2012 Market Now
“For myself I am an optimist – it does not seem to be much use being anything else.”
-- Sir Winston Churchill (1874 – 1965).
As we turn the corner from spring, and head into the summer, are things in the real estate market heating up? There is typically an increase in activity this time of year, but is what we are seeing optimistic? Let’s take a look at the numbers.
Looking back over recent years (for comparison to the first five months of 2012, and how they compare), we see that in the first five months of 2010 there were a total of 123 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 86 during 2009 and 102 in 2008. The total dollar amount of real estate changing hands in the first five months of 2010 was approximately $180 million, while in 2009 it was approximately $108 million and approximately $203 million in 2008. Just by these numbers alone, 2009 was the low point, with 2010 showing much improvement.
For the first five months of 2011, there were a total of 135 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc) with a total dollar volume of approximately $156 million, down about 13% from the first five months of 2010. By comparison, in the first five months of 2012, there were 172 total transactions, with a total dollar volume of about $225 million, a 44% increase over the same period in 2011. So, simply based on comparisons to recent years, for the first five months of the year, we saw the bottom in 2009, a rebound of sorts in 2010, a slight decline in 2011 and now another rebound of sorts to start off 2012.
Foreclosures and foreclosure related transactions made up approximately 6% of the overall market in 2009, with approximately 25 – 30 foreclosures and foreclosure related sales taking place. This unfortunate statistic continued in 2010, showing no real signs of slowing, with an estimated 35 foreclosures and foreclosure related transactions taking place, making up about 7% of the market in 2010 (based on dollar volume). For 2011, there were an estimated 23 foreclosures, representing approximately 2% of the market based on dollar volume. So far in 2012, we have seen 18 foreclosure sales, representing about 4% of the market.
The average home sale in 2010, hovered in the $2.2 million range, roughly even with the approximate $2.236 million average home sale for all of 2009, while the median home sale at the end of 2010 was $1.225 million, down about 20% from the $1.538 million median home sale for all of 2009. The average home sale in 2011 was approximately $1.635 million, down about 26% from 2010, while the median home sale was approximately $1.195 million, down about 2% from 2010 levels. These numbers also reflect the fact that there were only 8 home sales over $5 million, representing 13% of the overall market and 2 home sales over $10 million in 2011. Whereas, in all of 2010 there were 23 home sales over $5 million, with eight home sales over $10 million and in 2009, there were 12 home sales over $5 million and 6 over $10 million.
In the first five months of 2012, the average home sale was $1.559 million, down about 5% from the average home sale for all of 2011. Further, there have now been 11 sales over $3 million, with 4 of those over $5 million, as of the end of May 2012, compared to only 9 sales over $3 million for the same period in 2011 and only 2 over $5 million.
There were 35 vacant lot sales in all of 2009, with an average lot price down about 48% from 2008, which in turn was down about 36% from 2007. Vacant land sales increased modestly in 2010, with a total of 42 vacant lots sold. The average lot sale in 2010 was up 29% over 2009 and the median lot sale was up 41% compared to 2009. For 2011, there were 43 vacant lot sales, only 1 more than in 2010. As of the end of May 2012, there have been 12 vacant lot sales, with an average sale price of $1.1 million, compared to the 12 vacant lot sales in the first five months of 2011 with an average sale price of $975,000.
2008, on an annual basis, saw the fewest number of new single-family building permits being issued for any year since building permits were first required in 1972. 2009 is now the new record holder for the year with the fewest number of building permits being issued since 1972, with a total of only 44. 2010 ended with a total of 53 new single-family permits being issued, perhaps a glimmer of hope, and 2011 saw 54 single-family permits issued, only 1 more than were issued in 2010. As of the end of May 2012, 15 single-family permits have been issued, a projected annualized total of only 36 if this pace continues. Slow building (ie. fewer permits being issued) is typically an unfavorable market indicator, suggesting less confidence in the market. However, taking the optimistic view, it may simply mean there are fewer vacant lots available to build on.
Overall sales volume (number of transactions) was down about 7% in 2011 versus 2010, and the dollar volume of those sales in 2011 was down about 21% versus 2010. 2012 may provide some hope to the real estate market on Nantucket as we might be, hopefully, beginning a slow climb up from the bottom. As of the end of May, the 2012 market is outpacing 2011’s numbers. So far, with warmer than normal temperatures at this point, it looks like hints of an early summer and some cautious and guarded optimism with a gradual return to prosperity. Stay tuned!