2018 Summer Newsletter Atlantic East Nantucket Real Estate

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N A N T U C K E T

S U M M E R After a long protracted winter and not much spring, summer on Nantucket is now in full swing with beautiful, clear sunny days and the island abuzz with activities. Each season brings something new to the island and we continue to be grateful that we live here for all of them. Some of our favorite things about summer are getting out on the water, discovering new places to bike or explore, picking strawberries at one of the farms, enjoying local corn and tomatoes and, of course, ice cream! We are also happy to welcome back our summer friends and visitors.

After a very, very fast start to the year (+37% over 2017) the real estate market tempered slightly between May 1 and June 15th with a decline in the number of properties going under contract compared to last year. There are likely many reasons for this, among them overpricing by optimistic or overreaching sellers, concern about a trade war and some financial volatility including something called the yield curve which is flattening out, and is a reliable predictor of past recessions.

In spite of this, the numbers remain ahead of last year although the margins are shrinking. It remains to be seen how the year plays out but we are still on track for another $1 billion year.

One of the most stark things right now is that 25% of the properties currently listed for sale are priced $4,500,000 or higher (98 listings out of 401 total). There has been a lot of recent national press about the highest priced listings on Nantucket (over $20 million). There have been 10 sales this year between $5 - $7 million, 8 sales between $7 and $10 million and 4 sales over $10 million. This is robust activity in these price sectors this early in the year.

The average price of all properties sold on Nantucket to date is $2,026,000, an increase of 4% from one year ago. The total of number of sales to date through Q2 is 243, up 13% from 2017. The dollars represented by these sales are $492 million, up a whopping 26% compared to one year ago. Simply put, the higher end is moving.

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 average price of a house on Nantucket is $2,344,000, actually down 1% from one year ago. The median price of a home is $1,503,000, down 6%.

The average price of a vacant lot on Nantucket $1,573,000, up 94% from last year (which is an anomaly due to some large expensive land sales) and higher than the median price of a home. The median land price is $885,000, up 34% from last year.

Some Things to Watch: The average time on the market is down slightly to 9 months. 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 at 90%, a slight reduction from where it was running the first quarter of 2018.

Snapshot of Current Inventory: There are currently only 8 residential listings under $500,000, many of which are restricted for affordability and year round residency. There are currently 42 listings (11% of the market) priced between $500,000 and $1,000,000. The average list price of all current listings is $4,160,401. The median list price is now $2,490,000, a differential of nearly $1.7 million. There are 46 properties under contract right now (down from one year ago by 25%) with list prices ranging from $400,000 to $13,850,000. There are only 2 pending sales that were listed under $500,000; there are 5 pending sales over $5 million and 2 pending sales over $10 million. Over 75% of the current pending sales are properties that have been listed for less than 4 months. Another way to say this is that new listings, when priced correctly for the current market, are starting to go under contract quickly. The other 25% of current pending sales are properties that have been listed for a longer time. Most of these properties have had recent price reductions, aligning more closely to the current market, which resulted in offers. Of the pending sales – the property that had been listed the longest was on the market for 951 days or 2.65 years.

Fun fact: there are only 8 single family residential properties listed for sale right now in Brant Point, Cliff and Town areas for less than $1,500,000. Although inventory remains tight, new listings are coming on the market, in all areas, at a fairly high pace. Check back with us in the fall to see how the year is shaping up!

Nantucket Total Sales Dollars in (000's) As of Q2 2018 $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

2018

$450,458

$613,765

$1,065,18

$1,186,88

$917,238

$852,045

$574,274

$434,592

$694,253

$531,597

$809,846

$748,866

$1,005,24

$882,666

$972,172

$1,066,07

$492,240

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Nantucket: Home Prices As of Q2 2018

2500

2378

Avg Home ($OOO)

2373 2276

2271

Median Home ($OOO)

