It’s Still A Billion With A “B”

Between the release of Jen Shalley Allen’s comprehensive real estate analysis last week and Rob Ranney & Kate Ranney Sayle’s year-end update, I am not quite ready to admit defeat.

Allen, a 2002 UVA grad and a Fisher Real Estate broker and principal, has continued Alan Worden’s annual tradition of producing a thorough, end-of-the-year real estate review, and this year one of the highlights outlined was the total dollar sales increase from $1.16 billion in 2023 to $1.36 billion in 2024.

Rob Ranney and Kate Sayle have continued a family tradition originally started by their father, Flint Ranney, in the 80s. Flint, who passed away in 2012, started Nantucket’s first M.L.S. in 1982. Today, the brother-sister combo disseminates their quarterly real estate report known as Real News, including the 2024 wrap-up edition, which emphasized the need to “look backwards in order to look forward…”

Among others, these two publications are must-reads. Coupled with additional information courtesy of the Land Bank’s executive director, Rachael Freeman, and the Land Bank’s director of finance & administration, Susan Campese, several things come to mind including one critically influential piece that started on Monday as we wrap up 2024 and look ahead to 2025.

First, last spring I predicted a decrease in local real estate commission rates primarily due to the potential impact of the National Association of Realtors’ legal settlement of $418 million dollars (We’re Not In Kansas Anymore). While it is hard to track specific local data surrounding commission rates, it appears an island-wide reduction in “traditional” real estate commission rates has not happened.

Does that mean I am ready for crow cooked rare with some fava beans and a nice chianti?

Not quite, as it is still a tad early to get a full sense of the potential impact of the landmark settlement since it went into effect last August. However, brokers in unison such as Penny Dey from Atlantic East Real Estate are quick to point that “everything is negotiable, including commissions."

While most local brokers continue to say that the settlement will have little to no impact on the island due to the fact Nantucket is a “unique real estate market,” a handful of professionals such as Sayle have some doubts.

“Some buyers will be at a disadvantage,” offered the local broker and appraiser. "Not all buyers are represented. The settlement was an attempt to level the playing field but I think it will ultimately backfire because not all buyers will be able to afford representation. In those cases, the seller has all the information while the buyer does not. That’s not fair especially on Nantucket where home values can change from street to street."

The second item of interest was the fact that the two market areas that are telling the loudest stories are ironically at the opposite ends of the spectrum.

In the high-end market of homes above $10 million, there has been a steady increase in sales over the last few years including a sizable bump from 13 in 2023 to 21 in 2024. This has directly impacted the average and median sales prices of homes on Nantucket. With the middle and lower-end of the markets riding the coattails of the ultra high-end market, the 21 high-end sales resulted in a 16 percent increase in the median home sales number to $3.74m in ‘24 and an 8 percent bump in the average home sale price up to roughly $4.8m.

That’s high cotton.

On the other end of the spectrum, most everyone knows that the entry-level market is now $2 million. However, supply is low with less than eight properties officially on the market for under that price at the end of 2024. In fact, as property values have increased, there has been a precipitous drop in homes sales under 2 million from 160 in 2021 to 34 in 2024.

That does not bode well for those locals struggling to break into the market. As inventory levels slide lower, prices continue to rise, unexpectedly high interest rates remain in place and local banks cement their reputation of being frustratingly finicky about lending money to locals, it will only exacerbate this problem despite the Land Bank’s efforts to further assist the local audience by increasing its exemption to $1.2 million last month.

And finally, there’s a new sheriff in town.

Perhaps one of the most critical pieces to Nantucket’s real estate puzzle took shape on Monday when President Trump was sworn into office. However, it appears his influence actually started earlier.

President Trump’s fingerprints were all over the National Oceanic and Atmospheric Administration (NOAA) and National Marine Fisheries Service (NMFS) recent decision to abandon a controversial proposal to reduce speeds for vessels over 35 feet to 10 knots. Among other things, it would have crippled Nantucket’s lifeline to the mainland by negatively impacting the Steamship Authority and Hy-Line.

Obviously, the public outrage, political pressure and dire economic predictions helped persuade government officials from acting more quickly on the proposal. Nevertheless, it was clear that a Trump administration would be navigating in a different direction once the election was settled In November.

Consequently, the handwriting was on the wall.

In fact, as reported by the Current, Samuel D. Rauch, the deputy assistant administrator for regulator programs at NMFS said that the “NMFS does not have time to finalize this regulation in this administration” admitting it would be fruitless to try knowing what was to come.

On Monday, President Trump wasted little time fulfilling his campaign promise of executive action on wind farm projects. As the Biden administration thumbed its nose at the Nantucket community last Saturday by lifting Vineyard Wind’s suspension order as well as potentially grandfathering the SouthCoast Wind project, President Trump’s actions will certainly have a positive impact on local real estate especially if Trump’s choice for Secretary of the Interior, Doug Burgum, revisits the Vineyard Wind and SouthCoast Wind projects.

Without question, Nantucket took an economic hit last summer with July’s blade failure. As one local broker told me, “We dodged a bullet. The blade failure certainly whacked Nantucket in a negative way and to date, that damage has not been fully assessed. The impact of a second blade failure or worse could be a knockout punch and property values will suffer."

Back on shore, Trump’s return to the White House is generally seen as a positive by local real estate professionals as his pro-business, pro-investment agenda takes hold.

“There was a slight hesitation around the election - that’s to be expected”, said Maury People broker and developer, John Trudel. “With lots of uncertainty resolved around Trump; once he settles in, I expect more people will feel financially secure which leads to good things especially with the high-end market on Nantucket."

“It’s hard to say right now, but he does have a history of a strong fiscal policy and that generally leads to strength”, offered Penny Dey, broker and owner of Atlantic East Real Estate. “While I don’t see anything immediate, his business background should help. In the end, optimism is driven by low supply and high demand; and right now, Nantucket has both."

Great Point Properties' broker and principal, Bill Liddle, simply summed things up by saying, “His business background and experience in real estate should play well with Nantucket real estate”.

Purely through the lense of appreciation and return on investment, it has been a profitable venture over the years but there are some troubling trends.

For example, despite gross dollar sales increasing in 2024, the number of transactions has decreased significantly since the highs in 2020 and 2021. Most market sectors have seen longer times on market and fewer full-price offers.

And for brokers such as Peter Engen of Lee Real Estate who sees “inflation” as Nantucket’s biggest speed bump and Kate Sayle who considers “interest rates and material costs” as a major concern, relief is on the way as a Trump administration buoyed by nationwide enthusiasm appears to be better equipped to handle these issues and that should help “continue to make Nantucket real estate great again…”

British real estate tycoon, Lord Harold Samuel, is credited with the expression: “There are three things that matter in property: location - location - location…”

Certainly, that holds true for this island.

But today on Nantucket, what might be even more prudent are the words of actor Will Rogers who said, “Don’t wait to buy real estate…. Buy real estate and wait”.