the latter largely due to a reduced number of high-end transactions.

• Single-family home sales declined once again but anecdotal evidence suggests some of this could be due to the available inventory not meeting expectations (see page 6) as marketing times for sold properties set a record pace.

Vacant land sales also declined from a stellar 2018 performance, though some of this had to do with fewer high-end parcels available for sale as compared to the prior year, in conjunction with a reduced number of lot sales in new developments as compared to 2018. On the other hand, the commercial real estate segment saw a record year in transaction and dollar volume.

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CUMULATIVE REAL ESTATE SALES & TRANSACTION VOLUME* IMPRESSIVE FINISH TO THE YEAR PUTS 2019 AT THE FOURTH HIGHEST DOLLAR VOLUME

IN $000S $1,400,000

700

$1,200,000

600

$1,000,000

500

$800,000

400

$600,000

300

$400,000

200

$200,000

100

0

2005

2006

2007

2008

2009

2010

2011

1st Quarter ($)

3rd Quarter ($)

2nd Quarter ($)

4rd Quarter ($)

2012

2013

2014

2015

2016

2017

2018

2019

0

Total

Total dollar volume placed the 2019 market as the fourth best year on record. On the other hand, with 25 fewer transactions than in 2018, it was one of the lightest years for sales since 2011-2012.

* Data excludes foreclosure sales and non-market transactions such as affordable/ covenant home sales.

© 2 0 2 0 F I S H E R R E A L E S TAT E

Sales Trends & Performance Metrics

2019 YEAR IN REVIEW

M A RK E T DATA

• From a bird’s eye view, the

ABSORPTION RATES & SALES PRICE RATIOS

2019 Nantucket real estate

SALES DISCOUNTS HOLD STEADY, PROJECTED SALE TIME LENGTHENED

market was similar to both the 2018 and 2017 markets.

The average sales price as

PROJECTED MONTHS ON MARKET

a percentage of the original

35

SALES PRICE AS A % OF ORIGINAL & LAST LIST PRICES, ASSESSED VALUE 150%

listing price slid one percentage point from 2018 figures but was

30

in-line with 2017 figures. The average sales price to the last

130% 25

asking price also declined one percentage point from 2018,

110%

20

but was the same as it was two years ago. The average sale

15 90%

price to the Town’s assessed property value held steady at

10

129 percent for the third year in a row, which is the longest

70% 5

consecutive stretch for this metric in our dataset, signaling market values are relatively steady over the last three years.

0

2006

2007

2008

2009

2010

Absorption: Projected Months on Market

• After declining to a historically

Sale Price/Last List Price

low level in 2017, average

Sale Price/Original List Price

inventory levels for all property types increased 13 percent from

2011

2012

2013

2014

2015

2016

2017

2018

2019

50%

* (Fiscal Year assessed values are assigned using sales data that occurred during the calendar year two years prior).

Sale Price/Assessed Value

2018, the highest level since 2013. The estimated time to clear all for-sale property with the trailing 12-month transaction pace was 11 months by the end of 2019. This is the highest projected absorption rate since 2012-2013. This may have a

While sales discounts were largely steady, inventory levels for all property types rose to the highest level since 2013, leaving the projected absorption rate for all Nantucket real estate just above 11 months.

strong correlation to the fact that inventory and/or pricing isn’t matching buyer demand.

© 2 0 2 0 F I S H E R R E A L E S TAT E

(508) 228–4407 21 Main Street, Nantucket, Massachusetts

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In-Focus: Single-Family Homes M A RK E T DATA

SINGLE-FAMILY HOME METRICS DESPITE A DECLINE IN TRANSACTIONS, AVERAGE MARKETING TIME DECLINED & SALES METRICS HELD LARGELY STEADY

SINGLE-FAMILY HOMES

2019

2018

% CHANGE

5-YEAR AVG.

% CHANGE

302

325

-7%

318

–5%

$785,374

$906,072

-13%

$806,054

-3%

Median Sale Price ($000’s)

$1,855

$1,900

–2%

$1,776

4%

Average Months on Market

6.0

6.6

–9%

7.2

–17%

Sale Price / Original List Price

89%

90%

-1

89%

0

Sale Price / Most Recent List Price

93%

94%

-1

93%

0

Year-End Inventory

243

234

4%

228

7%

Transaction Volume Dollar Volume ($000’s)

*All sales data is as of December 31 and excludes condominiums, foreclosures, affordable home sales and timeshare sales. Sources: LINK Nantucket, Nantucket Land Bank, MA Registry of Deeds

• After a few years of steady transaction volume and rising dollar volume, the 2019 single-family home sale market saw a decline in both metrics, which also lagged the five-year average. Total transaction volume declined seven percent while total dollar volume declined 13 percent – the outsized reduction in dollar volume is largely attributed to reduced activity in the high-end of the market, or properties over $5 million.

