Single-family home sales on Nantucket were up during the first five months of 2002 compared to a year ago, but median sales prices fell more than 17 percent. This five-bedroom home located just one block from the harbor in Nantucket is being offered for sale at $1.49 million.

Part One of Two Parts

Record-breaking home prices could be fading away like an old summer memory as Nantucket islanders have watched home sales prices dip during the first half of the year.

Median prices for single-family homes sold during the first five months of the year were 17.6 percent lower than during the same period a year ago, according to statistics compiled by The Warren Group, parent company of Banker & Tradesman.

Yet, Nantucket Realtors are remaining optimistic, particularly after an upsurge in buyer activity during the last few weeks. And real estate agents got another positive sign recently – the sale of two of the most expensive properties listed on the Nantucket market. Both properties, priced over $10 million, had lingered on the market for a year and a half.

“By any measure, Nantucket real estate endured a flat nine [to] 12 months, but I think we will look back at [the] end of the first quarter of 2002 as the point at which the market here found a ‘bottom,'” said Roy Flanders, a Nantucket buyer’s agent.

Nantucket homes sales are closely linked to stock market performance, according to local Realtors. The collapse of once-stable companies and the subsequent beating investors have taken clearly have affected the real estate market in Nantucket.

But after a relatively dismal spring, sales surged in June and continued to be strong through the first few weeks of July.

There were fewer closings recorded in the first three or four months of the year, but those closings reflect sales that would have occurred last fall when sales suffered after the Sept. 11 terrorist attacks, according to Flanders.

The year started out slowly, but during the last several weeks buyer activity has picked up considerably in Nantucket, according to Melinda Vallett, a broker with Denby Real Estate.

As of last week, out of 63 homes that were sold or placed under agreement, about 48 had occurred during the months of June or July. There were 340 listings on the market, with 263 active listings – meaning those that had not been sold or taken off the market for other reasons.

The reasons for the recent burst of activity are not crystal clear, but Vallett said that some buyers could be spending their money on real estate as a safer investment.

“What I’m hearing from buyers is that real estate is a more sold investment than the stock market,” said Vallett.

Sales of single-family homes in Nantucket were up 10 percent during the first five months of 2002 compared to the same months last year, according to The Warren Group. Sixty-five single-family homes were sold from January to May of this year, compared to 59 during the same time last year. But the median price for the single-family homes that sold fell from $850,000 to $700,000.

‘Sweet Spot’

The story was a bit different at two other popular summer destinations in the Bay State – Martha’s Vineyard and the Berkshires. Unlike Nantucket’s price drop, the median sales price for a single-family home in Dukes County – comprised almost entirely of towns on Martha’s Vineyard – remained virtually unchanged during the first five months of 2002, increasing 1.2 percent. However, sales of single-family homes were down almost 9 percent during the first part of 2002.

In Berkshire County, where vacation homes are a comparatively small but significant part of the market, sales of single-family homes jumped 30 percent in the first part of the year compared to the same period in 2001. The median price for a single-family posted an 8 percent increase during that time.

Nationwide, 2001 was a banner year in the second-home market, according to the National Association of Realtors, with the median price of vacation homes rising 26.8 percent compared with figures from 1999. The median sales price of vacation homes in 2001 across the country was $162,000. However, NAR’s “Profile of Home Buyers and Sellers” did show that second-home sales volume decreased slightly 4.8 between 1999 and 200, slipping 4.8 percent nationally.

Despite the recent downward change in median price on the island, one thing remains clear: Buyers still are not finding Nantucket homes at bargain-basement prices.

The average price of homes that sold in June through the beginning of July in Nantucket was $1.46 million, said Flanders. Of the 263 active listings on the market, 151 were priced at over $1 million last week, according to Flanders, while 112 were listed at $1 million or less and 85 were priced at more than $2 million. Of the homes priced at $1 million or more that are on the market, the average asking price is $2.9 million, while for the homes priced at over $2 million, the average asking price is $3.9 million, he said.

Since 1997, the median sales price for a single-family home on the island has skyrocketed 101 percent. The biggest year-to-year increase occurred from 1999 to 2000, when median prices jumped more than 34 percent – from $535,000 to $719,000. Last year, prices increased more moderately – about 11 percent – from $719,000 to $795,000, according to The Warren Group’s statistics.

Today, there are plenty of homes in all price ranges currently on the market, but the “sweet spot” is for homes selling for $2 million or lower, said Flanders, principal of Pro Buyer Assoc., which is based on the island. The high end of the market – homes priced from $3 million to $10 million – seems to be struggling of late, he said.

“It’s almost as if the higher-end buyers have not bothered to get on a boat or plane [to reach the island],” said Flanders.

Flanders said that the lower sales prices reflect what’s happening with the equities market. The big bonuses and high discretionary income that once were there for many buyers have disappeared, leaving many reluctant to plunk down large sums of money on real estate. Still, within the past month, two pricey properties – one priced at $10.9 million and another at $11.8 million – went under agreement, said Flanders.

“It was not remarkable to have a sale in the $7 [million] to $9 million price range. Now just the fact that one might go under agreement in that price range causes attention a little bit,” he said.

David Lereah, chief economist for the National Association of Realtors, said in June that recession had a dampening effect on the second-home market nationally in 2001, but that the downturn had largely reversed itself by the start of 2002.

While some homes on the Nantucket sell quickly, others are taking much longer to sell. The average time on the market for all listings, including land, is now 10 months, the longest homes have remained on the market since 1996, according to Denby Real Estate.

However, part of the problem when comparing statistics is the high sales prices and sales numbers that were recorded in 1999 and 2000, two “tremendous benchmarks” that will be hard to measure up to, said Flanders.

“The year 2000 broke all the records for Nantucket real estate, with buyers in a virtual feeding frenzy to assure themselves [of getting] their own piece of Nantucket,” said Flanders.

Last year didn’t witness that same frenzied pace but year-end statistics were in line with 1999, which overall was a healthy market.

While not offering predictions for 2002, Realtors expressed general optimism for the remainder of the year, particularly after witnessing the last several weeks.

Flanders said he has as many active buyer-clients as he did prior to 2001.

“As has always been the case on Nantucket, compelling properties, priced correctly, do sell,” he said.

Next week: The second installment of Banker & Tradesman’s two-part series on vacation markets takes a closer look at the Berkshires.

Despite Heat of Summer, Nantucket Prices Cooling

by Banker & Tradesman time to read: 5 min