REAL ESTATE REPORT

"Statistician: A man who believes figures don't lie, but admits that under analysis some of them won't stand up either."

- Evan Esar (1899 - 1995),

Esar's Comic Dictionary

The cold weather is finally here, Christmas Stroll has come and gone and now with only one month left to go, 2006 will likely end a two-year bull-run of billion dollar real estate markets on Nantucket.

It was still fun to be a part of it though. Real estate statistics on Nantucket continue to impress even the most seasoned observer, even under close scrutiny some figures just do not lie. Although, I must admit, one $15 million sale (or five, as have happened so far this year) can make the averages seem more impressive than they really are. A statistic in itself I suppose.

Through November 2006, there have been fewer overall property transfers than there were at this point in 2005 (down 29 percent). The average home sale, based on all transactions through November 2006, stands at $2,438,000 (up 13 percent from all of 2005).

The median home sale is still inching higher as well at $1,555,000 (up 4 percent from all of 2005). There have been 266 homes sold on Nantucket through November 2006 for a total of $648.5 million, which is fewer than the 376 homes which sold by this point in 2005, and less than the total of $805 million in home sales at this point in 2005.

At this pace, with just under $900 million in total real estate sales so far in 2006, December will have to pull about $100 million in sales to eke out Nantucket's third billion dollar year in a row in real estate transactions, and it's not looking likely.

As for vacant land statistics, the only thing I can say is - our old buddies "supply" and "demand" continue their perpetual dance - swinging each other round and round the proverbial ballroom.

For 2006, through November, there were 57 vacant lot sales (there were 117 for all of 2005) with an average vacant land sale of $2,366,000 (up 99 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.

Of all the real estate changing hands on Nantucket so far in 2006, 68 percent of the sales have been over $1 million. With prices still firm at the upper end of the market, 51 percent of all sales have been over $2 million, while still only about 5 percent of the market changes hands for under $1 million.

Nationally, housing starts, or new home building, has tapered way off from its recent highs. We are seeing this here on Nantucket as well. There have only been 145 single-family building permits issued through November 2006, making 2006 the slowest new dwelling year since 2002. Interestingly, 2002 was the early portion of the most recent 'flat period' for Nantucket real estate.

The number of properties for sale on Nantucket has dropped a bit since October, and so have many listing prices. On average, listing prices have come down about 10 to 20 percent. Does this mean prices are finally falling? Not necessarily.

Ordinarily, fewer properties for sale would mean less choice for buyers and thus higher prices for sellers, right? (supply and demand). Yes and no. Real estate headlines are everywhere on Nantucket - most of them touting amazing statistics of huge values, skyrocketing appreciation rates, giant multimillion dollar sales prices. You can't swing a dead cat on Nantucket without hitting something real estate! Sellers read newspapers too!

Most sellers on Nantucket have the luxury of not needing to sell right away, so perhaps after the run-up in the market over the past couple of years, more sellers knowingly asked more than they thought they could get - but secretly hoped they would get! - for their properties. Now, with relatively little action on some lofty asking prices, some sellers are paring down their wish list a bit. The average sale as a percentage of its listing price bears this out as it is now running at about 89 percent. This is to say that the average sale sells at about 89 percent of its listing price. Curiously, the average time on the market for all properties - from listing to selling - hovers around seven months. That is about the same as it has been for the past two years.

Nationally, by the end of the third quarter, home prices were up only 7.7 percent, the slowest pace in three years; a year ago national home prices were rising at a 13.4 percent rate. "Inventories are at alltime highs, mortgage rates are still relatively low and prices are coming down, so this is certainly a buyers' market," said UBS analyst Margaret Whelan in an interview.

Even though most people I know struggle to own only one home, Nantucket remains a predominantly second-home market. With the so-called "baby-boom" generation rapidly outpacing all other consumers in the second-home market - vacation or second-home markets such as Nantucket continue to be fodder for this everexpanding segment of the American population. Maybe supply and demand are entering a more balanced period going into 2007.

So, what will 2007 bring? Adjustable rate mortgages. There is a national worry among economists and financial advisors that many homebuyers (and even homeowners) took out low adjustable rate mortgages or 'interest only' loans in the past couple of years to help finance or re-finance their homes. Many of these loans are due to 'adjust' in 2007. This worry might prove fruitless however, as interest rates are still historically low. If only Nantucket Bank gave out red tickets for re-financings! Of course, you would need a very large bag to carry them all to Main Street and you might get booed by the crowd for taking so

long in checking all the numbers. I

- Rob Ranney is a student of the current real estate market, and a licensed real estate salesperson since 1987. Rob 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 for denby.com.