THE REAL ESTATE REPORT
with Robert Ranney

"If we had no winter, the spring would not be so pleasant: if we did not sometimes taste of adversity, prosperity would not be so welcome."

- Anne Bradstreet (1612-1672),

'Meditations Divine and Moral', 1655

In real estate, if we had no downturns, or not even just an occasional slow period, the boom times might not feel so good. Bullish economists like to say that with each downturn or slow period, the seeds of the next boom market are being sown. To put it simply, my father once said: "Real estate markets are like pogo-sticks, they all bounce up and down." Or even simpler still: "What goes up, must come down." With the first quarter of 2008 in the books, let's take a look.

For the first three months of 2008, there have been 71 total transactions (houses, land, condos, timeshares, commercial, etc.) worth a total of approximately $151 million. By comparison, in the first quarter of 2007 there were 86 total transactions worth approximately $163 million. The number of transactions (all sales) is down about 17 percent compared to this point in 2007 and the total dollar volume of those transactions is down about eight percent from this point in 2007. Thanks to a handful of sales over $5 million, the average home sale in 2008 (through March) is hovering around $2.8 million, up from about $2.26 million at this point in 2007, while the median home sale is $2.05 million, up from the $1.76 million median home sale for the fist quarter in 2007.

By comparison, for the first quarter of 2008, the median home price in Manhattan is somewhere between $855,000 and $945,276, depending on which report you read, which is up about 13 percent from the first quarter of 2007. "You have had a disproportionate sale of high end properties," says Jonathan Miller, president and CEO of Miller Samuel Real Estate Appraisers. The number of sales, though, declined in the first quarter of 2008 by 34.3 percent from the first quarter of 2007, according to Miller Samuel, the largest drop the firm has reported since it began measuring sales in 1989.

In the first quarter of 2008, there were 43 homes sold on Nantucket with a total dollar volume of about $122 million, a drop of 25 percent in the number of houses sold and a drop of five percent in the dollar volume of home sales versus the first quarter of 2007, when there were 57 homes sold on Nantucket for a total of about $129 million.

So far in 2008, there have been a total of five vacant lot sales with an average sale price of $1.03 million. There were 10 vacant lot sales to this point in 2007, with an average sale price of $2.84 million. One explanation for the precipitous drop in average sale price for vacant land is a lack of speculation. With an uncertain market ahead, it takes a strong stomach to buy a vacant lot, build a house, and hope that after a year or so (typically how long it takes to build a house on Nantucket) your investment is worth, equal to or more than what was spent. It wasn't that long ago (2004, 2005 and 2006) that vacant land was appreciating at more than 50 percent per year, a clearly unsustainable rate.

In 2007, there were only 127 new single-family building permits issued, the slowest year since 1990 and 1991 (112 and 114 respectively). There have been 15 issued so far in 2008, a pace that is about half what it was in 2007.

Perhaps some hopeful news for buyers, though not necessarily for sellers, is that the average sales price for homes under $1 million has dropped by about 12 percent from 2007 levels in this price category, which represents only three percent of the total Nantucket market. Through the end of March, 78 percent of the real estate market on Nantucket is comprised of home sales over $1 million, while no home sales have taken place in 2008, as of the end of March, for under $500,000.

Typically spring on Nantucket brings renewed interest in real estate and more often than not, the second quarter is stronger than the first. Clearly it is too soon to tell how 2008 will compare with previous years. However, in terms of sales volume and total dollar volume, the first quarter of 2008 is the weakest

in five years. The pogo-stick is still bouncing. I

- Rob Ranney is a student of the current real estate market, and a licensed real estate salesperson since 1987. He has been performing real estate appraisals with Denby Real Estate, Inc. since 1996.