BHHS IP's Robert Sarkisian provides important insights and advice surrounding land purchase.
The real estate market on Nantucket over the past two years has been explosive. A dynamic that has us all thinking about land and its evolving role in homeownership on Nantucket. With home sales hitting record proportions, land purchase has been quick to catch up as an opportunity to leverage this upward real estate trend. Developers and private owners are banking on land as a valuable asset for immediate construction or a long-term investment.
Earlier this week, we caught up with BHHS Island Properties Co-Principal, Robert Sarkisian, to discuss this evolving role of homeownership. And, more importantly, how the current real estate climate has impacted its marketability. As a real estate broker, homeowner, landowner, and 30 year resident of Nantucket, Robert has his finger on the pulse of the market and has witnessed firsthand the changing tide of real estate.
"We see record sales. And that's not only for homes; we see the same for land, "says Robert. "Land has been as strong in the last two years as the single-family home market."
Over the last decade, purchasing land has grown exponentially, becoming a much hotter investment than ten years ago. Robert offered some startling data to help us wrap our arms around the current situation, "Inventory levels give or take have been about the same, but as a percentage of the asking price, land, which sold with a 10% discount in 2010, is now selling at 100% of the list price. From an assessed value perspective, the sale price was 85% in 2010 and now is 164%."
% of Asking vs. % of Assessed 10-year snapshot.
As Robert goes on to share, in 2017, there were 64 land purchases, with a median price of $688K and an average price of $912K. Back then, land was selling at a 5% discount. In 2021 there were 98 land sales with a median price of $1,100,000 and an average price of $1,545,000, which equates to a 59% increase and 69% increase, respectively.
Those 98 properties sold in 2021 represent a cross-section of the island. "There have been pockets of opportunity for land purchase this past year. From one-off lots scattered about the island to several clustered lots," says Robert. Specifically, 2021 land purchase areas included:
- Affordable lots at Sandpiper Place off of Old South Road (particularly appealing to first-time homebuyers on Nantucket)
- Several on Grey Lady off of Bartlett Road
- A few lots in the Tawpawshaw/Middle Moors area
- 37 lots in Sconset on Cannonbury Lane, in the "Garden by the Sea" development
- 8 properties in Town comprising the "North of the Mill" neighborhood
Subdivisions are also creating enormous opportunities for land purchase both across the four larger development areas listed above and from a portion of homeowners selling off part of their lot.
This dynamic prompts interested buyers to lock in on a property with new spec built already in progress. The goal? To have construction completed next spring, thereby having a move-in home for the next summer season. Added buyer benefits, such as having input on personalized finishes, increase this desire exponentially. And as Robert states, "A presale takes some of the risk off of the table of the developer, and helps fund the project to completion. It can be mutually beneficial to the buyer and seller if there is good synergy. This fast-paced spec home market unequivocally adds to the competitive nature of land availability and pricing."
In addition to limited availability, regulations also play a huge role in determining the right property. With 24 zoning districts, a factor very different from the consistency of off-island land, understanding what is allowed on Nantucket is important. Robert provides some pointers:
- Know the regulations of that zone! This includes specific zoning laws, septic and well rules, setbacks and deed restrictions. Zoning is number one when looking to buy land and when determining what you want to build. It is imperative that you understand if a piece of land will work with your intended goals.
- Financing can be tricky if purchasing land for a long term land investment because the bank may require more money down, especially if you plan to keep the land vacant.
- Remember that the HDC (Historic District Commission) will need to approve any exterior designs. Hiring a local architect well versed in working with this board will greatly benefit you down the line.
"I feel it is important to understand the land, air and sea traffic that comes along with the property and the ease of access to town, hospital and other amenities."
The Land Bank is continuing to be a strong contender in the land purchase sector. However, with the reduced availability of larger tracts of land in their purview, their focus has evolved to buying properties across the island, downtown in particular, to create beautiful functional recreational spaces for the community. Examples are the pocket parks, playgrounds, and dog parks we are all now enjoying. I'm excited about the new expansive park near the rotary off of the Milestone Road at the former Hayes in Monomoy. As Robert points out, "It's important to note that the Land Bank has a lot of buying power, so that has also contributed to the rise in land prices." With the Nantucket Land Bank receiving 2% of every real estate transaction on our island, with some exemptions, in 2020 alone, that equated to about $18 million in Land Bank transfer fees from the total of $1.8 billion in total real estate sales.
With all these factors at play, the process of locating and closing on an available lot on Nantucket may feel daunting. Robert assures that although becoming increasingly limited, there are still opportunities across the island for land ownership. Currently, there are 9 available land listings, with the least expensive lot listed at $400K and others upwards to $5.3M. In addition, there will continue to be opportunities around the single split off of lots.
Robert's advice: "If your homeownership goals include buying a lot in a nice neighborhood and sitting on it until the moment is right, your return on investment could be quite beneficial."
As an agency, BHHS Island Properties has had and continues to gain extensive knowledge and experience with land ownership, both professionally and personally. This includes understanding deed restrictions to effectively leverage the land around the home, working within the unique topography and the historical components of the island, knowing the zoning, and most importantly, hiring the right professionals.
Robert, along with Michael O'Mara, Mark Norris, Lucy Lau, and the rest of the team, offers many years of experience and a complete understanding of the many dynamics of home building on the island. As year-round, community-minded residents, they also can help you find the right architect & construction contractors for your project.
"I find investing in land on Nantucket always an opportunity. Each area comes with challenges and obstacles, but if you have the patience and wherewithal, it is rewarding to be able to create your dream and vision."
With much to comprehend regarding land ownership on Nantucket, it's essential to partner with an expert in the market. The fact is, regardless of its competitive nature and unique and multifaceted regulations around it, land is indeed an integral part of future homeownership on Nantucket for years to come.