• While the transaction volume decline was not due to reduced inventory, given average single-family home inventory was 17 percent higher than in 2018, it could have been partially due to the perception of limited inventory. Anecdotally, available inventory wasn’tmeeting buyer needs in 2019, either due to price and/or quality. Based on client feedback, this seemed particularly true in the $4 million+ segment where demand appears vibrant but transaction volume was notably lighter than in previous years.

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• Median and average home sale values declined modestly from 2018, but remained above the five-year average, marking the third highest values in the last 15 years. The average home sale value was more impacted by the reduced high-end transactions than was the median home sale value. Neither metric would have declined as much if a $25M January 2020 sale that went under contract in 2019 had occurred in 2019. Sales prices to asking prices dropped slightly but not out of the range witnessed in the last few years.

• Despite reduced transaction volume, the average marketing time declined to the lowest level in five years.

The price segment which saw the fastest sales was the sub-$1 million segment where properties sold in under four months. Home sales between $6 million to $7 million also sold within four months, further supporting the likelihood that there is sufficient demand in the market but perhaps not the right mix of inventory to meet that demand.

© 2 0 2 0 F I S H E R R E A L E S TAT E

In Focus: Single-Family Homes

2019 YEAR IN REVIEW

M A RK E T DATA

• The 2018 Nantucket real estate market was an exceptional year for the high-end ($5M+) of the market, far surpassing activity from any previous year.

And while 2019 sales weren’t too shabby on a historic basis, activity could not keep pace with the 42 transactions posted the year before. In total, there were 31 high-end transactions in 2019, including one mega-high-end sale (>$20M). While still among one of the best years for high-end activity, the most notable yearover-year decline was in the $10 million to $20 million arena. As previously reported, a mega-highend sale that went under contract in 2019 closed in early 2020 but there was still a decline of seven transactions in this price range.

• For the rest of the market, the sub-$1M price point continued to decline given limited inventory (13 available properties as of year end). There were 45 sales during 2019, a decline of 26 percent from the five-year average. Home sales between $2 million and $3 million also declined approximately 23 percent from 2018, but this was not due to reduced inventory. In fact, inventory was slightly higher than in previous years. Perhaps because of this, the $3 million to $4 million price point saw a 38 percent rise in year-over-year transactions, while the $4 million to $5 million price point saw a 20 percent increase.

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SINGLE-FAMILY HOME SALES BY PRICE POINT (AS A % OF TOTAL) HIGH-END SALES DECLINE, MIDDLE OF MARKET INCREASES

Sales by Price Point (as a percentage of total transactions)

100% -

90% -

5% 7%

80% -

70% -

6% 9%

5% 11%

5% 5% 8%

4% 6%

>$10M $9M - $10M $8M - $9M

12%

19%

$7M - $8M $6M - $7M $5M - $6M

16%

$4M - $5M

22%

60% -

22%

18%

$3M - $4M $2M - $3M $1M - $2M

50% -

<$1M

35%

40% -

38% 34%

30% -

39%

39%

20% -

10% -

0%

28% 21%

2015

2016

18%

2017

14%

2018

15%

2019

(508) 228–4407 21 Main Street, Nantucket, Massachusetts

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In-Focus: Speculative Home Sales M A RK E T DATA

• According to our records, there were 35 speculative home sales totaling $125 million in 2019, a slight decline from the 39 transactions totaling $155 million in 2018 and the 43 transactions totaling $173 million in 2017. The average marketing time for these properties was approximately 6.9 months, up from 5.8 in 2018 but down from the 9.7 in 2017.

Not included in these numbers, however, are various land sales that transacted with private construction contracts for finished speculative homes (i.e. Hawthorne Park and Ellen’s Way). These were not included solely because the finish price for each transaction isn’t public record. However, given the success of Hawthorne Park, the average marketing time would likely have been lower were these transactions included.

• For another year in a row, speculative home sales in the upper end of the market declined and were concentrated more in the $2 million to $3 million price point, followed by the $3 million to $4 million price point. The average price per square foot of finished living space ranged from $623 per square foot for properties in the Miacomet area to approximately $2500 per square foot for properties with water views in Town. In trying to glean year to year appreciation, sales prices per square foot rose as measured by the transactions within developments that also had 2018 and 2017 transactions.

Of course, this is to be expected as development projects come to completion in a healthy market.

The average sale price to the last list price rose slightly to 95 percent from 94 percent in 2018.

