2018 Spring Newsletter Atlantic East Nantucket Real Estate

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S P R I N G We are very happy for spring this year, especially after the very long winter. Just when it seemed that things were warming up we would get slammed with another nor’easter. We welcome the daffodils poking up and the forsythia starting to bloom and it is hard to believe that the Daffodil Festival is right around the corner. It is time to get the antique car on the road, dig out the festive yellow and green gear and start planning your picnic!

It is no surprise that the real estate market on Nantucket is off to a very fast start in 2018. The biggest challenge this season, besides rising appreciation, appears to be the lack of inventory. However, the reasons that people decide to sell property are many and are not usually dictated by the seasons. If you are a buyer, invest some time becoming educated about the market and put yourself in the best position to move quickly when you locate the perfect property. If you need financing, you should get prequalified, or even better, pre-approved by a lender before even starting the process of buying a property on Nantucket. This will help put you in the strongest position when negotiating and will also keep your expectations in line with reality. We are seeing an increasing number of bidding situations with multiple buyers interested in the same property simultaneously and typically the buyer with least onerous conditions prevails.

If you are a seller, it is crucial that you educate yourself about comparable sales, competing listings and current market conditions by working with a real estate professional. We highly recommend that you interview 2 or 3 brokers in order to gauge who you think will be the best fit for listing and selling your property.

Please do not make the mistake that so many people do and go with the broker who gives you the highest price (often with no justification). This strategy does not work and translates into a longer time on the market and almost always results in a lower selling price in the end.

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

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Fasten Your Seatbelts: There were 131 sales in the first quarter of the year compared to 93 last year, an increase of 29%. The dollars represented by these sales were up 37% from $184 million in 2017 to $297 million to date in 2018. HOWEVER, we cannot adequately stress how important it is not to judge the year on only one quarter of information.

Some Things to Watch: The average time on the market is up to 10 months, from 8 months in 2017. This is due to numerous properties being overpriced and languishing on the market for a longer time. The average selling price, as a percentage of assessed value is actually down from 127% to 121% and the average selling price as a percentage of list price is up to 91%. It has been between 90-91% since 2013.

Prices are on the Rise: But maybe not as fast as some sellers would like. The average sale price is now $2,125,000 close to where it was just prior to the recession, an increase of 9% from last year.

The average home price is $2,457,000, an increase of 4% from last year. And the average price of a vacant lot is $1,548,000, up a whopping 91% (due to some very large and expensive parcels selling in the 1st quarter). Median prices are very interesting right now. The median price of a residential property is actually down 6% to $1,508,000; for vacant land it is up 70% to $1,125,000.

How Does it Break Down? Only 5% of closings in the 1st Q were for properties under $500,000; 26% between $500,000 and $1M; 36% between $1 and $2M; 21% between $2-4M; 8% between $4-6M and 5% $6M and over. The highest price paid for a Nantucket property in the first three months of this year was $11,350,000 for an oceanfront property in Squam with two modest beach houses on over 2 acres. The least expensive residential sale was $460,000 for a Madaket townhouse with 2 bedrooms and baths. The majority of sales, as usual, were for properties located in Town (26), followed by the Mid-Island area (23) and then Surfside (13). There was only 1 sale each in Brant Point, Dionis, Nashaquisset, Pocomo, Polpis and Quaise.

And there were no closings in the 1st Q in Madequecham, Shawkemo, Wauwinet and Tuckernuck.

A Word of Caution for Sellers: Increasingly buyers are having trouble finding the right property, a function of reduced inventory and an active market which is good for sellers. However, this does not mean being ridiculous in your pricing strategy if you are a seller and you would like to sell this year. Today’s buyers are savvy and market educated. And it is important to remember that no one HAS to buy on Nantucket. Rather, it is a discretionary purchase for most people.

