REAL ESTATE REPORT

"Things are more like they are now than they have ever been."

- Gerald R. Ford

In terms of weather, January came in like a lamb and went out like a very cold lion. In terms of real estate, January was very tame as far as Januarys go. If past Januarys are any indication, do January 2007's real estate statistics hold any clues for the year ahead?

The two biggest years in Nantucket real estate history, 2004 and 2005, started out quite strong. In January 2004 there were 69 sales (house, land, condos, etc.) for $80.6 million and in January 2005 there were 75 sales for $137.4 million. Both of those years saw over $1 billion in total real estate sales. In January 2006 there were only 48 total sales, down somewhat from '04 and '05, with a total sales volume of $101 million. The year 2006 ended as the third biggest in Nantucket real estate history with just over $900 million in total sales.

In January 2007, there were only 40 real estate transactions, the fewest number since 2002, down 17 percent from January 2006. Of the 40 transactions, only 28 were homes, with the average home sale being $2.574 million (up five percent from January 2006), and the median home sale $1.852 million (up 6.5 percent from January 2006). The year began with January down about 30 percent in total sales volume from January 2005, and ended with a total dollar amount down about 23 percent from 2005. This year has begun with a total sales volume down about 17 percent from January 2006, but with higher average and median figures than 2006.

In January 2007, there were four vacant lot sales (there were nine in January 2006) with an average vacant land sale of $1.287 million (up 21 percent above the average vacant land sale in January 2006), and a median vacant land sale of $1.250 million, up 25 percent from the median vacant land sale in January 2006.

With fewer than half as many lots sold in January 2007 as in January 2006, but both the median and average prices still rising, it's clear that a dwindling supply of available vacant lots keeps pushing prices up. This trend in vacant land prices will likely continue until it's all gone.

As for building permits, 26 singlefamily building permits were issued this January as opposed to 18 for January 2006. Perhaps this supports the notion that the national housing market is bottoming-out and experiencing a 'soft-landing' as many economists nationwide are now suggesting. It will be interesting to see if this trend continues with an ever-shrinking supply of available lots to build upon.

Of all the real estate changing hands on Nantucket in January 2007, 84 percent of sales were over $1 million. With prices still holding firm and rising at the upper end of the market, 66 percent of all sales were over $2 million, while about six percent of the market sold for under $1 million.

Interestingly, even though January 2007 saw fewer sales than January 2006, sales over $3 million remained very strong. In January 2007 there were six home sales over $3 million representing 52 percent of the overall market, versus January 2006 when there were eight home sales over $3 million, but representing only 43 percent of the market.

According to the Nantucket Listing Service, Inc., there are just under 400 listings of properties (houses, land, condos, etc) currently on the market, ranging in price from $225,000 for a studio condominium unit to $23.5 million for a four acre waterfront estate on the harbor. Approximately 10 percent of these are either under contract or have active offers on them.

According to the National Association of Realtors, pending home sales in December were at their highest level in three years. The pending home sales index measures signed sales contracts. Warm December weather is thought to have encouraged more would-be buyers to enter the marketplace: "Some of the monthly gain appears to be weather related, but it appears that buyers are becoming more comfortable, sensing that the timing is good and that their local market has bottomed out," said David Lereah, chief economist for the National Association of Realtors. "I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity."

What does January predict for the rest of 2007? Based on January's numbers, 2007 will likely see overall stable prices with perhaps modest appreciation in some areas of the market. Homes selling for over $3 million will continue to grab a greater percentage of the market and homes selling for under $1 million will likely continue to hold on to their meager 5- to-6 percent share of the overall market. Vacant land will continue to outpace the market and set its own records.

Rising property values are great for sellers looking to cash-out, but with rising property values come rising tax assessments. With new tax assessments due out soon, and the continued rise of property values over the past three years, the new islandwide assessments are likely to be somewhat greater than they were last time around. With overrides looming and town budgets growing every year, it might provide some relief to yearrounders to note that the bulk of Nantucket's property tax revenue, (as shown in the nearby chart) is actually paid for by property owners who live somewhere

else. I

- Rob Ranney

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."