REAL ESTATE REPORT THE with Robert Ranney
Eventually spring will arrive on Nantucket. And along with hardy daffodils, perhaps it will bring some renewed enthusiasm in the real estate market. The first quarter of 2007 is behind us, and although not a 'recession' per se, it saw the fewest recorded transactions for a first quarter in over a decade.

In March, there were 37 total real estate transactions, the fewest number for a March since March of 2003. The first quarter ended with a total of 86 sales representing $163 million in sales. The average home sale was $2.260 million (down two percent from the first quarter of 2006), and the median home sale was $1.76 million (up 10 percent from the first quarter of 2006).

The total dollar volume of all sales for the first quarter of 2007 was down about 29 percent compared to the first quarter of 2006. We have not seen a drop like that since 2002 when the first quarter of that year was down about 45 percent from the first quarter of 2001. Nonetheless 2002 ended with very little overall change in the market compared to 2001 - perhaps this an indication that 2007 will end relatively unchanged overall from 2006.

For the first quarter of 2007, there were a total of 10 vacant lot sales with an average sale price of $2.85 million. There were a total of 16 vacant lot sales in the first quarter of 2006 with an average sale price of $1.9 million. That's a 50 percent appreciation rate - first quarter versus first quarter. Clearly, vacant land continues on pace to soon reach the stratosphere, if it hasn't already for most people.

New single-family building permits have been issued at a record pace so far in 2007, compared to recent years. Fifty-six new single-family building permits have been issued through the end of March, putting us on pace to exceed 220 for the year. Only 156 were issued in 2006.

According to the Nantucket Listing Service, Inc., there are about 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 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 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 milllion. These percentages of the market have been relatively unchanged in the past few months.

What these numbers tell me is that despite fewer transactions - and obviously less market activity - there have been no measurable drops in prices. Is it just a matter of time before we see some actual price drops? Or are real estate price drops on Nantucket (or even price drops in general) a thing of the past in an era of constantly dwindling supply and continued demand? Whatever the economic pressures from the outside world are?

It is an interesting question.

Approximately 85 percent of the people who own property on Nantucket do not live here except for small bits and pieces of the year. It stands to reason that if they live somewhere else, somehow, in some way, they will be affected by a nationally slowing economy. If someone who owns property on Nantucket, faces a difficult financial situation somewhere else, such as a foreclosure, it seems to me they would be more likely to sell their Nantucket vacation home to alleviate the financial pressure since they do not live and work here.

With the well publicized woes of the "sub-prime" lending industry spreading looming foreclosure panic in many of the real estate sectors across the country, will 30 miles of ocean between us and everywhere else be enough to spare Nantucket from some of this? We have all seen foreclosure notices in the local papers; however, so far in 2007 there have not been any actual foreclosure sales - a hopeful sign.

Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm urges perspective. "No matter which real estate market sector you're discussing there's a problem of perspective," he says. "Most of the people in the business now haven't been in it long enough to see a full market cycle." Maybe there is the false impression that things cannot get too much worse, since many of the people in the business have not seen a market much worse than this and to them, this is what a bottom looks like.

According to the National Association of Realtors, during the last big housing "boom" leading up to 1999 and 2000, there were about half as many real estate brokers in the business as there are now. With more agents now than ever, there is more competition for those all too important commissions. Although, with more brokers competing against each other for sales, and fewer sales taking place, perhaps it is a sellers' market and a buyers market.

According to Lawrence White, an economics professor at the New York University Stern School of Business, "Commissions are becoming more negotiable than used to be the case." He attributes this to brokers lowering commissions or offering "a-la-carte" services to attract customers. This is nothing new. After all, undercutting the competition to attract customers is a basic tenet of capitalism. Although, with more brokers chasing fewer sales, who knows what will happen.

One quarter down, three to go. Panic is unbecoming.

I can't wait for halftime! 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 www.denby.com.