2164

2124

2103 1945

2000

1666

1726 1600

1528

1495

1500

2133

1970

1672 1550

2344

1525

1425

1525

1503

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

Important: Well Water Testing Requirements Regulations were adopted by the Nantucket Board of Health in April 2017 requiring that owners of property in island areas defined as nitrogen sensitive that have a private well must have the well tested. The intent of the regulations is to protect Nantucket residents from ingesting contaminants found in the well water and to protect the island’s sole source aquifer. The areas are: Nantucket Harbor Watershed, Madaket Harbor Watershed, Hummock Pond Watershed, Sesachacha Pond and all Wellhead Protection Areas. Depending upon the area, testing is required on alternate years. To find out if your property is impacted or for more information please contact the Nantucket Health Department at 508.228.7200 or check out the regulations at: https://nantucket-ma.gov/DocumentCenter/View/14467/78---Required-Water-Testing

WHAT’S THE COUNT? For as long as we can remember there has been discussion about how many people actually live on Nantucket year round and at the height of the summer season. For decades we would say “about 10,000 people live here year round and in the summer it swells to over 60,000”. The latest census information would contradict that. In 2017 Nantucket was the fastest growing county in the Commonwealth of Massachusetts. In 2010 the year round population on Nantucket, according to the US Census Bureau, was 10,172; in 2017 it was 11,229. As year round residents, we can attest that it is likely much higher than the most recent estimates.

Getting accurate information on demographics is important on many levels. The numbers impact the amount of state aid received by Nantucket. Planning efforts would be greatly enhanced if we had real time and accurate information on growth trends to use as a planning tool. The Nantucket Civic League and others have sponsored an independent data-driven look at the island's dynamic population and will be sharing the results with the community on July 17th. We will report back on their findings.

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What the Heck is a 40B? In Massachusetts a 40B is a housing program, established in 1969, which allows developers to override local zoning by-laws in order to increase the density and stock of affordable housing in towns where less than 10% of the housing stock is defined as affordable under state guidelines. The goal of Chapter 40B is to allow working families and seniors to remain in their communities when they might otherwise be priced out of the conventional housing market. The statute was originally designed to permit the development of multifamily and affordable housing in suburban and rural parts of the state. There is no state subsidy for a Chapter 40B development. The developer absorbs the cost of the affordable units by spreading the cost across all of the units. Since Chapter 40B went into effect, 56,000 units in over 1,000 developments have been created across Massachusetts. In order to qualify for Chapter 40B, at least 20-25% of the proposed development must be for households earning at, or below, 80% of the area median income (80% of AMI is currently $88,720 for a family of four on Nantucket). The housing units can be for sale or for rent as long as the affordable units are permanently restricted to remain affordable in perpetuity. Despite the dedicated efforts of many people over many years, Nantucket's designated affordable housing stock is only at 2.6%. Unfortunately much of our affordable housing does not count towards the 10% total, such as properties that are under the Housing Needs Covenant Program. Perhaps one unintended consequence of a 40B development is that every time a new one gets approved it makes it incrementally more difficult for Nantucket to achieve the 10% threshold because 75-80% of the units in the development are at market rate. Since it is highly unlikely that Chapter 40B is going away, our only option is to work even harder to get to the 10% affordable housing threshold on Nantucket if we wish to better control the type of development on island in the future.

Nantucket: Is There a Limited Capacity?

In the Nantucket harbor mooring field there is only room for a certain number of moorings because of the physical limitations of the size of the harbor. The field is carefully charted on a grid with different sized moorings for smaller or larger boats, taking into account the radius each boat needs. When it is full there is no way to accommodate anyone else on a mooring in the harbor. The harbor is full!

This leads us to ponder the notion of limited capacity on Nantucket. The Steamship Authority has a finite capacity for bringing cars to the island. If a visitor cannot get their car over at the necessary time they make alternate arrangements such as using a rental car, Uber, taxi or The Wave shuttle bus system or getting around on their own.

Traffic: a hot topic this summer has been how bad the traffic was during the week of July 4th. The bottlenecks occurred in the usual places: Old South Road, Washington Street, lower Pleasant Street and Five Corners and downtown. In the past locals would, sometimes gleefully, use our time-proven back routes and shortcuts (sometimes actually longer in mileage but that would take less time, and even if it did not we felt like we were beating the system). Either there are more locals or the secret is out! Again, traffic is largely a function of the time of the day and the weather (forget finding a parking spot on Main Street if it is a rainy morning in July and August). In the afternoons Town is much quieter, even during the height of the season, and it is easier to find a place to park.

