Jan 31, 2014 - For Windwalker's annual review of the Nantucket real estate market, we unlocked the data and analyzed the
2013 Nantucket Real Estate Review
YOUR KEY TO MARKET INSIGHT
Windwalker Real Estate
What’s Inside
Taxable Value of all Nantucket Real Estate
2013 Nantucket Real Estate Review .................................. 3
$20.8B
$16.6B
Cumulative Sales Trends & Absorption Metrics............. 4
$17.1B
Single-Family Home Metrics ................................................. 5 Vacant Land Metrics................................................................ 6 Commercial Property Metrics.............................................. 7
20.8B
$
Speculative Market Update ............................................ 8–10
16.6B $17.1B
$
2012
2009*
2013
Summary Sales Data by Area...................................... 11–21 Front cover photo: Jeffrey Allen Back cover photo: Kit Noble, NantucketStock.com
Total Number of all Real Estate Transactions Total Number of Single Family Home Sales
399 325 2012
2005*
292
621 471
2013
Median Sale Values – SF Homes & Land
463
2012
2005*
2013
Total Transaction Dollar Volume
$
2000
$
1500
$
1000 $
500 0
1.19B
$
$
*
2009
2010 SF Home
2011
2012 2013 Land
Total Number of SF Building Permits Issued
212 57
108
2005*
2
2012
2012
742MM
$
2013
Average Sale Price as a % of Assessed Value
164
108 110
%%% 2005*
2005*
812MM
$
2012
2013
2013
*Denotes historical market high. Data excludes foreclosures.
Windwalker’s Nantucket Real Estate Review: Your Key to the 2013 Market
A passing glance at the year-end sales figures for the 2013 Nantucket real estate market indicates that 2013 slightly underperformed the 2012 market. Yet, these summary numbers obscure the finer details that characterized the true nature of the market’s performance. For Windwalker’s annual review of the Nantucket real estate market, we unlocked the data and analyzed the trends to provide you with a better look at the big picture:
In Our Eyes, The 2013 Market Came Out On Top Although the 463 real estate sales that took place in 2013 represent a two percent decline from 2012, 4Q12 was artificially buoyed by the threat of tax code changes, in effect moving forward some of the sales that may have otherwise occurred in 1Q13. Yet, despite this handicap, 2013 mounted an impressive, organic comeback through the first nine months of the year, rallying from a 20 percent transaction deficit in 1Q13 to a 26 percent lead by 3Q13. Were it not for the ‘unfair’ advantage held by 4Q12, we believe 2013 would have held the lead by year’s end. Even in the face of this headwind, the 2013 market was transactionally superior to the 2006 and 2007 markets — an impressive, post-crash comeback of its own.
Lower Price-Point Plays Suggest Higher Dollar Volumes May Be Ahead The nine percent dollar volume decline in 2013 was not so much attributed to the slight reduction in overall transaction volume but rather the higher concentration in lower price-point sales as compared to 2012. Sub-$1 million single-family home buyers, as well as residential and commercial land buyers, drove dollar volume in the lower end of the market, igniting a shift into higher price points as inventory disappeared. We anticipate 2014 will enjoy higher dollar volumes if only due to the evaporating inventory in these lower price points.
Performance Metrics Indicate Improved Market Efficiencies All segments of the local market, including single-family home sales, commercial sales, and vacant lot sales, demonstrated improved performance by way of lower months on market, higher sales prices as a percentage of both original and last list prices, and reduced inventory.
Speculative Projects Highlight Increased Confidence Finished speculative home sales represented a higher proportion of 2013 sales than in 2012, signaling that speculative investors’ confidence has been steadily improving. This confidence surged even higher in 2013 as speculative developers nearly doubled their purchases of vacant lots from 2012 activity and continued their buying spree of renovation projects.
Decline in Foreclosures Boosts Valuation Confidence Though not specifically detailed in this report, the overall health of the market improved in 2013 as foreclosures dropped significantly from eight percent in 2012 to just three percent. This decline aided in boosting valuation confidence for the entire market and provided direct support for the sub-$1 million segment as buyers finally saw relief from the valuation free-fall that had plagued this segment of the market in previous years.
