Atlantic East Nantucket Real Estate Winter 2018

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W I N T E R Greetings from “Nantarctica�, our newly coined name for the island. Like the rest of New England we recently had a few weeks with sustained temperatures below 20 degrees and wind chills below zero. The difference on Nantucket was the unrelenting wind and some flooding with the most recent winter storm. The harbors in both Nantucket and in Hyannis have had serious icing problems and the ferries, when they run, have had to rely on Coast Guard ice cutters to get them to the docks. None of this is unusual for the island but it has been some years since there was such a cold winter and it is only January!

The real estate market closed out 2017 with over $1 billion in sales transfers, the strongest year ever. There have been only three other years (2014 was the most recent one) that exceeded $1 billion and 2017 was the highest one yet. The number of sales (total of 546) were up 2% and the dollars represented by those sales were up a whopping 10%. Nantucket is a special place and consumer confidence and the recent extraordinary performance of the stock market play a large role in what happens in the Nantucket real estate market.

The average price of a Nantucket property is now $1,953,000; an increase of 7% over last year. The average price of a house is now $2,373,000 (+4%); the median home price is $1,600,000. The average price of a piece of vacant land is now $811,000; the median land price is $660,000.

It takes, on average, 8 months for a property to sell on Nantucket. The average sale as a percentage of list price is currently 90% (pretty much what it has been for the past 4 years). The average sale as a percentage of assessed value is 127%! The Town of Nantucket establishes the assessed value for all properties on island. Assessed values are reviewed every year by the Town and every 3 years the state Commissioner of Revenue certifies that values are at an acceptable level of market value and that they were developed by the use of industry appraisal standards.

Continued on Page 2....

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

N E W S f r o m

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The largest number of sales were in Town (88) and the Mid-Island (71) areas (which is typical). The lowest number of sales were in Quaise, Quidnet, Shawkemo, Squam and Tuckernuck (only 1 or 2 each). Geographical distribution of sales is largely impacted by the density of the different areas.

Please see the chart below for more detailed information.

The most active price sector was $1-$2 million with 146 sales, followed by $500,000 to $1 million with 143 sales. There were only 55 sales under $500,000, many of them restricted to affordable housing. There were 77 sales in the $2-$3 million range, 38 in the $3-$4 million range and 17 between $4-$5 million. There were 15 sales between $5-$7 million, and 11 sales between $7-$10 million and 11 sales over $10 million.

In 2017 the highest price paid overall was for the purchase of a large storage facility located on 1.7 acres near the airport that sold for $37,500,000. The highest priced residential sale (and brokered by Atlantic East) was the sale of 9 Lincoln Avenue, a large historic compound with stunning harbor views, located in the Cliff area for $16,500,000. The top land sale was 12+ acres located in Surfside, purchased by a developer for $4,050,000.

In 2017 the least expensive free-market sale was the sale of a commercial condominium unit located on Old South Road for $245,000. The least expensive single family residential sale was of 13A West Dover Street, a small cottage on an undersized lot in Town, selling for $585,000. The least expensive land sale was a lot of .23 acres in the Mid-Island area that sold for $335,000.

The stock market gained 17.3% in the past twelve months, home prices nationally gained 4.3% and wages only 2.3%. The Nantucket real estate market has historically followed the stock market. With real estate appreciation in the 10% range for 2017, barring any unforseen major events, we expect this trend to continue.

A Humanistic Code of Ethics

Madequecham, 8 Naushop, 12

Do no harm to the earth, she is your mother.

Being is more important than having.

Never promote yourself at another's expense.

Hold life sacred; treat it with reverence.

Allow each person the dignity of his or her labor.

Monomoy, 8

Nashaquisset , 9 Brant Point, 11

Dionis, 8

Pocomo, 5

Wauwinet, 4 Shimmo, 3

South of Town, 14

Quaise, Quidnet,Shawkemo, Squam, Tuckernuck, 2

Polpis, 13

Cisco/Hummock Pond, 17

West of Town, 21 Town, 88

Open your home to the wayfarer.

Be ready to receive your deepest dreams; Sometimes they are the speech of the unblighted conscience.

Always make restitutions to the ones you have harmed.

Never think less of yourself than you are.

Never think that you are more than another.

Madaket/Fisher's Landing, 22

Tom Nevers, 22

Cliff, 25

This piece reflects the code for members of the National Association of Realtors.