Property Taxes Heading Up A number of debt exclusion overrides passed this week at our local election impacting how much we all pay in property taxes. There were a total of 8 ballot questions and all 7 of the financial ones passed with the exception of $14 million for road improvements on Old South Road. Voter turnout was on the low side with only 2,219 (25%) of Nantucket’s registered voters casting their votes at this election. Nantucket enjoys one of the lowest residential property tax rates in the state at $3.53 per $1,000 of assessed value.

Additionally over 80% of property taxes are paid by folks who do not live on island all year long and are, therefore, not using services year-round.

Here is a brief run down of what passed and the estimated tax implications: $2.3 million for the design of a new Department of Public Works facility ($8.60 additional on the annual tax bill of the average year-round Nantucket home valued at $1.2 million for the next 20 years); $2.45 million for the renovation of the Washington Street Marine Department ($9.16 ); $3.5 million for storm water system improvements ($9.74 in additional taxes for 20 years); $5.3 million for sewer infrastructure repairs due to the force main failure in January in Town ($14.79); $1.08 million for sidewalk improvement on Sparks Avenue ($2.97) and $1.5 million for one time capital projects which will show up as a one time charge of $86.66 on next year’s property tax bills.

Page 2

Nantucket: Home Prices As of 1st Q 2018

2457

2500

2378

Avg Home ($OOO)

2373 2276

2271

Median Home ($OOO)

2164

2124

2103 1945

2000

1970

1672

1666 1550

1726 1600

1528

1495

1500

2133

1525

1425

1525

1508

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

2018

Get Going on Vacation Planning Despite the cool temperatures, the calendar tells us that spring is here. With that comes lots of activity here on the island. Daffodil Festival runs from April 27 – 29th this year. Wine Festival starts Wednesday, May 16th and ends on Sunday the 20th and the Nantucket Film Festival runs from June 20th to 25th. We also look forward to the re-opening of many restaurants that close down for the winter. Some local favorites include the Downy Flake, opening April 19th and le Languedoc opening in early May. We had a flurry of rental activity in the fall and the expected lull over the holidays. Since then there has been a steady stream of new bookings with available inventory starting to dwindle especially for August.

One surprising trend we are seeing is more than usual availability in our high end homes.

There are still several left for the most popular weeks at the end of July and into August. If you are thinking of a Nantucket getaway for your family and friends, give us a call. We're happy to find the perfect home to fit your needs.

INTEREST RATES ON THE RISE How does this affect real estate? The Federal Reserve has raised interest rates six times since 2009. Rising rates can reduce the pool of buyers, particularly in the lower price points here on Nantucket, who are more likely to secure a mortgage on a new property purchase. A mortgage rate increase of just a quarter percent reduces a buyer's purchasing power by 3 percent. A one percent rate increase reduces it by a substantial 11 percent. Continued rate increases will likely lead to a smaller number of buyers, decreasing demand and increasing inventory, especially in the lower price ranges.

Ultimately the potential for reduced property prices could follow. This is the law of supply and demand.

Page 3

Annual Town Meeting 2018 Perhaps the biggest story of the Nantucket Annual Town Meeting was what articles did not pass. There were three articles, citizen sponsored, that would have stalled or halted the Town's affordable housing project at Ticcoma Way/6 Fairgrounds Road and all three were voted down, confirming that the community stands behind the Town's effort to create 65 more affordable housing units for working people on Nantucket.

There was an article for a $30 million tax levy override, also citizen sponsored, that would have put the bulk of the override burden on those who own summer homes and do not use the services here on a year-round basis. During a lengthy discussion, issues about taxation without representation and fairness were raised.

The sponsor of the article cast the lone vote in favor and received a nice round of applause for his efforts.

Two articles by individuals who own property in the Surfside area who wanted to change their zoning from 2 acres to 1 acre also did not pass. The majority of those voting felt that both articles represented zoning “creep' in spite of the fact that both articles received a positive recommendation from the Planning Board. The argument that a neighboring property is in a different, more liberal, zoning district did not go over well with the voters. People are upset about the massive and messy construction project on Old South Road (the Richmond Project) and feel that enough is enough.