A sign that the 2013 market’s strength will carry into 2014, January sales posted the strongest transaction volume witnessed since 2007. Follow this year’s market developments on Windwalker’s website with daily posts, weekly blogs, and monthly market reports. — Jennifer Shalley, Director of Research for Windwalker Real Estate 3
Nantucket: Cumulative Sales Trends & Absorption Metrics
M A R K E T D ATA
Cumulative Real Estate Sales & Transaction Volume Two steps forward, one step back? $1,400,000
800
$1,200,000
700 600 500
$800,000 400 $600,000 300 $400,000
# OF TRANSACTIONS
SALES $ IN 000’S
$1,000,000
200
$200,000
100 0
$0
’95
’96
’97
Sales Volume ($)
’98
’99
’00
’01
’02
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
’13
Number of Transactions (#)
A brief glance at this chart might suggest that for each post-crash advance (2010 & 2012 markets), a slight retreat followed (2011 & 2013). In reality, Windwalker posits that the 2013 market was even stronger than it appears as there were no external factors artificially boosting 4Q13 like we experienced in 4Q12 with the year-end tax code changes. Each quarter was stronger than the one that preceded it, indicating a steady, genuine strengthening of the market. At 463 transactions totaling $742 million, the 2013 market is the second post-crash market to match figures not seen since 2006 & 2007. It also represents double the transaction volume posted at the bottom of the market and is nearly 75 percent higher than the dollar volume at that time. Though the graph may paint a picture of a slight Nantucket real estate setback, the 2013 market was anything but…
Absorption Rates & Sales Discounts
35
Another strong year of demand pushes inventory down and reduces sales discounts
4
95% 30 90%
ABSORPTION RATE
25
85% 80%
20
75% 15
70% 65%
10
60% 5 55% 50%
0
’06
’07
’08
Absorption Projected Months on Market
’09
’10
’11
Sale Price / Last List Price
’12
’13
Sale Price / Original List Price
SALES PRICE AS A % OF ORIGINAL & LAST LIST
If there’s a solid metric that indicates a healthy, efficient market, it’s quickening inventory absorption and narrowing sales discounts. Strong buyer demand (especially in the lower end of the market) in 2013 continued to drive down inventory such that, at a consistent transaction pace, it would take approximately 10 months to clear all property inventory on island, an improvement of two months over 2012 and even with 2006. Based on 2013 sales and year-end inventory, properties located in Cisco, Naushop, Nashaquisset, Mid-Island (residential) and West of Town enjoy among the fastest absorption rates at less than six months. Sales discounts also continued to improve as older inventory cleared and vibrant demand encouraged fewer low bids.
100%
M A R K E T D ATA
In Focus: Single-Family Homes
Single-Family Home Sales Metrics Moderate decline in YOY volume but inventory declines and pricing metrics strengthen
Perhaps surprisingly, the number of single-family home sales dropped 12% from one year earlier and the median price declined 6% as the majority of buyers put their money to work in sub-$1 million properties. A portion of the transaction volume was redirected toward vacant land sales (see pg 6) as both speculative buyers and end-users sought to build rather than renovate, especially in a declininginventory market where options became limited. Despite the moderate drop in sales volume, total inventory actually declined while pricing metrics continued to improve.
SINGLE-FAMILY HOMES 2013
Transaction Volume Dollar Volume ($000s) Median Sale Price ($000s)
2012
% CHANGE
5-YR AVG.
% CHANGE
25%
292
326
–12%
233
$586,669
$629,756
–7%
$486,067
21%
$1,240
$1,311
–6%
$1,431
–13%
13
15
–15%
11
14%
Sale Price / Original List Price
83%
78%
5
79%
4
Sale Price / Most Recent List Price
91%
89%
2
90%
1
Inventory
287
316
–10%
394
–27%
Average Months on Market
Single-Family Home Sales by Price Point
Single-Family Home Sales per Quarter by Price Point
Lower end property sales dominate transaction volume
Rapidly depleting low-end inventory forces a price point shift 0.7
$2-$4.99MM 21% >$9.99MM 3%
$1-$1.99MM 34%
$9.99MM 1%
Conservation 2%
$2-$4.99MM 2%
Spec/Residential 20% Residential 57%
$1-$1.99MM 34% Commercial 15% $5MM+ 0%
$1-$1.99MM 17%