-By Arthur Dobrin

Mid Island, 71 Sconset, 29

Miacomet, 46

2017 Sales by Area Page 2

Surfside, 65

Nantucket: Home Prices As of 12.31.17

2500

2378

Avg Home ($OOO)

2373 2276

2271

Median Home ($OOO)

2164

2124

2103 1945

2000

1970

1672

1666 1550

1500

2133

1726 1600

1528

1495

1525

1425

1525

1400

1297 1187

1000

1150

1190 1100 1013

970

917

1050

999

775

500

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

A Little Nantucket History In 1972 zoning was officially adopted on Nantucket Island along with some other land use regulations. This adoption was a reaction to the Nantucket Sound Islands Trust bill, also known as the Kennedy Bill. The proposed federal legislation was focused on turning large parts of Nantucket and Martha's Vineyard into a national land trust, much like the Cape Cod National Seashore. Many felt this bill was a federal “seizure� of the island. The bill did not pass, but it compelled Nantucket to move forward with an island-wide Historic District Commission, Conservation Commission and the Nantucket Planning and Economic Development Commission.

NOW IS THE TIME TO BOOK YOUR RESERVATIONS! We mean vacation rentals, ferry reservations and, fairly soon, camp and dinner reservations! The 2018 rental season is shaping up very strongly with limited availability during the month of August. July still has decent availability, especially in the first half of the month. We have seen a growing trend of vacationers returning to the same rental property year after year and many of them re-book in late summer or early fall. We do have some exceptional and large high-end waterfront properties still available for the month of August if that should fit your bill. If you have flexibility on when you visit Nantucket in the summer the best values are to be found in late June and early September, just after Labor Day. The Steamship Authority has started to take auto reservations for the summer. We encourage you, if you have not already done so, to contact them as soon as possible in order to get your preferred dates and times for car reservations. Reservations can be made at www.steamshipauthority.com or by phone at 508.477.8600.

Many camps (and restaurants!) will start to take summer reservations during the next few months. We recommend checking out their individual web sites for additional information.

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Special Town Meeting A Special Town Meeting was held on Nantucket in November largely to consider three articles regarding the sale of recreational marijuana, additional funding for the construction of a new fire station and funding and approval for the Town to purchase a small section of property on Washington Street to improve a busy intersection. These three issues were among the 27 articles on the warrant. Nantucket voters overwhelmingly supported legalizing the sale of medical and recreational marijuana at a previous Annual Town Meeting and, subsequently, at the ballot box.

The marijuana articles, which were passed, place a temporary moratorium on the sale of recreational pot until late 2018, establish zoning districts where marijuana can be sold and increase the local tax on those sales.

Also passed by unanimous voice vote was the warrant article requesting additional funding for the new fire station, to be built on Fairgrounds Road next to the new Police Station and the Washington Street land acquisition article.

ALWAYS A SURPRISE! People are often surprised that property taxes on Nantucket are not higher than they are. The reason is largely due to the fact that more than 80% of all properties are owned by non-resident taxpayers who do not use Town services on a year round basis. In addition, properties owned by non-year round residents tend to be those that are in locations that have higher assessed values. Other factors that impact assessed value are the size of the property, amenities (such as a pool), proximity to the water and condition. The fiscal year 2018 residential property tax rate is $3.53/$1,000 of assessed value.

The rate for open space is $3.34/$1,000 and for commercial it is $5.97/$1,000 of assessed value.

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The Good and the Not So Good Following is a brief summary of the new tax laws as they relate primarily to real estate: The mortgage interest deduction has been lowered: the tax bill allows taxpayers with existing mortgages to continue to deduct interest on a total of $1 million of mortgage debt for a first and second home. For new buyers, the $1 million limit drops to $750,000. Mortgage interest on home equity loans or second mortgages will no longer be deductible unless the funds are used to “substantially improve the property”.

Rules for 1031 like-kind property exchanges will remain the same for real property. Unfortunately, deductions for automobiles, artwork and construction equipment have been repealed. The deduction of state and local taxes now has a cap: you will now only be allowed to take an itemized deduction of up to $10,000 for the total of state/local property taxes, income or sales tax.

Home sellers who turn a profit keep their tax break: homeowners who sell their house for a gain will be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains, so long as they are selling their primary home and have lived in it for two of the past five years.

The deduction for moving expenses is gone: there may be exceptions for members of the military but most people will no longer be able to deduct the cost of moving, even when they move for work.

Almost everyone is now exempt from the estate tax: before tax reform, few estates were subject to the estate tax, which applies to the transfer of property after someone dies.

