Atlantic East Nantucket Real Estate Winter 2019

N

A

N

T

U

C

K

E

T

N A N T U C K E T

W I N T E R Happy New Year to all! We are very pleased to share with you that Atlantic East Nantucket Real Estate is celebrating 15 years in business this year. We have been at it full-time and year-round and are a locally owned business with local expertise. We are grateful for our agents, who are among the most creative, experienced and hard working on Nantucket. We have been reflecting on the journey that has brought us this far and we appreciate all of the challenges and learning experiences that we’ve had along the way. We thank you all for your continued support; we truly could not have done this alone. Onward to see what 2019 brings!

Last year was a banner year for economic growth, with U.S. gross domestic product rising and the economy firing on most of its cylinders, as consumers spent more, companies reinvested, unemployment was down and interest rates remained relatively low. Ten years after the last recession, there is a lot of chatter right now about a potential economic shift coming in the near future. There is no question that the U.S. economy is facing stronger headwinds with more numerous interest rate hikes, increasing trade tariffs and concern that earnings growth may have peaked. For 2019 the odds are still against the U.S. economy entering a recession but a series of economic forecasts call for growth to be slower in the coming year.

On the island, 2018 ended up being the best year ever in terms of real estate sales. There were 543 sales for a total of $1,202,353,000 (that is billions), the highest year ever. The top end of the Nantucket market - now defined as over $5 million was the engine, with 48 sales totaling $433,634,531, 36% of the total sales dollars in 2018. Bringing up the other end was sales under $500,000, of which there were only 25. Of these, 14 were vacant land, 8 were covenant sales (restricted for affordability), 2 were small condos and only 1 was a single family home. The door is fast closing on residential properties under $500,000.

Continued on Page 2...

N a n tu c k e t R e a l E s ta te A v e ra g e S e llin g P r ic e A ll P r o p e r tie s (0 0 0 's ) A s o f Q 4 2018 2 5 00

2 0 00

1 5 00

1 0 00

500

0 A v e r a g e S e llin g P r ic e ( 0 0 0 's )

1 9 97

1 9 98

1 9 99

2 0 00

2 0 01

2 0 02

2 0 03

2 0 04

2 0 05

2 0 06

2 0 07

2 0 08

2 0 09

2 0 10

2 0 11

2 0 12

2 0 13

2 0 14

2 0 15

2 0 16

2 0 17

2 0 18

475

533

666

970

940

862

1 0 01

1 3 73

1 8 01

1 9 31

2 1 35

2 3 16

1 8 34

1 9 07

1 5 32

1 6 45

1 5 97

1 7 87

1 7 17

1 8 21

1 9 53

2 2 14

M A R K E T ( c o n t i n u e d

N E W S f r o m

P . 1 )

The average selling price on Nantucket went from $1,597,000 five years ago to $2,214,000 in 2018, up 27%. From 2017 the average price increased 11%. In 2018 the average price of a home was $2,615,000, up 9% and the median home price was $1,750,000. Vacant land is selling, on average, for $1,756,000 (up 53%!!) and $920,000 for the median lot (+28%). The last time vacant land was achieving these prices was in 2011. The average time it takes a property to sell on Nantucket is 9 months, up slightly from 2017. The average sale, as a percentage of list price remains at 90%, as it has been for the past few years. The average sale as a percentage of assessed value is now 123%, down very slightly from 2017.

In the other four years that sales exceeded $1 billion, these numbers were reached in December. Not so in 2018; by midNovember the total had surpassed $1 billion. Although the fourth quarter number of sales was almost the same as in 2017, the dollars represented by those sales were up a whopping 32% to $461,685,000.

From a price sector perspective, the largest number of sales were between $1,000,000 and $2,000,000 (165), followed by 81 sales between $2,000,000 and $3,000,000. In 2018 there were about the same number of sales over $7 million as there were under $500,000.

As has been the case for some years, the areas with the largest number of sales were Town and the Mid-Island area (82 each), followed by Sconset (40), Surfside (38) and the Cliff area (30).

Some of the most recent new construction has been in these three areas.

There was only one sale each in Madequecham, Pocomo, Quaise, Shawkemo and Tuckernuck Island. There were no recorded sales in 2018 in Wauwinet.

Will 2019 be another banner year like 2018? There is no way to know definitively but there are some indications that the market is behaving as it typically does before a correction.

Best wishes to all for a Happy and Healthy New Year from everyone at Atlantic East Nantucket Real Estate!

