2018 Fall Newsletter Atlantic East Nantucket Real Estate

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A U T U M N The summer of 2018 is now in the books, and a very busy summer it was! There was a small slowdown in the real estate market in the beginning of the summer largely due to overpricing on the part of sellers. The market picked up through July and August, and is now mostly even with where we were one year ago at this time. We are on track to exceed $1 billion in annual sales for the fifth time.

However, it does feel like we are getting ready for some sort of market correction in spite of the stronger employment and financial markets. Home prices have grown significantly faster than incomes and inflation. According to the National Association of Realtors, home sales nationwide declined 8.7% in September compared to last year. The yield curve (the difference between short and long-term interest rates) continues to flatten, and on Nantucket the time on the market is up slightly from 2017. As we know all markets go in cycles, and a discretionary market such as we have on Nantucket does not always follow the same rules as a primary home market.

There have been a total of 367 sales on island through the end of Q3; 2017 had a total of 546 for the entire year. The total sales dollars exceed $740 million at this time, and unless something unexpected occurs, we will exceed the $1 billion+ of sales dollars in 2017. The average price of all properties selling on Nantucket is now $2,018,000; in 2017 it was $1,953,000. The lowest it has been in the past 10 years was $1,532,000 in 2011 as we were beginning to recover from the recession.

The average price of a home on Nantucket is $2,297,000, compared to $2,273,000 at the end of last year. The median price of a home is $1,595,000, compared to $1,600,000 at the end of last year, virtually the same. We expect these numbers to rise before the end of this year. The real story right now is the price of vacant land which has skyrocketed to $1,906,000 on average compared to $811,000 at the end of 2017, an increase of 57%. The median price of a lot is now $1,000,000, compared to $560,000 last year.

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The rise in the price of land is due to a number of factors: the primary driver is the lack of supply and increasing demand, especially for those properties with strong water views or water access. With the reduced number of properties on the market, buyers are willing to buy and build to get exactly what they want. There are only 61 parcels of land currently listed for sale on Nantucket.

Properties are now selling for an average of 90% of list price at the time of sale and for 130% of assessed value set by the Town for purposes of taxation on a three year renewal cycle. We are at the end of the current cycle come January. On a happy note, property taxes in Nantucket remain among the lowest in the state at $3.53/$1,000 of assessed value. In addition, there is a residential exemption for property owners who reside in their home year round.

The areas with the largest number of sales to date in 2018 have been the Mid-Island area (61), followed by Town (60) and then Surfside (28) and Sconset (27). Areas with 3 or fewer transfers include: Squam, Dionis, Middle Moors, Nashaquisset, Pocomo, Quaise, Shawkemo and Tuckernuck Island. Those properties that are in the highest demand today are either new or completely renovated, often with a very high level of amenities such as private pools, custom kitchens and baths and finished basements as well as those that are perceived as having extra value (water views or access, privacy and space or expansion potential). In spite of the valiant efforts of various groups, antique homes with historical features intact are not as popular as they once were. We can only hope that this trend will cycle back in time.

The least expensive single family house sale (non-restricted for affordability) this year was a modest house of 912 s.f. on a .23 acre lot in the Mid Island area that sold for $500,000. The least expensive single family house currently listed is a 2 bedroom, 2 bath home in need of updating on a 5,000 s.f. lot located in the Mid Island area and priced at $775,000. The most expensive residential sale was located on the water on Hulbert Avenue with a main house and cottage on a large lot that sold for $22,900,000. The most costly residential property currently listed is a compound located on Nantucket Sound, listed at $38,000,000.

We are confident that 2018 will go down in history as one of the strongest years ever for real estate on Nantucket.

