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2014 is turning out to be one of the best years in the history of the Nantucket real estate market. On almost all levels sales are out pacing 2013. Through June 30th sales are on track to surpass $1 billion for only the 3rd time and for the first time since 2005. A quick look at the numbers shows the strength of the market.

Only transactions in the less than $1 million segment are trading at a lower volume. We believe the robust activity in this segment over the last two years to be part of the issue. Inventory has plummeted and prices have increased as a result of that decline. The middle of the market, from $2 million to $6 million, has seen large gains from last year. In the highest price points, in excess of $10,000,000, sales so far are typical of this time of the year. There have been only two residential sales in excess of $10 million this year. This is not atypical when looking back over the past five years and we would expect some good activity in this segment as the selling season hits its peak. As a result the collective dollar volume is up nearly 60% from this time in 2013.


With such robust sales the inventory has declined accordingly. Looking at the housing inventory, which represents the largest part of the market, the most startling change has been in the lowest price segment, houses listed under $1 million. From a peak of 186 homes for sale in 2010 there are now only 49. Even in the $1 million to $2 million segment there has been a significant inventory decline. Looking at the increase in sales volume in these price segments, a decline in inventory makes perfect sense. And, sellers have recognized the market strength and prices are moving higher.

As a percentage of inventory these changes are dramatic. Accounting for almost one third of all

listings in 2011, the under $1 million dollar inventory accounts for only 15% of properties for sale. Correspondingly the high end of the market, starting with properties priced at $4 million and above have doubled as a percentage of inventory, going from a low of 11.3% in 2011 to over 25% now. Overall inventory has declined faster than we expected. With so many lean years, we expected more of a rush to list properties as the market health improved. But sales have out paced new listings.



The Nantucket real estate market has been rebounding nicely since the dark days of 2009. It has taken three years for the correction to take hold and today much of the market is healthy. Yet, there are still price reductions and for prices above $6,000,000 the days on market average is nearly one year. Despite the froth, we are still not experiencing the irrational exuberance of the mid-2000s. And, with the economy much less than robust, it is difficult to see where we are headed. Clearly Nantucket is a popular place. Like many other popular locations the Nantucket real estate market has benefited from the huge influx of liquidity that the Federal Reserve has been injecting into the economy along with the continued historically low mortgage rates. Yet a concern must remain until the whole economy reverts to historic growth patterns. It is hard to ignore that the return in equities, based on the S&P 500 index, has only compounded about two percent annually since 1999. Compared to the historic 1982 - 2000 bull market this is a paltry return. Along with the worries about the overall economy, will this have a sobering effect on our real estate market? We are not savvy enough to predict but for now the market is moving full ahead.