The 2018 Nantucket real estate market posted the second highest dollar volume in the island’s history. Jen Shalley Allen offers a summary of the key 2018 highlights and what we may expect for 2019 below. Download your copy of the Year in Review, or email us to receive a hard copy by mail.
THE OVERALL MARKET…
While the period from 2010-2015 could be characterized as “one step forward, two steps back” when it came to total dollar volume each year, the Nantucket real estate market has been on a steady upward trajectory since 2015 with the 2018 market posting the second-best dollar volume in island history. On the other hand, transaction volume declined during this time and was more than 100 transactions lower than the last best market of 2005. In aggregate, sales performance metrics for all property types were nearly identical to 2017 while available property inventory rose modestly. From a valuation perspective, our summary analysis on page 11 sheds light on the positive annualized returns by property type over the last several years.
Single-family home sales metrics were also virtually identical to the 2017 market, with the median home sale and average home sale metrics leveling off from the more significant gains realized between 2016 & 2017. Average property inventory remained steady until a notable rise toward year’s end (see page 6). The high-end and ultra-high-end of the market saw another record year, though fewer of these sales were a result of speculative project sales as compared to 2017.
VACANT LAND SALES…
After seeing years of transaction volume declines, largely due to limited available supply, vacant land transactions rose once again in 2018. Transactions included several notable residential parcels in desirable locations as well as larger tract commercial plots and subdivision transfers. It proved to be a very successful year for vacant land sales with construction contracts, a trend that hasn’t been witnessed in quite some time, if ever in matched volume.
A bit of déjà vu from 2017, the most controversial commercial sale of 2018 (from a data perspective) was the $25.8 million sale of a new storage facility by the airport. Once again, Fisher has excluded this transaction from its figures. The remaining sales were down from 2017 levels but low inventory didn’t seem to be the primary driver of reduced volume, as several downtown properties were left unsold as of year-end.
What we expect to see in 2019….
- After a more typical transactional start to January sales, both for sold properties and new contract activity, we anticipate the 2019 market will be solid but perhaps not quite as robust as 2018. January 2018 was a record setter while early 2019 sales appear to be more in line with previous years’ activity.
- With a rise in year-end inventory, the first quarter will set the tone for how well this new inventory is absorbed and be instrumental in setting listing price activity for the spring and summer market. We advise buyers and sellers to reach out to us to see the full picture of inventory to sales activity by price point when considering a purchase or sale.
- Buyers will remain interested in income-producing properties, but the new short-term rental tax (currently 11.7 percent) may affect purchasing and use decisions pending how rental activity is affected. We are still in the early stages of how this will all unfold.
- Though the Town is actively working to procure more affordable housing unit, the sub-$1 million housing market will continue to be extremely limited as demand will exceed what little inventory exists.
- While we expect to see continued success in the sale of finished speculative properties, we expect there will be reduced supply for buyers than in previous years. This is due both to less activity from developers but also to the fact that some of the inventory isn’t even hitting the market before buyers purchase the land + construction contract as soon as they hear about it.