2018 Nantucket Sales by Price Range (in 000's as of Q3) 140 122 120

100 82 80

60 49 40 27

25

20 10

14 7

6

0 Under $500K

$500-$1,000

$1,000-$2,000

$2,000-$3,000

$3,000-$4,000

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$4,000-$5,000

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

Over $10,000

Nantucket: Lot Prices As of Q3 2018

Avg Lot ($OOO)

Median Lot ($OOO)

2500

2378

2000

1915

1906 1769

1483

1500

1375 1258 1190 1100

1067 1000

970

1000

472 265

800

750

700

1000

965

845 700

500

1027

970

787

519

1130

1095

688

811

730 668

660

475

320

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Some Good Laughs Nantucket Island was treated to the comedy of Tig Notaro in mid-September with generous assistance from Meg Ruley, one of our agents at Atlantic East Nantucket Real Estate. The show benefited MUSACK, a non-profit (charity) that was founded by Donick Cary, a close high school friend of Meg's. Donick's charity was founded to give teens a voice through music. It started with the donation of 10 guitars to the Nantucket High School Music Department after finding out about the need. Scholarships and musical instruments are provided to students around the country as well as to young people on Indian reservations and in Haiti and Cuba.

We are proud to say that Atlantic East Nantucket Real Estate helped sponsor this sold out event.

INTERNET ROBBERY Wiring funds? Take Note: there is a new form of theft; wired funds are being captured by criminals monitoring professional's email accounts for money wiring instructions. They are able to use the compromised email account to send an authentic looking message that appears real, sometimes getting the unsuspecting victim to wire funds into a different account. Sometimes the criminals follow up with a reassuring phone call.

The funds are wired into a fraudulent offshore account and are out of reach from U.S. law enforcement. Banks are seldom liable for a wire authorized by the customer. The money is gone forever. We now have special protocols in place for handling wire transfers.

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Update on Rental Tax Bill H. 4841 The rental tax bill, also known as the Airbnb bill, was passed by both the House and the Senate in Massachusetts at the end of July. The bill was then sent to Governor Baker for signature. He remanded it back to the state legislature with amendments. The legislature has been in informal session since July 31, 2018. In order for the bill to become law it would need to be approved and signed by the governor by December 31, 2018.

If it is not enacted then it will certainly be re-filed in some form in the next formal session, beginning January 3, 2019. At this time, the bill is NOT LAW. The bill, as currently written, imposes a 5.7% room occupancy tax on short term rentals (with a few exemptions) and, on the Cape and Islands, up to an additional 2.75% for water protection (total of 8.4%+/-). There is the potential for an additional tax in the form of a local option tax (up to 6%) to be decided by each municipality. In the case of Nantucket, the earliest the local option tax would apply is after the next annual Town Meeting, scheduled for April of 2019. The bill also requires owners of rental properties to register their properties in a statewide public registry. At this time no such structure for registration has been set up. The current bill, if enacted, would go into effect on January 1, 2019. There is a retroactive clause exempting leases executed prior to November 1, 2018.

Cranberries!

Nantucket: Special Fall Town Meeting Nantucket held a Special Town Meeting on October 10 primarily to address the soon-to-end moratorium on the sale of recreational marijuana. Since the state has legalized marijuana, each community must come up with a plan for medical and recreational facilities under state regulations by the end of this year. Nantucket voted to limit the number of recreational stores to 2 on the island. This number represents 20 percent of the number of licenses for year-round liquor stores. The article was amended by a citizen to require that the stores must be a minimum of 2,000 feet apart, which passed. Dispensaries cannot be located within 500 feet of a school or day care center. An amendment was proposed, that subsequently did not pass, to dictate they be 500 feet from a “public park, playground, or recreational facility or personal services establishment providing activities or services primarily for children”. One of the applicants for a recreational facility, called Green Lady, is well along in the permitting process.

Unfortunately, there was a lack of quorum (the number to convene meeting was 3% or 271 voters. The quorum for financial matters was 452 voters) at the meeting which meant that the articles that dealt with spending money were not able to be voted on. Most of these had to do with traffic and road improvements on Old South Road and they will be brought back to a future town meeting. These spending articles are still on the November 6th ballot for voters to decide.

