2015 Third Quarter Update
“Nothing is said that has not been said before.” -- Terence (185 BC – 159 BC)
2014 made history as Nantucket real estate’s third $1 billion dollar year after 2005 and 2004 (one and two respectively). Is 2015 continuing this positive trend? Now that the third quarter of 2015 has come to a close, can we draw any conclusions about the 2015 market so far? Let’s take a look.
In real estate analysis, we must look backward to look forward. Looking back over recent years (for comparison to 2015), we see that in 2013 there were a total of 506 total transactions (houses, land, condos, commercial, timeshares, foreclosures, etc), as compared to 546 during 2012 and 384 in 2011. The total dollar amount of real estate changing hands in 2013 was approximately $754 million, while in 2012 it was approximately $834 million and approximately $542 million in 2011.
In 2014, there were a total of 566 transactions (houses, land, condos, commercial, timeshares, foreclosures, etc) with a total dollar volume of just over $1 billion, up about 12% in number of transactions, and up about 34% in total dollar volume from 2013. By comparison, through the first nine months of 2015, there have been 341 total transactions, with a total dollar volume of about $590 million, a 14% decrease in transactions and an 11% decrease in dollar volume over the first nine months of 2014. By the numbers, 2014 was significantly better in comparison to any of the previous 5 years before it and 2015 began on a similar footing, though continuing on a more muted pace through the third quarter of the year.
Foreclosures and foreclosure related transactions made up approximately 7% of the overall market in 2010, with approximately 35 foreclosures and foreclosure related sales taking place. This unfortunate statistic continued in 2011, showing some signs of slowing, with an estimated 23 foreclosures and foreclosure related transactions taking place, making up about 2% of the market in 2011 (based on dollar volume). For 2012, there were an estimated 35 foreclosures, representing approximately 3% of the market based on dollar volume. In 2013, there were an estimated 12 foreclosures, representing about 1% of the market. There were an estimated 9 foreclosures in 2014, representing approximately 1% of the market by dollar volume. Through the first half of 2015, there have been an estimated 4 foreclosures, representing about 0.3% of the market by dollar volume.
In 2012, the average home sale was $1.854 million, up about 13% from the average home sale for all of 2011. Further, there were 42 sales over $3 million, with 19 of those over $5 million, and 5 over $10 million in 2012, compared to only 27 sales over $3 million for all of 2011 and only 8 over $5 million. The average sale in the $500,000 to $999,000 range was $749,000, up 6% from 2011’s numbers.
At the end of 2013, the average home sale was $1.94 million, up about 5% from the average home sale in 2012. Additionally, in 2013 there were 17 home sales over $5 million, with eight of those over $10 million, representing 24% of the market by dollar volume; as compared to 2012 which saw only 21% of the market comprised of home sales over $5 million. In 2014, there were ten home sales over $10 million (three of those were over $20 million), 25 home sales over $5 million (representing 23% of the market), and 239 sales over $1 million (or about 70% of the market by dollar volume). So far in 2015, through the first nine months, the average home sale is $2.19 million, buoyed by 39 home sales over $3 million, 16 home sales over $5 million and 5 home sales over $10 million (with 1 of those over $25 million). The average sale, through September 2015, in the $500,000 to $999,000 range is $754,000, up slightly from the $751,000 average for this market segment in 2014.
Vacant land sales have been increasing since 2009. In 2011, there were 43 vacant lot sales, only 1 more than in 2010. In 2012, there were 83 vacant lot sales, with an average sale price of $1.375 million, compared to the 43 vacant lot sales for all of 2011 with an average sale price of $1.853 million (2011’s average vacant land sale was skewed by a $12 million lot sale, as well as an $8 million lot sale and another at $6 million). In 2013, there were 89 vacant lot sales, with an average lot sale of $792,000. By comparison in 2014, there were also 89 vacant land sales, with an average lot sale of $1.130 million, or a 43% increase over the average in 2013. In the first nine months of 2015, there have been 64 vacant lot sales, with an average lot sale of $937,500, down about 17% from the average vacant lot sale in 2014.
2009 is the record holder for the year with the fewest number of building permits being issued since 1972 (the first year building permits were required and thus records were kept), 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. In 2012, 58 single-family permits were issued in 2012, a modest increase over 2011. In 2013, there were 108 single-family permits issued, a significant increase over recent years. In 2014, 140 single-family permits were issued, a 30% increase over 2013. As of the end of September, there have been 108 single-family permits issued in 2015, an annualized rate of 144 at the current pace.
Overall sales volume (number of transactions) and dollar volume of those sales were down in 2013, compared to 2012’s numbers. 2014 ended as a much stronger year than any other year out of the past five, with 2012 at a close second. 2015 appears to have a more muted tone than 2014 (at least through the first nine months). Will 2014 and 2015 end up looking like 2004 and 2005 did? When plotted on a graph, the most recent five years resemble a set of stairs. 2011 was down from 2010, but 2012 was up over 2011. 2013 was down from 2012, but 2014 was up over 2013. At this point, 2015 looks to continue this trend, being down from 2014 (at least through the third quarter). Stay tuned.