September Market Insights - Nantucket Real Estate

Insights

MONTHLY SALES HIGHLIGHTS

FISHER’S REVIEW

After two years of record-setting sales volume, 2022 has settled into a pace that is not as fiery as what we saw in 2020-2021 but is healthily above pre-pandemic figures. September 2022 activity included 43 transactions totaling $194 million, bringing third quarter totals to 88 transactions measuring $368 million. While this is a respective decline of 48 percent and 36 percent from third quarter activity one year ago, it surpasses every previous third quarter in island history from a dollar volume perspective. In a continued low-inventory environment, unit sales were down dramatically while dollar volume remained robust. Limited supply also kept a lid on new contracts but an increase in price reduction activity showed that values may not continue their steep upward trajectory in the same way we witnessed the last two years. Here are Fisher’s September Market Insights…

KEY MARKET STATISTICS

Price

(Sept)

NANTUCKET REAL ESTATE ACTIVITY

SINGLE-FAMILY HOME SALES

• September single-family home sales measured 29 transactions totaling $155 million, a respective 53 percent and 38 percent decrease from September 2021. As compared to the five-year average, dollar volume was down just 14 percent while transaction figures trailed by 41 percent, illustrating the significant role higher end sales and an overall increase in property value have played over the last five years. Though September 2022 figures trail the epic volume posted in 2021, monthly figures were the second highest of the year and bested only by the 28 transactions totaling $159 million in April. The monthly transactions brought singlefamily homes sales to a total of 188 transactions measuring $825 million through September 30, 2022. On a quarterly basis, third quarter sales totaled $367 million, well below the $578 million posted one year ago but handsomely above the pre-pandemic third quarter average of $267 million (2015-2019).

• September sales were led by four single-family home transactions above $10 million, bringing the yearly total to 11 transactions in this segment of the market. This time last year there were 12 transactions in this price point, while the five-year average is seven. It’s not surprising then to see a 20+ percent annual rise in both the average home sale value ($4.4 million) and the median home sale value ($3.3M). The average sale price as a percentage of the Town’s assessed value also jumped significantly to 190 percent. Continued historically low inventory also led to further declines in the average property marketing time, which was 2.7 months at the end of September.

CONTRACT ACTIVITY BY QUARTER

LOW INVENTORY LIMITED NEW CONTRACTS

• Despite stock market volatility, the Nantucket real estate market continued to thrive in 2022 and has seemingly only been constrained by a continued lack of property inventory. Of course, part of this assessment is anecdotal given the number of buyers we know are actively looking to purchase. Only a portion of these buyers were successful in September as there were just 43 contracts (Offers to Purchase and Purchase & Sale Contracts excluding duplicates) booked during the month. This is below the 61 contracts from September 2021 and more on par with values seen in 2019 (49) and 2018 (53). On a quarterly basis, there were 115 new contracts from July to September, 100 fewer than the same period one year ago.

• Most of the contracts booked in the third quarter, 35 percent, were for properties last priced between $2 million and $3 million, which is in line notably higher than percentage in this price segment last year and for the five-year average. This once again reflects the rise in property values as there were fewer new contracts (and inventory) for properties under $2 million. The other price point to see a sizable increase was sales above $10 million which fetched seven percent of the new contract activity compared to just three percent for 2021 and the five-year average.

• With over $200 million in the pipeline (based on last list prices) and the $139 million in month-to-date October sales, the 2022 market is certain to surpass $1 billion. The question will be by how much.

Market Insights BY JEN ALLEN

VACANT LAND SALES ACTIVITY

TRANSACTION VOLUME DECLINED, DOLLAR VOLUME HELD STEADY

Transactions 62 98 -37% f 62

Total Sales Dollar Volume $154,943,164 $151,363,622 2% d $107,822,415

Avg. Selling Price $2,499,083 $1,544,527 62% d $1,720,020

Median Selling Price $1,637,500 $1,100,000 49% d $1,142,500

Avg. Months on Market 1.5 7.1 -79% f 5.4

Avg. Price as % of Last Ask 96% 97% -1 f 95% Avg. Price as % of Original Ask 96% 95% 1 d 93% Avg. Price as % of Assessed Value 226% 137% 89 d 150%