Also defeated was an article that would have permitted an increase in ground coverage from 10% to 12.5% in certain Village Residential zoning districts by special permit provided that the additional 2.5% of ground coverage was limited to 16 feet in height. Voters felt they were giving something away for nothing and soundly defeated this article.

Article 67 was a Home Rule Petition which would authorize the changing of the name of the Board of Selectmen to the Select Board, a more gender-neutral term. The article overwhelmingly passed. Also passed, without much discussion, was the annual operating budget of $82.3 million.

The meeting opened with 485 (only 6%) of Nantucket's 8,913 registered voters in attendance. Of the 90 articles on the Town Meeting Warrant only 25 were called for discussion. The rest of the articles were voted as recommended by the Finance Committee and the Planning Board. The meeting was wrapped up in less than 5 hours.

One perennial observation: each year the issues seem to become more complex and the Town does a decent job of holding a series of public hearings on each article prior to the ATM in order to provide an opportunity for voters to become more informed. It is frustrating when voters have not done their homework prior to speaking and it slows down the process.

But this is democracy at work and we are fortunate to be able to participate.

BEST NOT TO DIE IN MASSACHUSETTS OR SOME ADVICE FOR PLANNING AHEAD Obviously it is best not to die anywhere but if you are a resident of Massachusetts when you die your estate will be taxed at one of the highest levels in the nation. In addition, the estate tax is due within nine months of death, often forcing heirs to have to sell assets under duress which can cost the estate some serious money.

There is currently a bill at the state legislature, H1510/HD 1867, An Act Relative to the Massachusetts Estate Tax Code, sponsored by Shawn C. Dooley of Norfolk. We are strongly in support of this bill as it is an issue of fairness.

Massachusetts has been losing wealthy residents (and their state income tax, sales tax, property and excise taxes, capital gains and estate taxes) for years due to the punitive nature of the existing estate tax code. There are only 14 states in the country with a state estate tax and Massachusetts has one of the lowest exemptions at $1,000,000. The bill would increase the state exemption to 50% of the Federal tax code; in 2017 the exemption in Massachusetts would have been $2,745,000 per person (the current federal exemption is $5,490,000 per preson).

With the recent changes in the Federal Estate guidelines it is reasonable that the MA exemption be revised and raised to be more consistent with the Federal government. We encourage you, in the interest of supporting a more fair tax policy, to reach out to your state representatives to ask for their support of the bill.

Below is a link to all of the state legislators in Massachusetts as well as a link to the highlights of H1510/HD1867.

Massachusetts State Legislators –H1510 Estate Tax Bill Summary

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Important Alert! New Rental Tax on the Way In an effort to regulate and benefit from the short-term rental market, Massachusetts State lawmakers have passed excise tax bills on short-term rental properties that may go into effect by next summer. The bills are currently in a conference committee to reconcile the differences between the senate and the house versions before heading to the governor for signature. The bill would allow the Department of Revenue to create a database of short-term rentals, impose a tax between 4 and 8%, and allow municipalities and towns to impose local excise taxes as well. Nantucket will decide whether or not to impose local taxes on short term rentals and what structure to implement. The current room occupancy tax, charged when staying in a hotel or inn on Nantucket, is 11.7% of which 5% goes to the Commonwealth and 6.7% is the local room tax.

In both bills, any platform (Airbnb, Home Away, VRBO) or entity (real estate offices and home owners) will be responsible for collecting and remitting these new taxes to the state.

The aim of the room-occupancy tax is to bring in an estimated 20-35 million dollars in revenue to the state and to level the playing field for hotels, motels and inns who are already required to charge the tax (and have to be licensed, have health and safety features and be inspected).

Stay tuned!

Nantucket Campaign to Stop the Straw!

