A $24 million tear down on Nantucket? Home prices on the island breaking records this summer

  • Nantucket, the vacationers' island off Massachusetts, is becoming a hot spot for summer property.
  • Some $268 million worth of homes were sold in the first three months of this year.
  • Property buyers are mostly domestic, pushing for better location over home design.
$24 million Nantucket home
Diana Olick | CNBC
$24 million Nantucket home

Vacation home sales on the tiny, toney island of Nantucket, a beach resort off the coast of Massachusetts, are seeing new life, and their prices are off the charts.

If the first quarter is any indication, the dollar volume of sales will likely exceed $1 billion this year.

Already, $268 million worth of homes sold in the first three months of 2018, a 49 percent increase over last year, according to data from Great Point Properties, a local real estate agency.

"When the markets are good, and I mean the equity markets, people are obviously getting richer, making more money, so they're more inclined to spend more of that on Nantucket," said Edward Sanford, a principal agent at Great Point Properties.

The jump was largely on the high end. Sales in the $4 million to $6 million range were up 300 percent annually. Even sales in the $1 million to $2 million range were up 52 percent. The lower end of the market is having trouble, only because there is so little for sale. The island has more houses listed for sale over $10 million than under $1 million. Five years ago, homes priced below $1 million made up half of all sales. Today, they make up just one-quarter.

Sanford has his own family property listed — at $24 million. It sits on the edge of the harbor, with stunning views of moored sailboats, the ferry, and the historic downtown. Even at that price, he considers the 60-year-old home a tear-down.

"In the very high end of the market, where this house is, buyers don't care about the house. They are looking for the location. We see perfectly good, brand new houses gutted because the buyer wants his vision, he has the money," said Sanford.

Most Nantucket buyers are domestic, coming from Boston, New York and Texas. Unlike the Hamptons, New York's vacation playground for the rich on Long Island, Nantucket sees few foreign buyers. Also, unlike the Hamptons, property taxes on Nantucket are low, adding to the attraction.

Luxury home sales have been softer for the past few years, but that is slowly changing, mostly because sellers are lowering their sights.

"These two locations are known for their exclusiveness, but we've been seeing over the last year, that sellers are coming down further to meet the buyer," said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and consulting firm based in New York. "So the buyers are budging. It's not that the buyers are gone, it's that the luxury markets that recover quickest are where sellers come down."

Nantucket doesn't often see the ultra-high prices of the Hamptons — where homes are listed for over $50 million. Just 10 sales of homes were priced at over $10 million, and that was a record. Now, there are 29, although that price range saw just one closing in the first quarter of this year.

April did see one sale for $17.5 million — the home where former Secretary of State John Kerry and his wife, Teresa Heinz Kerry, spent their summers.