• One of the highest transactions in September was for the $12.375 million sale of three contiguous lots in the Cliff area bringing September 2022 land sales to a total of nine transactions measuring $29 million. While the September transaction volume is steady to both 2021 and the five-year average, the dollar volume was well above both periods and is reflective of a healthy year for vacant land sales, particularly from a valuation perspective. Through September 30, 2022, there were 62 land transactions totaling $154.9 million, a respective decline of 37 percent from the same period in 2021 but a two percent increase in dollar volume. Like the trend in residential sales, it is taking far fewer transactions to amass a significant dollar volume. For the five-year average, the transaction volume was identical at 62 land sales, but the dollar volume was 43 percent higher in 2022 than it was for the $108 million that represented the five-year average.

• Aside from the handful of high-end sales, most of the new vacant land supply has stemmed from transactions in the Sandpiper Place development along Old South Road (6) and the subdivision of a large tract parcel off of Rugged Road (7). And despite the varied characteristics of each land sale, average sales discounts from the list price were modest at just four percent while overall marketing times were at a record low of 1.5 months (though many vacant land sales were marketed privately).

MONTH-END INVENTORY & PRICE REDUCTION ACTIVITY

INVENTORY & PRICE REDUCTIONS RISE

• Though Nantucket property inventory is down only modestly from 2021, it remained at historic lows through September. As of September 30, 2022, there were just 154 properties listed for sale including residential (134), commercial (6) and vacant land (14) listings. The total months’ supply, or how long it would take to sell all listings based on trailing 12-month sales, measured slightly higher than four months, two months higher than at this time last year due to a slower transaction pace.

• As we previously reported, nearly all price points below $6 million saw steady or less inventory than one year ago. However, at the upper end of the market, inventory levels were higher than during this time in 2021. In fact, properties listed between $6 million and $8 million saw an increase from seven listed properties one year ago to 25 through September 30, 2022. Time will tell if this inventory is absorbed.

• During the 30-day

September 30, 2022, there were 32

compared to 20 price reductions during this same period one year ago. The average price reduction (from original list price) was 12 percent, noticeably higher than the average adjustment of seven percent in 2021. We’ll see whether these price reductions spur additional sales activity in the fourth quarter.

Market Insights BY JEN ALLEN

SINGLE-FAMILY HOME SALES

VOLUME DECLINED BUT VALUES ROSE

2022 2021 % Change 5-Year Avg (2018-22)

Total Transactions 188 330 -43% f 237

Total Sales Dollar Volume $825,366,512 $1,130,764,286 -27% f $770,245,895

Avg. Selling Price $4,390,247 $3,426,558 28% d $3,235,818

Median Selling Price $3,317,500 $2,700,000 23% d $2,433,700

Avg. Months on Market 2.7 4.0 -33% f 5.5

Avg. Price as % of Last Ask 97% 96% 1 d 95%

Avg. Price as % of Original Ask 96% 94% 3 d 92% Avg. Price as % of Assessed Value 190% 155% 35d 148%

• September single-family home sales measured 29 transactions totaling $155 million, a respective 53 percent and 38 percent decrease from September 2021. As compared to the five-year average, dollar volume was down just 14 percent while transaction figures trailed by 41 percent, illustrating the significant role higher end sales and an overall increase in property value have played over the last five years. Though September 2022 figures trail the epic volume posted in 2021, monthly figures were the second highest of the year and bested only by the 28 transactions totaling $159 million in April. The monthly transactions brought single-family homes sales to a total of 188 transactions measuring $825 million through September 30, 2022. On a quarterly basis, third quarter sales totaled $367 million, well below the $578 million posted one year ago but handsomely above the pre-pandemic third quarter average of $267 million (2015-2019).

• September sales were led by four single-family home transactions above $10 million, bringing the yearly total to 11 transactions in this segment of the market. This time last year there were 12 transactions in this price point, while the five-year average is seven. It’s not surprising then to see a 20+ percent annual rise in both the average home sale value ($4.4 million) and the median home sale value ($3.3M). The average sale price as a percentage of the Town’s assessed value also jumped significantly to 190 percent. Continued historically low inventory also led to further declines in the average property marketing time, which was 2.7 months at the end of September.

