Ken Beaugrand, Realtor President, Nantucket Real Estate

Is this the time to buy?

The answer is yes! Every day we open the paper and find yet another doom and gloom story about the real estate market in America. Does this apply to our situation here on Nantucket? No, I believe that it does not and in fact, it is a very good time to buy on island.

Historically, Nantucket has been much slower to reflect the vagaries of the overall economy. In its real estate prices, the drop is less dramatic and the market is much quicker to recover. So let us let history be our guide as we take an instructive look at the recent market and where we are headed from here.

If we look at the median home value appreciation over the last twelve years, we see that there has only been one other period, from 2000 to 2002, where the median value depreciated for as long as two years. In the year immediately following this decline, the market had a significant up tick in values. Again, from 2005 through 2007 we see similar depreciation. Again, the statistics for the first quarter of 2008 indicate an up tick in values is occurring.

Now if we look at the price that properties have actually sold for compared to the original asking price, we see that actual sale price has declined from a high of a 16% discount from the listing price in 2004 to only 10% in 2007. Looking at the first three months of 2008, we see that the sales have stayed at about the same 10% for the first quarter, so that properties have been selling approximately 10% below their asking price. Therefore, to put it directly, your chances of scoring a “deal” have already started to decline, and as market conditions on Nantucket stabilize, your chances of buying a house at a significant discount decrease.

So, why is this a good time to buy?

1. The increased inventory gives buyers many choices for either a turnkey home or a development project.
2. Sellers on island generally are not in the position to be forced to sell, and therefore there have not been many “deals” made by desperate sellers. The reason that the property is on the market is that the Owners want to sell. As they see the prices at which properties are selling, they will be more willing to make a deal at a price more reflective of the current state of the market.
3. Nantucket will forever be seen as a premier destination location and once the upward movement begins, the pent up buyer demand, slowed for the past two years due to other economic pressures, will once again drive up prices.
4. No one, unless they have a crystal ball, can ever time the bottom of a particular market.

There you have it; I believe that the signs are there to indicate that we are about ready to move forward in our market. Next year, we will look back and see that the second quarter marked the bottom of the market.

So my advice is simple, if you want to fulfill your dream of owning a home on Nantucket; now is the time for you to act. Then you can sit back on the deck of your new Nantucket home and congratulate yourself on the wise decision that you made.

Sincerely,

Ken Beaugrand, Realtor
President, Nantucket Real Estate Co.