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SPECULATIVE HOME SALES METRICS SLIGHT DECLINE IN TRANSACTIONS, MARKETING TIMES LENGTHEN

# OF TRANSACTIONS

SPEC SALES AS A % OF SFH SALES

AVERAGE MARKETING TIME

SALE PRICE TO LAST ASKING PRICE

2019

35

10%

6.9

95%

2018

39

11%

5.8

93%

2017

42

13%

9.7

95%

2016

35

9%

7.8

94%

2015

21

6%

6.7

94%

2014

24

6%

6.2

95%

2013

25

8%

9.8

90%

2012

17

5%

12.6

88%

2011

12

5%

8.6

86%

SPECULATIVE HOME SALES

6-YEAR HISTORY OF SPECULATIVE HOME SALES BY PRICE POINT SALES MORE CONCENTRATED IN $2M-$4M SEGMENT

# OF TRANSACTIONS

2014

12

2015 10

2016 2017

8

2018 2019

6

4

2

0

$1–$1.99M

$2–$2.99M

$3–$3.99M

$4–$4.99M

$5–$5.99M

$6–$6.99M

$7–$7.99M

$8–$8.99M

$9–$9.99M

$10M+

© 2 0 2 0 F I S H E R R E A L E S TAT E

In Focus: Vacant Lot Sales

2019 YEAR IN REVIEW

M A RK E T DATA

VACANT LOT SALES METRICS TRANSACTION AND DOLLAR VOLUME DECLINE, MEDIAN SALE PRICE RISES

VACANT LAND SALES METRICS

2019

2018

% CHANGE

5-YEAR AVG

% CHANGE

59

73

-19%

75

–21%

$76,660

$135,297

-43%

$90,521

-15%

Median Sale Price ($000s)

$1,088

$1,032

5%

$1,228

-11%

Average Months on Market

5.6

6.9

–19%

8.3

–33%

Sale Price/Original List Price

88%

90%

–2

90%

-2

Sale Price/Most Recent List Price

93%

94%

-1

93%

0

45

51

12%

55

–18%

Transaction Volume Dollar Volume ($000s)

Year-End Inventory

• After an active year in 2018, vacant land sales moderated in 2019 despite average inventory levels between the two years remaining relatively similar. Through the 12 months ending December 31, 2019, vacant land sales totaled 59 transactions through $77 million, a respective decline of 19 percent and 43 percent from 2018. The decline in dollar volume stems from the fact that many of the 2018 transactions were for sizable residential parcels in A+ locations (7 Hinckley Lane for $5.5 million), large-tract commercial parcels (i.e. 51 Sparks Avenue for $11 million) or larger subdivisions (i.e. the largely undeveloped Cannonbury neighborhood in ‘Sconset for $21.5 million). In comparison, the highest vacant land sale in 2019 was the $4.08 million sale of a .8-acre parcel along Hinckley Lane.

• The varied distribution in the sales prices of land parcels between 2019 and 2018 resulted in a 30 percent decline in the average selling price but the median lot sale increased by five percent. This was due to fewer sub-$1 million transactions in 2019 (27) as compared to in 2018 (35).

• In last year’s report, we mentioned that we expected land sales would remain healthy due to newly created lots in several new subdivisions, including Hawthorne Park, Grey Lady Lane and Buck Hollow Lane. Of these developments, Hawthorne Park along Hummock Pond Road continued to see robust sales and contract activity in 2019, representing one of the most successful pre-construction developments in Nantucket’s history. In fact, only two lots of the 17-lot subdivision remain as of the time of this writing.

• As we look at available inventory and the current market environment, we anticipate 2020 land transactions may be similar to if not slightly lower than 2019. While the market remains vibrant, Nantucket buyers often seek turnkey homes over construction projects. That said, we sense that there is healthy demand for higher end parcels in desirable locations so expect new supply with these characteristics would enjoy faster than average marketing times.

© 2 0 2 0 F I S H E R R E A L E S TAT E

(508) 228–4407 21 Main Street, Nantucket, Massachusetts

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In Focus: Commercial Sales M A RK E T DATA

COMMERCIAL PROPERTY SALES METRICS BIG YEAR FOR NANTUCKET’S COMMERCIAL MARKET

2019

2018

% CHANGE

5-YEAR AVG.