Voters decided they wanted to have a direct say on erosion control measures on Town-owned beaches. In the future, such proposals will be decided at Town Meeting , instead of only by our Select Board. Supporters of the article felt that citizens should have a more direct voice; opponents felt that Town Meeting is not the most sensible venue (it tends to be emotional) to decide such complex issues and that adding this step could prevent the Select Board from being able to deal with erosion emergencies in a timely manner.

Voters also supported regulating single use plastics, beginning in June of 2020, such as plastic bottles, nip bottles, plates, drinking cups and lids at the commercial level, meaning this would apply to stores and restaurants and not to individual users. Islanders have been working hard, with leadership from the Select Board, to reduce the use of plastic straws on island. The campaign is called “Stop the Straw”. Single use plastics are a hazard to our fragile marine environment.

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Development Watch There is a general feeling on the island right now that development is out of control and that citizens need to become more actively involved in slowing down and regulating the pace of growth.

More from Special Town Meeting: There was a citizen’s article that would have changed the zoning at the controversial Surfside Crossing 40b development from 2 acres to 1 acre zoning which failed to garner enough votes to pass. It would not have stopped the pending 40b application but may have given the developers an incentive to do a less dense build out. The initial application was for 164 units; it has been scaled back to 100, a mixture of single family homes and condominiums targeted towards market rate and affordable housing in a variety of price ranges.

A second citizen’s article, required that future installation of private sewer lines beneath Town streets will require Town Meeting approval. Although the article passed at Town Meeting, it must still pass muster with the state attorney general. Another issue is that the majority of the streets on Nantucket that are located outside of Town are, in fact, County roads, not Town roads so that the article, if legal, would not affect the majority of roads on island. It is clear that islanders want to be more involved going forward, which can only be a good thing.

Buying in Brant Point or Another Flood Prone Area?

If you are the Buyer in a sale that requires flood insurance, make sure to find out if there is an existing policy in place. Policies can be transferred at the time of the sale which may pass along any “grandfathered” benefits. These “grandfathered” items in the policy will be lost if the policy is cancelled. Make sure to contact the insurance company to confirm. If you require financing, flood insurance will be required by the lender. The cost varies depending upon a number of things including what flood zone the property is located in. Here is a link to more information on flood insurance in Massachusetts.

Nantucket: Home Prices As of Q3 2018

2500

2378

Avg Home ($OOO)

2373

2164

2124

2103 1945

2000

1666

1726 1600

1528

1495

1500

2133

1970

1672 1550

2297

2276

2271

Median Home ($OOO)

1525

1425

1595

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

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2011

2012

2013

2014

2015

2016

2017

2018

Nantucket Nantucket Real Real Estate Estate Average Selling Price All Average Selling Price All Properties Properties (000's) (000's) As Asof ofQ3 Q22018 2018

2500 2500

2000 2000

1500 1500

1000 1000

500 500

00 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 1997 Average Selling Price (000's) 475 475 533 533 666 666 970 970 940 940 862 862 1001 1001 1373 1373 1801 1801 1931 1931 2135 2135 2316 2316 1834 1834 1907 1907 1532 1532 1645 1645 1597 1597 1787 1787 1717 1717 1821 1821 1953 1953 2018 2018 Average Selling Price (000's)

This and That Mary Malavase was awarded The Lucile R. Ralston Merit Award by the Nantucket Garden Club at their annual meeting and awards ceremony. This coveted award is given to a member who has made the greatest contribution to promote the growth and progress of the Nantucket Garden Club. Congratulations Mary!

With so much talk about 40b developments and how Nantucket can reach the 10% designated affordable housing stock (the SHI list - means Subsidized Housing Inventory) under the state guidelines (which freezes any new 40b applications), we find it interesting to take a look at where the existing affordable housing is located on island.

It is unfortunate that Nantucket is not able to include the 78 Nantucket Housing Needs Covenant properties towards the SHI list. Under the state guidelines we are at only 2.6% affordable housing. Check out this map prepared by the GIS office of the Town.

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 4, Autumn 2018