Great Point Properties Market News

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All Sales YTD

 

THE REASON THERE IS A REAL ESTATE MARKET
In the last decade, number crunching has become a significant part of the Nantucket real estate industry.  Today we rush to analyze the sales market, digging through the numbers, much like a Wall Street analyst would look at a stock.  We understand the need for Buyers and Sellers to have a firm grasp of the overall market.  With the average sale nearing the $2,000,000 mark, knowledge is key.  Yet the numbers diminish what is so humanly vital about Nantucket.  How can one value all that is so personal about Nantucket. To paraphrase the MasterCard advertisements: those experiences cannot be monetized. 

The vast majority of Buyers are here because Nantucket is one of the truly unique communities in America.  We have a long and varied history, rich in achievement in industry, in science and in social advancement.  One result of this human endeavor is the town of Nantucket, an incredibly sophisticated urban place, built over 200 years by the very people who created the history.  By quirk of economy or lack thereof, that urban environment and corresponding natural world survived largely intact well into the 20th century.  It became the foundation of our modern community, and is still the foundation of the island’s enduring appeal. The modern generation, those who were born and raised here and those who chose the island as their new home, have created a fabulous place to visit and live. It seems that the stunning accomplishments of the 18th and 19th century islanders spurred on this generation to create a modern equivalent.  Today, the island community has created the best of cuisine, the arts, shopping, and homage to our history gone by.

Coupled with our history, is the stunning physical beauty of Nantucket’s natural world.  After living here for more than 40 years, we are greeted each day with some memorable vistas, whether it is looking down Pine Street or going to the end of Hummock Pond Road to have a mid-winter glimpse of the beach and surly ocean.  Each season offers revolving natural opportunities, creating the perfect bookend to all the modern human industry.  As a result Nantucket is a place that generations of people return to.  At Great Point Properties, we have two generations of Sanfords, whose family has been coming here since 1922 and that is nothing unusual.  Today the same allure still exists and is the very foundation of our resilient real estate market.

WE DID NOT SEE THIS COMING
Last winter, coming off a year where sales were essentially flat, except for the $10 million plus market that saw a decline from 2010, we hoped for some improvement in 2012.  Having seen the immediate impact of the rash of bad news emanating from the European debt problems, we
were guardedly optimistic that would not occur again.  With two years of decent sales coming off a horrendous 2009, the Nantucket real estate market was showing excellent signs of recovery.  Although Buyers still remained solidly in control last winter, the indicators were pointing to a healthier, more balanced sales market.  Little did we expect the stunning results that 2012 produced.

BY ANY MEASURE
The numbers are excellent.  Every price point was ahead of 2011.  The $805 million in sales were the best since 2007.  The 471 transactions, the most important indicator of market health, were the most since 2005, one of the greatest years of Nantucket real estate sales ever.

nantucket real estate transactions

WHY?
In 1986, as Congress worked to pass yet another tax bill, Nantucket experienced a surge in real estate sales. It turned out to be the biggest sales year until 1997.   Partly influenced by a healthy economy and a stock market that had tripled from the lows of 1982, it was also reaction to the potential changes in the tax laws looming for 1987.  Clearly in 2012 Buyers and Sellers were reacting to the same concerns.  Although there was no glaringly bad news, it was hard to see much positive economic news in 2012.  It seemed the lack of “crisis” was good reason to breath easier.  With mortgage rates still going lower, real estate nationwide saw an upswing; finally the market pendulum had begun to produce a healthier sales environment. On Nantucket, prices were still well off their historic highs and Buyers recognized that.  Some Buyers were making pure investment plays.  With bond yields at historic lows, little vibrancy in the equity markets, and commodities, such as gold, having seen good moves upward, the Nantucket real estate was an easy investment decision.  Others had decided that it was time to make a purchase for that long awaited summer home.  By mid-summer we were experiencing the first real Buyer demand in five years.  For real estate agents this was a refreshing change.

BENEATH THE TOTALS
We all understand the excitement that $10 million plus sales create.  This January, Great Point Properties sold a Squam waterfront property for $20 million and it was the talk of the town.  What is not understood is how the island real estate market breaks down by price point.  A look beneath the publicity of big sales shows an inverse result.  Nearly 75% of sales transactions on Nantucket are below $2 million.  45% of all sales are below $1 million. Only 8% of all sales are north of $4 million.

Average percentage of all real estate transactions on Nantucket

Despite the overwhelming volume of transactions, only 42% of the dollar volume resides in the $2 million and below market.  The $10 million plus sales market illustrates this discrepancy dramatically.  Over the last four year this market segment averaged only 2% of all transactions but consumed on average 15% of the dollar volume.  In 2010, eight figure sales represented 21% of the dollar volume on only eight transactions (out of 339).  So the bang is large and fascinating, but the market impact is distorted.  The heart of the Nantucket market is  $2,000,000 and under, which is still a very healthy valuation.

CONSISTENCY
What is fascinating is how consistent the price points have been over the last four years, both in transaction volume and dollar volume.  Only the very high end has a degree of variability in dollar volume. Transactions in the  $1 million and below segment tracked steadily at a 45% average. Dollar volume has trended up slightly in that price segment but overall shows remarkable stability.  The $1 million to $2 million segment is even more consistent with three of the four years averaging 29%, and the fourth year at 30% and dollar volume in a tight range from 21% to 25%.

All market sales

 

WHERE ARE WE HEADED?  A CONTEST – YOU DECIDE
As noted above in this report, 2013 will be absent some of the external forces that drove a portion of the market, namely the looming changes in the tax code. Underlying the strong sales environment is this oft-noted foundation that supports the demand for island real estate.  Much of what will unfold this year hinges on the larger economic forces at work, and this author would never hazard a prognostication in that regard.  Comparing the 2013 economy to the great bull market of 1982 to 2000 certainly causes us to retain a very guarded optimistic outlook.  Instead of offering a specific set of numbers we will have some fun.

As a guide, below is one more set of numbers. While you ponder your prediction in the swirl of facts and figures, remember the impregnable value of our special community is the experience of being here and sharing it with family and friends. Even in February!!!

GPP stats

ABOUT OUR NUMBERS
Great Point Properties compiles its sale information from LINK Nantucket, our multiple listing service, and the Nantucket Land Bank real estate transfer forms.  Some sales are consummated without broker participation and these transfers are scrutinized to make sure they were actual arms length market transactions. We will reach out to various sources to help determine the true nature of those sales.  Inter-family sales, sales of less than 100% of fee simple, time-share transactions and any foreclosure by a financial institution are NOT included in our statistics.

KEEPING UP WITH THE NEWS
We send out a market update every month along with some noteworthy news items.  We know your time is valuable so we keep this information concise. If you would like to sign up or know of someone who would be interested, please email us at amy@greatpointproperties.com.  All we need is the name and email address you would like the newsletter emailed to.

In addition you can visit our Market Report page at www.greatpointproperties.com/market-report.  There you will find up to the minute information on sales, properties going under contract, and monthly sales statistics.

GPP