% CHANGE

19

9

53%

15

21%

Dollar Volume ($000’s)

$79,581

$18,396

77%

$35,920

55%

Median Sales Price ($000’s)

$2,850

$2,044

28%

$2,297

19%

8.5

4.6

46%

8.1

5%

Sale Price / Original List Price

87%

97%

-10

92%

10

Sale Price / Most Recent List Price

92%

97%

-5

93%

6

15

19

-27%

12

20%

COMMERCIAL PROPERTY SALES METRICS

Transaction Volume

Average Months on Market

Year-End Inventory

• The only segment of the Nantucket real estate market to see a rise in both transaction and dollar volume from 2018 was the commercial real estate segment. In fact, this part of the island market typically sees anywhere from 13-20 transactions per year with an average total dollar volume of $27 million. In 2019, there were 19 transactions totaling an impressive $80 million, one of the highest dollar volumes ever recorded.

• Total dollar volume increased 77 percent from 2018 thanks in large part to the portfolio sale of the Roberts House Collection, which included four historic manor houses, or bed and breakfasts. Other notable transactions included the $6.5 million transfer of a residential and commercial property along Oak Street, the $4.9 million sale of a portion of a mixed-use property on Main Street (formerly the Nobby Shop), two other $4 million+ sales for in-town bed and breakfast properties, as well as the $4.15 million sale of a mixed use commercial property on South Beach Street. All but five of the 19 transactions were for core, in-town properties.

• While the commercial real estate market enjoyed a banner year, the average marketing time for publicly marketed commercial properties lengthened in 2019, rising by nearly four months from 2018 figures. This number is likely to be effectively even higher given that several commercial properties were marketed privately prior to coming to market.

Sales discount metrics also declined from the prior year, declining five to 10 percentage points from both the last and original asking prices. This all stated, it can be challenging to objectively assess year-to-year trends in this portion of the market given the limited number of sales, the myriad differences between properties from year to year (not least whether they have an operating business component) and the fact that many transactions are negotiated privately.

• In looking to 2020, the market may not match the record-setting pace of 2019, but we are aware of at least a couple of notable transactions that will take place in 2020 suggesting this segment should still have a healthy year ahead.

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Nantucket Home Values Then & Now

2019 YEAR IN REVIEW

M A RK E T DATA

In the never-ending quest to ascertain what is happening with Nantucket property values, we dissect and review data on a continual basis. In last year’s report, we reviewed resale transactions to provide estimated annualized returns for vacant land, single-family homes and commercial properties. This year, we endeavored to shed light on a question we are often asked: are property values below or above those from 2006-2007?

To do this, we gathered transaction data from two island neighborhoods: Beach Plum Village and Nashaquisset. These areas were chosen as each had transaction data from the market’s last height, its most recent low and within the last 24 months. We also found three re-sale transactions from 2019 that shed light on single-family home transactions from 2006 to now.

We caveat that this data is intended to provide a bird’s eye view of values as, of course, there is a wealth of context to each transaction that simply cannot be summarized in one page. Value trends also differ substantially based on price point and the area of the island, so there isn’t a straightforward answer to this question. We are always happy to help our clients dig into more specifics on property values so please reach out to us for more information on this study or a specific property.

)) BEACH PLUM VILLAGE 2006-2007: New homes constructed in 2006 sold between $450-$575 per square foot.

2009-2010: Homes constructed in 2006 sold for approximately $325-$360 per square foot. There were no new homes constructed during this period.

2018-2019: New homes constructed in 2018 sold between $700-$775 per square foot. The only re-sale of a comparable 2006 home was in 2017 and that sold for $572 per square foot.

We should point out that since 2006, there have been substantial improvements to the community spaces, including an enhanced pool and expanded open space and entertainment area.

)) NASHAQUISSET 2006: A home constructed in 1990 sold for $580 per square foot.

2009-2010: Homes built between 1995 and 1998 sold for a range of $430-$460 per square foot.

2018-2019: A home built in 1998 sold for $468 while a home built in 1994 and renovated in 1997 sold for $787 per square foot.

)) CLIFF/SURFSIDE/SHIMMO Cliff: A speculative property completed in 2006 sold that same year for $952 per square foot. This same home, with minimal updates but substantial landscaping changes, sold for $1,143 per square foot in 2019.

Surfside: A home constructed in 1996 sold for $1,052 per square foot in 2006. With minimal cosmetic changes, it sold again for $1,182 per square foot in 2019.

Shimmo: A speculative home built in 2008 sold for $1,655 per square foot in April 2009.

With limited changes to the property, it sold again in 2019 for $1,505 per square foot.

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(508) 228–4407 21 Main Street, Nantucket, Massachusetts

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Brian Sullivan Jen Shalley Allen Cam Gammill Danno Lynch Gina O’Callaghan Lara Hanson Liza Hatton Brent Tartamella Erin Wilson Cait Kappler Marleah Lydon Gaelan Truyman Sarah Holmes

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