REAL ESTATE REPORT
with Robert Ranney

"-- Statistics: The only science that enables different experts using the same figures to draw different conclusions."

- Evan Esar (1899-1995)

Real estate statistics on Nantucket are a funny thing - everyone seems to be interested in them, but no one seems to be able to agree on them or what they mean. One $15 million sale (or three, as have happened so far this year) can make the averages seem more impressive than they really are.

With only two months left to go, 2006 is looking a little more like 2001 than a continuation of 2004 and 2005. Has the Nantucket real estate market entered a leveling off period, a "breather" in the market, a "slowdown" in momentum, dare we say - a "downturn"? Maybe the statistics for the first ten months of 2006 can provide some insight.

In 2006 through October, there have been fewer overall property transfers then there were at this point in 2005 (down 31 percent). The average home sale, based on all transactions through October 2006, stands at $2,372,000 (up 10 percent from all of 2005 and up 11 percent from this point in 2005), and the median home sale is still inching higher as well at $1,587,500 (up 6 percent from all of 2005). 245 homes have sold on Nantucket through October 2006 for a total of $581 million, which is fewer than the 346 homes which sold by this point in 2005, and less than the total of $737 million in home sales at this point in 2005. At this pace, with just under $800 million in total real estate sales so far in 2006, November and December will have to each pull $100 million in sales to eke out Nantucket's third billion-dollar year in a row in real estate transactions.

Moody's Economy.com has projected a fall in housing prices in well over 100 U.S. metropolitan areas. The company predicts that the median sales price for an existing home will drop by 3.6 percent in 2007. If this prediction comes true it would be the

first nationwide decline in home prices for an entire year since the 1930s. "Prices are going to go down and stay down for a while," said Mark Zandi, Economy.com's chief economist. "It will take at least a couple of years to work off the excesses of the last decade." Most of the 133 areas that Economy.com has forecasted for declining housing prices are concentrated in California, Florida and the Northeast Corridor from southern Maine to northern Virginia.

Vacant land statistics, however, have to be checked, double-checked and then looked at with absolute astonishment!

For 2006, through October, there were 51 vacant lot sales (there were 117 for all of 2005) with an average vacant land sale of $2,484,000, up 109 percent above the average vacant land sale in 2005 and a median vacant land sale of $1,087,500, up 55 percent above the median vacant land sale in 2005. For the first time in Nantucket real estate, or perhaps ever (though real estate statistics from the whaling boom are unreliable or nonexistent), the average vacant land sale is more than the average home sale.

Of all the real estate changing hands on Nantucket so far in 2006, 68 percent of the sales have been over $1,000,000. With prices still firm at the upper end of the market, 50 percent of all sales have been over $2,000,000, while still only about 5 percent of the market changes hands for under $1,000,000.

Nationally, 'housing starts' or "new home building" has tapered way off from its recent highs. On Nantucket, there have only been 131 single-family building permits issued through October 2006, making an annualized rate of about 157 permits for 2006, far fewer (a 26 percent drop) than the 212 issued in 2005. With only 51 vacant lots sold so far in 2006, I'm not even sure where those 131 houses are going!

The other funny thing about statistics is they use information or data that has already happened to show trends that might continue, or discontinue, into the future. Although not actual statistics, current listings of properties for sale might shed a little light on the potential market going forward. The number of properties for sale on Nantucket has dropped since September, and so have listing prices.

On average, listing prices have come down 10 to 20 percent since the end of summer. Ordinarily, fewer properties for sale would mean less choice for buyers and thus higher prices for sellers. However, like so many other things about Nantucket, our real estate market is unique. Most sellers have the luxury of not needing to sell right away, especially with the high appreciation rates of the past few years. Conventional wisdom indicates that as Nantucket gets smaller and smaller (erosion, rising sea levels, the Land Bank and other conservation agencies snapping up vacant land, etc) and demand stays firm, prices won't tumble - at the very least they will remain relatively steady. So, what's the rush? Many agents advise clients to "ride out" a down market and re-list in the spring - just in time to attract next summer's potential buyers. The recent appreciation rates seen

in 2004 and 2005 of 15 to 35 percent annually were clearly unsustainable. If prices had continued at that pace, it wouldn't be long before we'd all be priced out of the market. Nantucket would close down after Christmas Stroll and reopen in time for Daffodil Weekend and no one would live here year-round anymore because we couldn't afford a home (or we simply would have sold out, pocketed our gains, and moved away). Perhaps a more modest rate of 0 to 5 percent is not so bad!

With the help of statistics, hindsight is 20/20, but foresight is the stuff

of wizards, psychics and witches! I

- A student of the current real estate market, and a licensed real estate salesperson since 1987, Rob Ranney has been performing real estate appraisals with Denby Real Estate, Inc. since 1996, as a field appraiser, construction inspector for numerous financial institutions, market statistician, realtor, and most recently as Senior Vice President of Research, Data Collection and Dissemination, with a literary flair and a newly re-issued poetic license.