Page 2

Sneak Peek at Nantucket Harbor We are pleased to tell you about our most recent collaboration with the Nantucket Historical Association. Enjoy the spectacular view from the new web cam perched high atop the Nantucket Whaling Museum, sponsored by Atlantic East Nantucket Real Estate. One can check the weather, see if the boat made it in or look really hard and see how long the standby line is to get off-island! If it could swivel you could see how long the line is at the Juice Bar! Enjoy this live bird’s eye view of Nantucket Harbor all year round.

Nantucket Harbor Web Cam

Nantucket Housing Needs Covenant Properties Housing Nantucket, the non-profit that administers, among other things, the Nantucket Housing Needs Covenant Program, is celebrating 25 years this month. They have recently set the 2019 guidelines for NHNC properties. The guidelines are adjusted annually based on a formula that considers long-term interest rates and median and average income for Nantucket county. The maximum re-sale price for a NHNC property is now $775,973. To qualify for the program, the household income must be at, or below: $172,350 per year and the buyer(s) must have unrestricted assets less than $387,990. At the inception of the program in 2003 the maximum sales price was $406,162. There are over 80 NHNC properties on Nantucket now, housing many folks who are long-time islanders and part of our community.

For more information, please contact Housing Nantucket at www.housingnantucket.org.

Nantucket: Lot Prices As of Q4 2018

Avg Lot ($OOO)

Median Lot ($OOO)

2500

2378

2000

1915 1769

1756

1483

1500

1375 1258 1190 1100

1067 1000

1027 970

1000 700

500

472 265

970

965

845

787

519

1130

1095

750

700

920 800

688

811

730 668

660

475

320

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

Page 3

2011

2012

2013

2014

2015

2016

2017

2018

3 Cheers for the Land Bank!

The Nantucket Islands Land Bank has again raised the first-time home buyer exemption another $100,000, this time to $600,000 in an attempt to keep up with the escalating island real estate market. This is the second major increase in the last three years. The exemption applies to first time buyers whose home will be their primary residence, who have never owned real estate anywhere (on or off-island), and who do not sell the property within the first five years. One of the largest challenges for entry level buyers on Nantucket is the high closing costs and this will save qualified buyers $12,000 on the first $600,000 of the purchase price. The decision was made after review by Land Bank staff of real estate prices over the past few years. In 2018 there were only 8 buyers who qualified for the exemption up to $600,000. The Land Bank stated that raising the exemption will not affect them in a major way but it will significantly impact those trying to buy a home for the first time. The Land Bank generates about $20 million annually through the 2% transfer fee paid by buyers. The funds are used to preserve and maintain open space on Nantucket, much of it for recreational use by the public.

NEW Rental Tax Bill is Now the Law On December 28, the governor of Massachusetts signed into law a bill, commonly known as the Airbnb bill, which levies a 5.7% state excise tax on short term rentals, defined as those that are 31 days or less in duration. The details of implementation are still being worked out by the state.

The tax applies to rental periods commencing July 1, 2019 or later. Exemptions from the tax include properties that are rented for 14 days or less in total for the calendar year. There is also an exemption for properties owned by active service military personnel.

Nantucket has a local option room occupancy tax of up to 6%. The Nantucket Select Board met this week and, after much discussion and public comment, voted 3-2 to recommend that the 6% local option tax be changed to 4%. This amendment will be discussed and voted on by the Nantucket community at our annual Town Meeting, which begins on April 1, 2019. If it is adopted, the tax to our visitors will be 9.7% and will go into effect immediately. We encourage you, if you would like your voice heard, to attend. Non-registered voters are allowed to attend and speak but not to vote. We also would ask that you spread the word amongst your local contacts (who vote) such as cleaners, caretakers and service people and encourage them to attend as well.

There is also an additional 2.75% tax for the Cape Cod & Islands Water Protection Fund, subject to a recommendation from the state Department of Environmental Protection and approval by Nantucket’s “governing body”.

The excise tax paid by tenants on short term rentals could be as high as 14.45% of the total rent before 2019 is over. And for owners of multiple short term rental properties, it could be 3% of the total rent if the maximum Community Impact Fee should be adopted by Nantucket.

Owners of Short Term Rental Properties must get Certificate of Registration from the state of Massachusetts: The state is setting up a public registry of short-term rental properties by July 1, 2019. We are told the registry may be functional by March.

Owners of Short Term Rental Properties must maintain a liability policy of $1,000,000 per rental on their rental property: And provide evidence of such a policy to the Commissioner of Insurance, also effective July 1, 2019.