Market Insights BY JEN ALLEN

VACANT LAND SALES ACTIVITY

TRANSACTION VOLUME DECLINED, DOLLAR VOLUME HELD STEADY

(2018–22)

Transactions 62 98 -37% f

Total Sales Dollar Volume $154,943,164 $151,363,622 2% d $107,822,415

Avg. Selling Price $2,499,083 $1,544,527 62% d $1,720,020

Median Selling Price $1,637,500 $1,100,000 49% d $1,142,500

Avg. Months on Market 1.5 7.1 -79% f 5.4

Avg. Price as % of Last Ask 96% 97% -1 f 95% Avg. Price as % of Original Ask 96% 95% 1 d 93% Avg. Price as % of Assessed Value 226% 137% 89 d 150%

• One of the highest transactions in September was for the $12.375 million sale of three contiguous lots in the Cliff area bringing September 2022 land sales to a total of nine transactions measuring $29 million. While the September transaction volume is steady to both 2021 and the five-year average, the dollar volume was well above both periods and is reflective of a healthy year for vacant land sales, particularly from a valuation perspective. Through September 30, 2022, there were 62 land transactions totaling $154.9 million, a respective decline of 37 percent from the same period in 2021 but a two percent increase in dollar volume. Like the trend in residential sales, it is taking far fewer transactions to amass a significant dollar volume. For the five-year average, the transaction volume was identical at 62 land sales, but the dollar volume was 43 percent higher in 2022 than it was for the $108 million that represented the five-year average.

• Aside from the handful of high-end sales, most of the new vacant land supply has stemmed from transactions in the Sandpiper Place development along Old South Road (6) and the subdivision of a large tract parcel off of Rugged Road (7). And despite the varied characteristics of each land sale, average sales discounts from the list price were modest at just four percent while overall marketing times were at a record low of 1.5 months (though many vacant land sales were marketed privately).

Market Insights BY JEN ALLEN

CONTRACT ACTIVITY BY QUARTER

LOW INVENTORY LIMITED NEW CONTRACTS

Q3Q2Q1

• Despite stock market volatility, the Nantucket real estate market continued to thrive in 2022 and has seemingly only been constrained by a continued lack of property inventory. Of course, part of this assessment is anecdotal given the number of buyers we know are actively looking to purchase. Only a portion of these buyers were successful in September as there were just 43 contracts (Offers to Purchase and Purchase & Sale Contracts excluding duplicates) booked during the month. This is below the 61 contracts from September 2021 and more on part with values seen in 2019 (49) and 2018 (53). On a quarterly basis, there were 115 new contracts from July to September, 100 fewer than the same period one year ago.

• Most of the contracts booked in the third quarter, 35 percent, were for properties last priced between $2 million and $3 million, which is in line notably higher than percentage in this price segment last year and for the five-year average. This once again reflects the rise in property values as there were fewer new contracts (and inventory) for properties under $2 million. The other price point to see a sizable increase was sales above $10 million which fetched seven percent of the new contract activity compared to just three percent for 2021 and the five-year average.

• With over $200 million in the pipeline (based on last list prices) and the $139 million in month-to-date October sales, the 2022 market is certain to surpass $1 billion. The question will be by how much.

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•

Market Insights BY JEN ALLEN

MONTH-END INVENTORY & PRICE REDUCTION ACTIVITY INVENTORY & PRICE REDUCTIONS RISE

•

Though Nantucket property inventory is down only modestly from 2021, it remained at historic lows through September. As of September 30, 2022, there were just 154 properties listed for sale including residential (134), commercial (6) and vacant land (14) listings. The total months’ supply, or how long it would take to sell all listings based on trailing 12-month sales, measured slightly higher than four months, two months higher than at this time last year due to a slower transaction pace.

As we previously reported, nearly all price points below $6 million saw steady or less inventory than one year ago. However, at the upper end of the market, inventory levels were higher than during this time in 2021. In fact, properties listed between $6 million and $8 million saw an increase from seven listed properties one year ago to 25 through September 30, 2022. Time will tell if this inventory is absorbed.

During the 30-day period ending September 30, 2022, there were 32 price reductions compared to 20 price reductions during this same period one year ago. The average price reduction (from original list price) was 12 percent, noticeably higher than the average adjustment of seven percent in 2021. We’ll see whether these price reductions spur additional sales activity in the fourth quarter.