It's a buyer's market

Real estate sales dropped a remarkable 34 percent in the first six months of this year compared to the same period last year, totaling 128 sales against 193 by the end of June 2007. Still, the average home price has jumped 16 percent above the six month mark last year and the average price of all property is up four percent.

Ken Beaugrand at Nantucket Real Estate said earlier this year he began researching the island's market data over the past dozen years and found that from 2000 to 2002 the average home price declined, then rebounded, then dipped once more between 2004 to the close of 2007. During the first quarter of this year prices started to tick up again.

"That suggests to me that the market, with respect to the prices of real estate, has bottomed here on Nantucket," he said. "Now we are starting to move up with the average sale price, though not activity. This is the time to buy. You have a tremendous amount of choice and the likelihood is that you will be buying at the bottom of this market cycle.

"There is no question that this is going to be a challenging year, but for those people who have been looking for the best time to buy, they should look at the data that's out there or the best time to buy may be passing them by," said Beaugrand.

In her most recent study of the local market, Penny Dey, co-owner of Atlantic East Real Estate, said there are 599 properties for sale compared to 627 listings of all property in June 2007. In March of this year there were 472 listings. Waterfront properties, others with good water views and attractive, wellmaintained properties in town remain strong sellers at top prices, and because there are fewer of these than other types of properties that sales activity is generating the hike in the average home price.

"When analyzing the Nantucket market one has to look at sectors," said Dey. "Some sectors have remained healthy. The average and median prices change monthly depending on what has closed. What is selling this year is still selling for more than it did last year."

The high end movement has brought the average price of an island home to $2,615,000 and the median to $1,850,000. The average price per lot of vacant land is now $839,000 with the median at $430,000. These numbers are based on the first six months of 2008, and are actually lower than what was reported in March when the average home went for $2.8 million and the median for just over $2 million.

Beaugrand said the spring numbers may reflect sales that closed in January for capital gains tax purposes. Sales activity for the middle of the market - $2 million to $4 million - was slow last year compared to 2006 and is expected to lag this year, as well, in part because that segment is fairly saturated.

"This is the longest period I can recollect when there have been this number of properties for sale," said Dey. "I do think there is a general uncertainty right now about a lot of things that all factor together to create unease. Everyone wants to know when the market has hit bottom. The only way to know that for sure is after it has happened.

"There are plenty of indicators that the summer of 2008 is a turning point for the Nantucket market. This will be a year of fewer transactions and strong dollars, and hopefully, I'm wrong. We will have a much better indication about this year at the end of September because the third quarter tends to be our strongest quarter."

Besides real estate agencies feeling the pinch of diminished sales, it is having an effect on the Land Bank which derives most of its revenue to purchase and protect properties from a two-percent property transaction tax. Land Bank Director Eric Savetsky said that after its next two planned purchases its funds will be nearing depletion. At the 2007 Town Meeting the town agreed to put its full faith and credit behind Land Bank bonds so that it could borrow up to $35 million. The Land Bank has borrowed $15 million since then, but agency officials are not certain if they want to risk borrowing the remaining $20 million.

"The answer to that could greatly affect our future purchasing. The slow down seems significant," said Savetsky. "It's a reality check. We are having to be a little more cautious. The past eight years has been fantastic - it's been a freight train of fantastic revenues and we were able to do a lot of stuff. That has definitely changed."

Brokers continue to remind sellers that they must price their properties competitively for the current market and not based on its past or potential future. They are optimistic that even with a slower sales volume for 2008 the year will end on a healthy note in relation to the state of the overall economy and the nature of the island's unique real estate profile.

"Our role as brokers is to educate the consumer," said Beaugrand. "Once the consumer is educated they can make a conscious decision, but they need to understand that Nantucket is different from the mainland. It is a second home economy and the same pressures to sell that exist on the mainland simply don't exist here. It's as simple as that." I