The Town of Nantucket, via the new ACKLocal platform and in collaboration with ReMain and the Maria Mitchell Association, launched a campaign to stop the use of plastic straws on island. Organizers say that the goal is to reduce unnecessary waste and to protect our oceans from more plastic pollution. It is estimated, conservatively, that 3 million plastic straws are used on Nantucket just during July and August! We are really excited to be joining cities and towns around the world working to reduce single-use plastic pollution, beginning with straws. As individuals we can say NO to the use of plastic straws in our homes and when dining out.

The campaign involves: A pledge to be signed by participating restaurants and vendors, screening of the Straws movie, public outreach and education through various events and activities and advertising to raise awareness in the Inquirer and Mirror, who has been a very generous early supporter. From the organizers: "We have been putting various paper straws through their paces to see which ones hold up the best as we know that some of them tend to fall apart quickly. We will shortly have more information (contact info, purchasing, pricing etc) which will also be available on our web page. The company that has the best, as far as we can see, as well as having several size options, is Preserve and they do sell bulk.�

More information is available on the Town website: www.nantucket-ma.gov/1131/Stop-The-Straw Stop the Straw Whats Whys and Hows

$3,000,000

Nantucket Real Estate $2,500,000

2003 - 2018 YTD 1st Q 2018

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Median Lot

$320,000

$475,000

$700,000

$1,067,000

$1,375,000

$1,100,000

$700,000

$845,000

$970,000

$750,000

$688,000

$730,000

$668,000

$800,000

$660,000

$1,125,000

Average Lot

$519,000

$787,000

$1,190,000

$2,311,000

$2,378,000

$1,915,000

$970,000

$1,095,000

$1,769,000

$1,483,000

$1,258,000

$1,130,000

$965,000

$1,027,000

$811,000

$1,548,000

Median Home

$917,000

$1,150,000

$1,495,000

$1,550,000

$1,495,000

$1,425,000

$1,275,000

$1,100,000

$1,013,000

$1,050,000

$999,000

$1,400,000

$1,525,000

$1,525,000

$1,600,000

$1,508,000

Average Home

$1,297,000

$1,672,000

$2,164,000

$2,378,000

$2,103,000

$2,271,000

$1,945,000

$1,970,000

$1,528,000

$1,666,000

$1,726,000

$2,124,000

$2,133,000

$2,276,000

$2,373,000

$2,457,000

Page 5

Nantucket: 1st Q Comparison Sales Dollars (000's)

$350,000

+37% $300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

2003

Dollars 1st Q. (000's) $73,557

2004

2005

2006

2007

2008

$152,158 $251,239 $229,730 $171,902 $150,468

2009

2010

2011

2012

2013

$53,322

$108,095

$73,874

$96,132

$74,334

2014

2015

2016

2017

2018

$174,073 $156,176 $196,271 $184,719 $297,448

SHORTS! A MUCH NEEDED SERVICE ON ISLAND A new linen service is being offered here on the island. Fresh, quality towels and linens will be available for drop off and pick up at your property. An ideal time saver if you have lots of guests or a rental home to change over for tenants. Cleaning services will really appreciate the time saved on laundering, which is one of the biggest turnover challenges during the season. Check out this new company at www.linendrops.com/Nantucket or call 1-844-954-66367.

SHUCK IT FOR NANTUCKET As a project to help clean the harbor waters and save the eel grass, the town is collecting oyster shells from restaurants to create an oyster reef. The shells are cured outside for 2 years to kill any bacteria and then deposited in given areas to create a reef for oysters to grow and flourish. Oysters help clean the water by filtering the harmful phytoplankton and toxins that kill the eel grass. These reefs become a mini eco-system that help improve the water quality and health of the eel grass. Not to worry, when eating oysters, there are local advisory warnings on shellfish if a certain area has the risk of any contaminants, pathogens or toxins.

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 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 2, Spring 2018