REAL ESTATE REPORT
with Robert Ranney
Last month I started this column by saying "cold weather is finally here," a seemingly certain statement at the time. This month, the only safely certain thing I can say is "2007 is here"! As it is with the uncertainty of the weather here on Nantucket, so it is with the certainty of our real estate market.

It seems that not only is Nantucket separated from everywhere else by water, but by our real estate statistics as well.

In 2006:

+ There were only 475 total real estate transactions, the fewest number since 2001 down 28 percent from 2005.

+ The average home sale was $2.378 million, up 10 percent from 2005.

+ The median home sale was $1.55 million, up 4 percent from 2005.

Putting this in perspective, according to the Associated Press the median price of a Manhattan apartment in 2006 was $760,000. According to the Martha's Vineyard Gazette the median home price on Martha's Vineyard in 2006 hovered around $700,000. You read that right - Nantucket's median home price in 2006 was about twice as high as the median price for a Manhattan apartment.

Of the 475 transactions 284 were homes which was fewer than the 398 homes which sold in 2005. The year ended with a total of $917 million in real estate transactions, a dollar amount down about 23 percent from the nearly $1.2 billion in 2005.

As for vacant land statistics, the only certain thing is that demand continues to dominate supply by a rather large margin.

In 2006:

+ There were 59 vacant lot sales (there were 117 in 2005) with an average vacant land sale of $2.311 million, up 94 percent above the average vacant land sale in 2005.

+ The median vacant land sale was $1.067 million, up 52 percent from the median vacant land sale in 2005.

Most economists and market watchers agree that the median is a more useful figure as it represents the exact middle of the range, as opposed to the average, which can easily be skewed by extremely high, or even extremely low, numbers. Even so, the past three years have seen the median vacant lot price on Nantucket go up approximately 50 percent each year.

Coupled with fewer lots being sold in 2006, fewer single-family building permits were issued in 2006 as well. Only 156 single-family building permits were issued in 2006, suggesting slower construction activity, as opposed to the just over 200 permits issued in both 2004 and 2005.

Of all the real estate changing hands on Nantucket in 2006, 68 percent of the sales were over $1 million. With prices still solid at the upper end of the market, 50 percent of all sales were over $2 million, while still only about 5 percent of the market sold for under $1 million.

"Strong corporate profits, good news on Wall Street and a global commodities boom helped grow fortunes and sparked a surge of demand for trophy homes in 2006," said Waco Moore, vice president of The Institute for Luxury Home Marketing. The group trains real-estate sales agents who work in the luxury market. "Final numbers aren't in, but estimates are that the U.S.'s 2006 sales of homes priced at $5 million and above were up about 11 percent over 2005," he said.

Interestingly, Nantucket has its own 'uncertainty factor' for the category of home sales above $5 million. The year saw 24 sales of homes over $5 million, or about $231 million in sales volume.

In other markets, year-over-year reductions generally mean declining prices. Not so on Nantucket, where despite a 20 percent drop in the number of transactions in the over $5 million category, and a 6 percent decline in dollar volume, the average sale price for homes over $5 million in 2006 was actually up about 18 percent from 2005. The median sale price for homes over $5 million was up about 29 percent.

In addition, the number of sales of homes at $15 million and above doubled in 2006 from three in 2005 to six in 2006.

So, who bought homes on Nantucket in 2006? Well, as shown in the accompanying chart, nearly 50 percent of homebuyers on Nantucket in 2006 came from Massachusetts. Nantucket is a predominantly secondhome market. With reliable fast ferries, convenient airline schedules and a recent general lack of inclement weather, Nantucket has been easier to get to than ever before - especially for people living in nearby Massachusetts.

What are the predictions for 2007? Well, with 2006 showing the early signs of a slowing market, 2007 will probably continue this trend with much more modest numbers.

Vacant land will likely continue its meteoric appreciation until it is either all built on or owned by the Land Bank and other conservation agencies.

Erosion will continue to eat away our shores, further dwindling our sandbar (some estimates suggest Nantucket loses about six acres of land per year to erosion) and further exasperating the dynamic duo of supply and demand, as sea levels rise.

Daffodils will be out before too long, if they aren't already, and the only real certainty is that nothing is really certain at all in the Nantucket real

estate market. 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 for "denby.com" - the source for all your Nantucket real estate information, statistics and market analysis needs.