THE REAL ESTATE REPORT
with Robert Ranney

    "Many an optimist has become rich by buying
out a pessimist."
                                                      - Robert G. Allen
The pessimists were out in full force during February. If there was anything about February that was optimistic from a real estate perspective, it was that it is the shortest month of the year. And, thankfully, it's over. Pessimists can point to February 2007 as being the slowest month for real estate transactions on Nantucket in quite some time.

In February 2007, there were only nine real estate transactions, the fewest number for a single month in over 10 years. In fact, the only month in recent memory that even comes pessimistically close was February 1991, which saw 10 total transactions. Of the nine transactions in February 2007, six were homes, two were timeshare units and 1 was a condo.

The average home sale was $1,803,000 (up 4.7 percent from February 2006), and the median home sale was $1,397,500 (up 6.8 percent from February 2006). Despite such a meager showing in February, for the year so far, the average home sale is still up three percent from the average home sale in 2006.

In February 2007, there were no vacant lot sales at all (there was only one in February 2006). There were a total of 59 vacant lot sales in all of 2006, which was about half as many as there were in 2005, which itself saw many fewer vacant lot sales than 2004. As I've said before, our fragile sandbar gets smaller and smaller every year, literally and figuratively. Buildable or even 'usable' vacant lots are becoming more and more scarce. It may be that in the not-too-distant future it will be commonplace to have months go by with no vacant land sales at all. At least for now, however, it is a relatively new concept.

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 $23,500,000 for a four acre waterfront estate on the harbor. Approximately 15 percent of the current listings are listings for vacant lots, further evidence of an ever-dwindling supply of available land.

Of all the real estate changing hands on Nantucket so far in 2007, 84 percent of the sales were over $1,000,000. With prices still holding firm and rising at the upper end of the market, 66 percent of all sales were over $2,000,000, while about 6 percent of the market sold for under $1,000,000.

"Mortgage rates drifted lower last week largely on the basis of new economic information suggesting a slower economy and lower inflation," said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.

"Real GDP growth for the last quarter was revised downward to a 2.2 percent annualized rate, compared to the 3.5 percent initially estimated, while the accompanying price measure showed that core inflation was tamer than first reported, at a revised 1.9 percent annualized rate." Weakness in January new-home sales and the unexpected rise of existing home sales for the month painted a "mixed picture" of the housing market, Nothaft added. "While the overall trend is unclear, the housing market is likely to continue on its rocky path during the first half of 2007," he said.

This is a pessimistic/optimistic mixed message. On the one hand, mortgage rates are still extremely low historically, which is optimistic; however they are drifting lower because of slowing economic data, which is somewhat pessimistic. It remains to be seen whether the optimist might be waiting to take advantage of the lower rates (and steady or even decreasing prices) to buy out the pessimist.

One encouraging note is that the local rental market is ahead of where it was last year at this time. Which suggests that perhaps 2007 could get better as we go forward. In addition, new singlefamily building permits have been issued at a record pace so far in 2007, compared to recent years. An optimistic sign indeed. But with only four vacant lots sold in the past two months and nearly 40 new single-family building permits issued, one wonders where the new homes are going to be built!

Now, with February in the books and March upon us, spring is tentatively emerging. Maybe like so many daffodils cautiously beginning to peek above the ground after an on again off again spring thaw, activity in the local real estate market might also gather some renewed enthusiasm as well. Recent market statistics indicate that some areas of the market are seeing a more stable period of little or no appreciation, and a vague general trend of slight to modest appreciation as compared to recent years. Think spring, be optimistic!

- 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.