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A SOLID YEAR

Posted: April 25, 2014 

2013 turned out as much expected for the Nantucket real estate market.  Sales were solid but were slightly down from 2012.  We had anticipated that due to the oft discussed impact of the change in the tax laws accelerated purchases the last quarter of 2012.  Total dollar volume came in at $746.6 million as compared to $805.1 million in 2012.  Transaction totals were 464 verses 471 in 2012.  Of note there was on $30.6 million dollar transaction for the Glowacki property that included 70 properties.  That was only counted as one sale in the 2013 transaction figures.

BREAKING DOWN THE NUMBERS

Since 2009 the island real estate market has been in steady recovery.  Looking at the sales by price point the trends are fairly stable.  Total transaction volume has risen steadily with only slight dips in 2011 and 2013.  Yet compared to the depths of the 2009 recession these numbers are very healthy. Below the $2 million price point sales have been impressive. For 2013 those sales accounted for 82% of all sales, slightly above the 76% average.

April 2014 Nantucket real estate report  - transactions volume

Of interest the $2 million to $4 million price segment has shown a steady decline as a percentage of volume with only 11% of the sales in 2013.  This is well below the average 16% over the last five years. The higher end price segments held fairly steady.  In the $6 million to $10 million segment there was a significant year over year decline.  Yet, when looking at the five year trend the numbers were in line with the averages.  It turns our 2012 was an abnormally active year.  

MORE POSITIVE INDICATORS

A sure sign of the health of a market is the inventory.  With sales progressing at a good pace inventory has steady declined.  From year end 2009 total inventory has declined 35%.  What is encouraging with this figure is that, despite the major four year down turn the real estate market righted itself with good control.  As a corollary price reductions have also steadily declined.

April 2014 Nantucket real estate report

Other positive indicators are:

  • The average sales price to asking price increased from 92% to 94%;
  • The number of days on market for sold properties declined from 271 days to 227 days.


FOR THE COMING YEAR

We see no reason why the Nantucket real estate market will not continue on the same  course as it has for the last four years.  Despite the modest economy, the environment of stable low interest rates and positive gains in the equity markets over the last 5 years have created a good environment for real estate sales.  And Nantucket remains a popular place.  We all understand why.  

It is plausible, when considering that the S&P 500 has only returned 40% unadjusted for inflation in the last 13 years, that brighter times are ahead. Over the comparable stretch from 1990 to 2000 it returned 300%.  During that same period dollar of island real estate sales grew by 426%.  Assuming a day when the economy rights itself for real, we may look back at these times as a significant opportunity to buy a piece of Nantucket, what ever the motivation.  

GPP