Now, even fewer people have to deal with it. The amount of money exempt from the tax – previously set at $5.49 million for individuals and $10.98 million for married couples – has been doubled.

The new laws will first be applied to 2018 taxes. How will these changes affect the primary and secondary home real estate markets? Only time will tell.

Stay tuned!

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Impacts of Extreme Weather The most recent storm on Nantucket had winds gusting to 76 mph, unusually high tides and extensive flooding throughout parts of Town and the Brant Point areas.

Some of the island impacts of such weather are the cancellation of the majority of the planes and boats due to wind and ice in the harbors which leads to delayed mail and food deliveries.

Last week the monthly court session had to be held by teleconference because the judge could not get here. And many workers who commute daily could not get to the island. The hospital, thankfully, has a generator which keeps things going as usual and, in the case of a severe health situation, the patient can be airlifted off island to a Boston hospital. Again, weather permitting. Thankfully, people who live on Nantucket are hardy and are used to planning accordingly!

2017: A Year of Benchmarks We find it helpful to take a look at trends in the market place to help identify where the market might be headed: In November of 2017 the highest price ever was paid for a residential property on Woodbury Lane in Town, when 4 Woodbury Lane sold for $4,100,000. The property was on a .22 acre lot and had an updated 5 bedroom/6.5 bath home.

Also in 2017, the longest contiguous time on the market before selling: 8 Whitetail Circle, vacant land, sold for $900,000 in June 2017 after 2,725 days on the market – 90+ months or 7.5 years. Initially listed at $1,125,000 – 20% in price reductions since first listed. It was a 2.75 acre lot with distant ocean views.

The highest price paid in 2017 for a Naushop property was the sale of 78 Goldfinch Drive, a 5 bedroom/3.5 bath home on a 5,000 s.f. lot, selling for $1,387,500. At the time of sale the list price was $1,495,000 and the property was on the market for 410 days.

The highest price paid in Nashaquisset in 2017 was $1,345,000 for 13 Autopscot Circle a 3 bedroom/3 bath cooperative home. The highest price ever paid in Nashaquisset as $1,550,000 in 2005 just prior to the recession.

Sconset's highest residential sales in 2017 were two properties, each of which sold for $7,500,000: 20 Sankaty Head Road, an oceanfront compound with 2.93 acres and a 5 bedroom/6.5 home and 91 Low Beach Road, 3.60 acres with a 7 bedroom/7 bath waterfront home. The highest price ever paid in Sconset for a residential property was the sale of 15 Baxter Road for $11 million in 2013.

And in Town there were two residential sales at $6,500,000 each, both located on upper Main Street (100 Main Street and 151 Main Street). The highest price ever paid for a residential property in Town was for 93 Main Street, one of the “Three Bricks”, which sold in 2007 for $10,500,000.

Nantucket Total Sales Dollars in (000's) $1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0 Total Sales Dollars

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$450,458

$613,765

$1,065,180

$1,186,885

$917,238

$852,045

$574,274

$434,592

$694,253

$531,597

$809,846

$748,866

$1,005,240

$882,666

$972,172

$1,066,079

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2017 Nantucket Sales by Price Range (in 000's) 160 146

143 140 120 100

77

80 60

55 38

40

17

20

15

11

11

0 Under $500K

$500-$1,000

$1,000-$2,000 $2,000-$3,000 $3,000-$4,000 $4,000-$5,000 $5,000-$7,000 $7,000-$10,000 Over $10,000

SHORTS! Do You Think Your Assessed Value is Too High? If so, there is a process for filing for an abatement with the Town of Nantucket. The deadline of February 1, 2018 is fast approaching. It is incumbent upon the property owner and/or their representative to make a cogent and compelling case to the Board of Assessors for a reduction in the assessed value of the property. It is a good idea to have well documented reasons with specific supporting analysis. Current assessments reflect market value as of 1/1/2017. Additional information as well as the forms for filing for an abatement are on the Assessor's web site at the Town of Nantucket: http://www.nantucket-ma.gov/documentcenter/view/7851 Congratulations to Ken Beaugrand who was elected to serve as the 2018 President of NAREB, the Nantucket Association of Real Estate Brokers. NAREB is the local real estate trade organization on island.

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, Principal Brokers 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 and Ani Mulcahy, Office Managers

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

82 Easton Street Nantucket MA 02554 t: 508-228-7707

NantucketRealEstate.com Volume XIV, Issue 1, Winter 2018