REAL ESTATE REPORT
2007 SHAPING UP LIKE 2006
with Robert Ranney
Thanksgiving has come and gone, the Christmas holiday season is gearing up and Christmas Stroll (which seems to come earlier and earlier every year) has arrived. As we approach the end of the year, with national credit worries and financial doom and gloom making nearly constant headlines, how is our local real estate market doing?

For the first ten months of 2007 (November's totals aren't in yet), there have been 390 total transactions worth a total of approximately $726 million. By comparison, through the first ten months of 2006 there were 398 total transactions worth approximately $798 million. The number of transactions (all sales) is down about 0.1 percent from this point in 2006 and the total dollar volume of those transactions is down about nine percent from 2006. It seems that, overall, 2007 has remained relatively close to 2006, although November and December still need to be accounted for. So does this mean Nantucket escaped the so-called 'sub-prime mess' and resulting credit crunch that has swept through financial markets and financial institutions across the country?

"There is no 'national' housing market," says Jonathan Miller, director of research at Radar Logic, a New Yorkbased real estate research firm. Different markets have different risk factors and fundamentals that drive prices, he says. "Consumers attempt to overlay national statistics on their own property or local housing market, resulting in significant confusion and frustration."

As of the end of October 2007, there have been 258 homes sold this year with a total dollar volume of about $571 million. As of the end of October 2006, there had been 245 homes sold for a total of about $581 million.

Through October 2007, there have been a total of 43 vacant lot sales with an average sale price of $2.4 million (there were 59 vacant lot sales in all of 2006, with an average sale price of $2.3 million). The number of lot sales is about even with 2006, with the average lot sale price now up about seven percent from 2006, and the median sale price up about 32 percent.

As of the end of October 2007, there have still been only five commercial sales so far in 2007. There were nine altogether in 2006.

So far in 2007 there have been 117 single-family building permits issued. If this pace continues, 2007 will be the slowest new single-family building permit year in a decade.

Of all the real estate changing hands on Nantucket so far in 2007, 72 percent of all sales (houses, land, condos, timeshares, etc.) were over $1 million. With prices still holding firm at the upper end of the market, 55 percent of all sales were over $2 million, while about six-to-seven percent of all sales sold for under a million. These percentages are about what they were in 2006, providing evidence that generally speaking, sale prices have not really declined yet. Although, the average home sale price in the under $1 million category has dropped nine percent versus 2006 (in 2006 the average home under $1 million sold for $828,000, while in 2007 it is selling for $757,000).

According to Nantucket's versions of multiple property listing services, there are just over 600 listings of properties for sale (houses, condos, vacant lots, etc). Prices range from $299,000 for a vacant lot on Williams Street, to $19.75 million for a waterfront property in Squam. The number of listings has been slowly increasing over the past few months, with the average sale now taking place at about 89 percent of its asking price and average time on the market slowing creeping up too.

As we all know, Nantucket is a costly market - the median home price through October was $1.6 million which means potential buyers are the hardest hit by the tightening of credit. A portion of buyers, especially for so-called "affordable" homes with prices under the median home price, rely on "jumbo loans" - those above $417,000 - which cannot be insured by government lenders Fannie Mae or Freddie Mac. Thus, even potential homeowners with good credit are having a hard time getting a loan. In 2004, 2005 and even 2006, when loans were much easier to get, low, adjustable, three to five year interest rates seduced buyers into taking on bigger loans, and thus higher priced properties, than they could actually afford. The hope was to be able to cash-out again before the rates reset higher, counting on market appreciation to build equity. Now, with the initially low adjustable rates resetting at higher rates (on a monthly basis in some cases) and with the would-be gain in property (equity) value from appreciation almost non-existent, coupled with the increased difficulty in getting a new loan, refinancing might not be an option.

Generally, on Nantucket, real estate statistics are reported in year-over-year terms, due to the highly seasonal nature of the housing market, as prices and volume almost always peak in the second half of the year. What's more, the average home sale price is almost always skewed on Nantucket by a handful of sales over ten or fifteen million dollars. At the current pace, 2007 will likely end up very similar to 2006. With the national real estate market still very uncertain, and experts disagreeing over the amount of time needed to shake off excess inventory, sub-prime woes, increasing foreclosures, and a simple recovery to a more normalized housing market, 2008

could be even slower statistically than 2007. I

- 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 leading researcher and data collector for "denby.com."