2022 was another robust year in the Nantucket real estate market, with a total of 431 transactions as we rounded out the year. Although every transaction has unique intricacies, market conditions also created common trends seen across the board. 

1) Cash Offers & Financing Without a Contingency. This is no surprise due to the substantial increase in interest rates over the past year. As a result, borrowing has become much more expensive. However, the buyers who did choose to finance were able to lock in lower rates than what you could secure on the open market due to their relationships with their financial institutions.

2) 1031 Exchanges. The significant increase in property values over the past couple of years caused sellers to realize substantial capital gains. Instead of incurring the tax ramifications of these gains now, sellers parlayed the proceeds into another property purchase to defer the tax burden of the sale. These 1031 exchanges became quite common in 2022 real estate transactions.

3) On Island Real Estate Trades. 2022 saw a large number of real estate trades vs. new homebuyers entering the Nantucket market. Sellers wanted to stay in the Nantucket market, so they would sell their current property and simultaneously purchase a new one, either upsizing or downsizing. With the increase in property values and decreasing inventory levels, it is becoming tougher and tougher to enter the market, hence the waning number of new homebuyers in 2022. 

4) Bidding Wars & Escalation Clauses. In years past, you rarely saw escalation clauses in offers, but 2022 was different. Due to the high demand and historically low inventory, it was a highly competitive marketplace for buyers. In an instance where multiple parties were interested in and bidding on the same property, escalation clauses were one way to ensure an offer remained competitive.

5) More Diverse Investor Pool. Traditionally, buyers who were purchasing a property to be strictly used as an investment property would maximize the rental income via short-term rentals. However, in 2022 we saw more investment purchases tied to employee housing. With more investors looking to rent properties out with longer-term leases, businesses with a need for employee housing were able to find a place in the rental market.

The Nantucket real estate climate is ever-changing, and only time will tell what new transaction trends we see in 2023.