Some years ago, during the Master Planning process, our community seriously explored limiting automobiles. Studies were done, articles brought to Annual Town Meeting and lots of discussion ensued but the voters, at that time, lacked the will to do anything about it. Shortly thereafter there was a recession which largely mitigated the problem for some years. Is there a limitation to the number of automobiles Nantucket can handle? We do not know the answer but do know this: if we do not seriously evaluate the situation and at least attempt some creative alternate solutions, we have only ourselves to blame as we are sitting in traffic on Old South Road.

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Book 2019 Rentals Now and Save Big! We expect the Rental Tax bill to come out of the reconciliation committee within the next few weeks and to become law as early as January 2019. The bill allows 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 additional local excise taxes. In the initial iteration we will know only what the state portion requires. The earliest that Nantucket will decide whether or not to impose additional local taxes on short term rentals and how to implement it is at our Annual Town Meeting in April 2019. 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. Rentals booked prior to the bill becoming law are exempt from the tax.

Homeowners who rent their homes directly will be responsible for collecting and remitting these new taxes to the state. Real estate brokers will similarly be responsible for collection and remittance on any rentals done through a real estate office. At the present time hotels, motels and inns are required to charge the tax. They also have to be licensed, have health and safety features such as two means of egress and commercial sprinkler systems and be inspected, usually on an annual basis.

The aim of the room-occupancy tax is to bring in an estimated 20-35 million dollars annually in revenue to the state and to level the playing field for commercial business who feel they have lost market share to online booking services for privately owned properties.

Social Security Increases Security The Social Security Administration has increased security on all online accounts. This will help to prevent anyone from creating a fake account with your social security number. You can now also add a second layer of security using your email or telephone number. You may only create an account using your own personal information and for your own exclusive use, you cannot create or use an account on behalf of another person, even if you have that person's written permission. Never share the use of your account with anyone else under any circumstances. For more information, or to create your own account see the links below.

To create a new account: https://www.ssa.gov/myaccount/ Check out this additional information on protecting your social security number https://www.ssa.gov/pubs/EN-05-10220.pdf https://blog.ssa.gov/protecting-your-social-security/

uring the first half of 2018 the largest number of sales were in Nantucket Town (40) followed by the Mid-Island area with 39 sales. The Mid-Island area is the locale that surrounds Town and does not fall into another defined area. Much of Nantucket’s commercial activity is now in the Mid-Island area. Surfside was next with 30 sales, then Madaket/Fisher’s Landing with 21, Sconset with 14, Miacomet with 13, South of Town with 12 and the Cliff area with 11 sales.

There were 10 sales or fewer in each of the following areas: West of Town (10), Tom Nevers (8), Cisco/Hummock Pond (8), Shimmo (6), Brant Point (6), Shawkemo (5), Polpis (4), Squam (4), Dionis (3), Naushop (2) and Quidnet (2). There has been only one sale each in Monomoy, Nashaquisset, Pocomo and Quaise and no closed sales yet in 2018 in Madequecham, Wauwinet and Tuckernuck.

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2018 Nantucket Sales by Price Range (in 000's as of Q2) 90 81 80 70 57

60 50 40 30

36 27

20 12

10

8

7

10

4

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

USEFUL SHORTS! Congratulations to John F. Trudel, III who was recently elected unanimously to be the Vice-Chair of the Nantucket Planning Board for a one year term.

The Nantucket Cottage Hospital Thrift Shop has made dropping off donated items easy. Each Saturday friendly helpers are at the parking lot of the hospital (located at 57 Prospect Street) between 8:30 - 10:00 AM. They will unload your unwanted stuff for a great cause and with no problem parking!

A membership at Nantucket Community Sailing entitles you to use all of their equipment at the Jetties Beach Sailing Center for free! This is a great deal and includes Rhodes 19 and Marshall 15 sailboats, smaller sailboats, kayaks, paddle boards and wind surfers. Fly over the harbor: they also have two new Waszp hydrofoil boats for advanced sailors that can be booked for lessons. For more information contact NCS at NantucketCommunitySailing.org or at 508.228.6600.

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 3, Summer 2018