Page 4

800+ Swimming Pools on Nantucket Not that long ago, it was easy to count the swimming pools on Nantucket, most of which were part of the larger hotels. Today there are over 800 swimming pools on island, most of them private. There is a citizen-sponsored article that will be taken up at our Annual Town Meeting (ATM) this coming April that seeks to restrict swimming pools in a way that will have wide ranging impacts on Nantucket. The article proposes to, among other things, require that pools and an extra perimeter of 5’ would count towards ground coverage (they currently do not count towards ground coverage), prohibit pools in all zoning districts with a minimum lot area of 10,000 square feet or less, create additional 20 foot setbacks from lot lines for pools and pool equipment, and require a Special Permit for pools in zoning districts with a minimum lot area of 20,000 s.f. and for community pools.

One concern about this article is that nearly 800 lots that were built with conforming pools would be at risk of becoming nonconforming as to setbacks, ground cover and use. Determining whether or not a lot could have a pool would require a lengthy and costly zoning process. Hundreds, and possibly thousands, of lots outside of the historic districts would be effectively prohibited or extremely restricted from having pools. And, one of the biggest issues is that zoning articles can be retroactive to when the warrant was published, which is, in this case January 2019. This means that owners of impacted lots may not be able to obtain a building permit for a pool between now and April 2019 in case the article should pass. We will keep you posted on the outcome of the article.

Book Your Rental Now and Save As of today, we know that any lease done for a rental beginning July 1 or later is subject to a state excise tax of 5.7%. We will know more about the “up to 6% “ local option tax after our Annual Town Meeting (see page 4). The majority of the Select Board recently voted a lower initial rate and to phase it in over time, giving all an opportunity to assess the efficacy of the program. There are other additional taxes that may kick in between now and July 1st as well. If you have not yet booked your rental for this summer, we would encourage you to do so before the end of March. Please also remember that the Steamship Authority is open now for reservations through their Head Start program. Reach them at 508.477.8600 or online at www.steamshipauthority.com.

2018 Sales by Price Sector, in 000's Under $500K $7,000-$10,000 11 Over $10,000 25 13 $5,000-$7,000 24

Under $500K $500-$1,000

$4,000-$5,000 40

$1,000-$2,000

$500-$1,000 75

$2,000-$3,000 $3,000-$4,000

$3,000-$4,000 32

$4,000-$5,000 $5,000-$7,000 $7,000-$10,000

$2,000-$3,000 81

Over $10,000 $1,000-$2,000 165

Page 5

Nantucket: Hom e Prices As of Q4 2 0 1 8 2615 2 5 00

2378

A vg Hom e ($ OO O)

2373 2276

2271

M edian Hom e ($ O OO)

2164

2124

2103 1945

2 0 00

1970

1672

1666 1550

1750

1726 1600

1528

1495

1 5 00

2133

1525

1425

1525

1400

1297 1187

1 0 00

1150

1190 1100 1013

970

917

1050

999

775

500

0 20 02

20 03

20 04

20 05

20 06

20 07

20 08

20 09

20 10

20 11

20 12

20 13

20 14

20 15

20 16

20 17

20 18

ARE YOU BEING WATCHED? Property surveillance devices are becoming more common here on the island and we learned some important information.

Massachusetts is a dual party consent state. If your home is for sale or rent and has active equipment videoing or taping, it must be disclosed to the agents, buyers or tenants. Specific consent is not needed, but clear notice of the fact is necessary. If you are renting your home the tenant has the right to peace, quiet and unobserved enjoyment. No recording are allowed in any areas that have a reasonable expectation of privacy.

Atlantic East N A N T U C K E T R E A L E S TAT E Penny Dey, GRI, ABRM and Heidi Drew, ABR, RSPS, SRS, Broker/Owners Ken Beaugrand; Linda Bellevue, GRI, CBR; Peter DuPont; Alison K. Forsgren, ePro, NAR Green, SRES Mary D. Malavase, ABR, RSPS, TRC, SFR, SRS; Jane Miller, ABR, RSPS; Erikka Perkins, Rental Manager; Meg Ruley, ABR, RSPS Lisa Sherburne, ABR, RSPS; John F. Trudel III, SFR; Melinda Vallett; Christine Whelden, ABR; Geri Walker, Office Manager

We believe in doing one thing and in doing it well.

82 Easton Street Nantucket MA 02554 508.228.7707

Volume XV, Issue 1, Winter 2019