nantucket getting slammed

Once my favorite place in the whole world is getting slammed--however, decent room is still 600 plus/night...



http://www.nytimes.com/2009/07/08/business/08nantucket.html?_r=1

NANTUCKET, Mass. — On a winding road, down a white shell driveway, sits a rambling gray-shingled home with a view of the harbor, where beige lounge chairs ring an amoeba-shaped swimming pool and the living room is filled with pristinely white sofas, plumped, pillowed — ready for the next owners.

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The Pinch in Nantucket
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Jodi Hilton for The New York Times
This 7,500-square-foot Nantucket home will be sold at auction by its owner, Paul C. Steinfurth, who put it up for sale a year ago. More Photos »

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by Jodi Hilton for The New York Times
The RopeWalk, a restaurant owned by Joe Pantorno, is serving breakfast for the first time to try to lure more customers. More Photos >
The 7,500-square-foot house has been on the market for a year with no takers. “We had some good offers,” said the owner, Paul C. Steinfurth, who runs a Miami real estate business and bought the house for $5.4 million in 2004. “Then Lehman happened and they put their hands in their pockets.”

So Mr. Steinfurth is resorting to a risky tactic new to the real estate market here: next Tuesday he’ll offer the house at an “absolute auction.” The highest bidder wins, no matter how low the bid.

The sale is testimony to just how drastically the market has turned and how severely the economy has hurt even the country’s most exclusive enclaves.

About 600 properties, or 6 percent of all those on the island, are for sale, but almost nothing is selling. “The damage is huge,” said Flint Ranney, a real estate broker on the island for 30 years and president of Denby Real Estate. “The market value of the real estate on the island was about $20 billion in 2008. Now it is about $14 billion. This is much worse than 1987. That decline came from the savings and loan crisis and it was more contained. This is the stock market and it affects everybody’s wealth.”

While some real estate agents say things are picking up, Mr. Ranney disagrees, pointing out that just four homes sold in March, four in May and about the same last month, according to data his firm keeps on all transactions. The dollar volume of all transactions is down 48 percent, according to his firm’s data.

In recent decades, Nantucket has attracted wealthy families who have built a rash of multimillion dollar homes. Its residents include Eric E. Schmidt, chief executive of Google, and his wife, Wendy; General Electric’s former chief executive, Jack Welch; David M. Rubinstein, of the Carlyle Group, a private equity firm; along with hundreds of lesser-known money players at other prominent investment and private equity firms.

The island’s airport, Nantucket Memorial, was jammed with private planes and its 240-slip marina, a destination for big yachts, helped fuel the local economy. When newcomers could not get into the old Sankaty Head Golf Club, they built the Nantucket Golf Club. A posh new yacht club, planned six years ago in the days of easy money, opened last Wednesday with its membership roster just 78 percent full.

Entering the traditionally hectic summer months, there is some hope that business will take off. Still, nervous shopkeepers, restaurateurs and hoteliers are offering bargains and seeking new revenue. Recently, Joe Pantorno, who owns The RopeWalk, a restaurant that looks over the Nantucket marina, opened for breakfast for the first time. The White Elephant, one of the island’s most elegant hotels, has been promoting a wider range of discount packages.

To be sure, there are some reasons to be optimistic business will pickup this summer, and Nantucketers are finding them. For one thing, the June weather has been rainy and July and August are prime time. George Bassett, the Nantucket boat basin’s dock master, said he was not usually booked up until around the end of June. “Our reservations are running better than 80 percent,” he said, alluding to July and August. “We are very encouraged, knowing what is going on in the world.”

But Mark Smith, a yacht delivery captain who sailed into Nantucket from Annapolis, Md., last week, and who had visited the island before, said, “The marina looks like a ghost town this year and even the moorings are light.”

As Leah Bayer, her blond hair tucked under a baseball cap, pulled tins laden with fudge from the oven at her store, Aunt Leah’s Fudge Shop, on the edge of the marina, she worried about business. “This has been the worst June I have ever seen and I have been here since the 1960s,” she said. “We used to open at 6 a.m. because the marina was busy, but we didn’t open so early this year. It has been completely empty. I just want to pay my rent and my payroll.” If business does not start improving soon, she added, “Everybody will hit the panic button.”

Ms. Bayer attributes the bad market to the weather, the economy and to the Wachovia Corporation’s decision not to hold its annual equity conference on the island. It brought more than 600 participants and their families to the island and included fireworks and lobster dinners, but was moved to Boston this year. Kate Hamilton-Pardee, director of the island’s visitors’ services, said families who once came for a week were cutting vacations to four days.

 

The people with big money that earned it the old-fashioned way - they inherited it - are getting crushed, in absolute terms, right now.

When they have to even think about spending money, their world has been rocked.

 

Real wealth never sweats

CHEERS john