Buying in ‘Billionaires Isle’ Nantucket Is Now a Bargain: Homes Are ‘Falling Into the Ocean’

Nantucket, MA, has long served as a sandy summer paradise for jet setters such as Joe Biden, Ben Stiller, Kourtney Kardashian, and former Google CEO Eric Schmidt, among others.

Not surprisingly, homes in Nantucket’s highly exclusive luxury market known as “Billionaires Isle” are listed for many millions. But lately, the market has been on shaky ground.

Take, for instance, one six-bedroom house on Red Barn Road that was listed as far back as October 2020 for $2,995,000. Four years and four price cuts later, the 3.8-acre property is now listed at $1.7 million. Even so, it is still sitting on the market after seven months.

The listing agent, John Arena of Raveis, says he has received plenty of calls about the house, which is now in foreclosure.

“People are lined up to buy it,” he insists, adding that the foreclosure has prevented him from properly showing the house.

Shelly Lockwood of the real estate advisory firm Advisors Living has a different theory on why it hasn’t sold: The very beach the house sits on is slowly eroding away.

As a result, she says, “It’s falling in the ocean.”

Arena concedes that one serious buyer retreated after being talked out of it by a family member.

“They were told the erosion risk wasn’t worth it,” he says.

Lockwood’s family moved to Nantucket in the 1970s and she lives on the island year-round, so she knows the house well.

“People call me all the time and say, ‘It’s such a great house,’ and it is,” she says. But whether they should buy it is another story.

“I tell them, ‘If you can afford to lose the money—and some people can—then buy the house,” she says. “If you’re comfortable with [having the house for] one, five, or 10 years—it probably won’t be 10—then go ahead and buy it. But you can’t believe it’s going to last.”

How beach erosion is eating away at expensive real estate

Nantucket isn’t the only seaside town where erosion is nibbling away at its shores. Homes are being whisked out to sea in Outer Banks, NC, tumbling off cliffs in Dana Point, CA, and turning into shark bait in Dauphin Island, AL.

Many of these high-flying real estate markets are showing signs of faltering. Across Nantucket, for instance, list prices are down 5.8% year over year, to a median of $4,595,000 in May, according to Realtor.com® data. The number of homes for sale has been rising, but buyers seem reluctant to bite. 

“Climbing inventory suggests that demand has faded in the area,” says Realtor.com economist Hannah Jones. “Shoppers looking for a home in an area that faces serious climate-related risks may expect listing prices to be adjusted accordingly. When these risks loom large in buyers’ minds, homes are likely to spend longer on the market, and the homes that do sell may fetch a lower sale price.”

Some home shoppers might simply shift their house hunt farther inland toward higher ground. Those who are willing to live on the edge, on the other hand, might simply search for bargains near the beach so cheap, they decide it’s worth the risk.

“Towns that face the risk of beach erosion may see buyers either looking for higher land or looking for a deal,” Jones says. But, she warns, “It’s important for buyers to consider the risks they are taking on when purchasing beachfront real estate.”

The Red Barn Road foreclosure is hardly the only Nantucket listing that’s struggling to land a buyer. Local agents were aghast when a gorgeous house at 6 Sheep Pond Road priced at $2.3 million in the fall of 2023 sold for a mere $600,000 in February this year.

The reason: After a mild storm wiped out 90 feet of frontage overnight, a buyer swooped in with a lowball offer that was accepted.

“That was a game changer,” says Lockwood. “And that wasn’t even a particularly bad storm.”

The buyer, Brendan Maddigan, told the Nantucket Current that he plans to enjoy the house for as long as he can, calling beach erosion “a losing battle.”

“It will eventually—or maybe not—take out that house,” he said. “I looked at it as if I could have that spot for a few years, hopefully a little longer, and do everything I can to make it last, I’ll be happy.”

That’s the attitude that Lockwood hopes will become the norm.

“The only type of people who should be buying those houses are the ones who can afford to lose the money,” she says.

Why Nantucket home sellers may be in trouble

Lockwood points out that Nantucket beach erosion is nothing new.

“It’s the values that are new,” she says. “The houses are worth so much more than they ever were. Now you’re looking at billions in losses.”

Over $3 billion in damages and losses to be exact, says Leah Hill of the Coastal Resiliency Advisory Committee. That’s if Nantucket and private homeowners take no action to stem the tide of erosion.

The committee came up with 40 recommendations that will cost the island $930 million—but should save billions in the long run.

Some homes, due to the vagaries of waves and wind, might gain frontage, Hill says. However, there is no way to predict which homes will gain and which will lose. (Arena says the Red Barn Road listing has gained rather than lost.)

“Erosion is episodic,” Hill says. “A coastal bank can be stable for 20 years and then overnight lose 25 feet. There is no reliable way to determine how long a home will be there.”

Because of the unpredictability, any waterfront home could be at risk. Many of the homes (including the one on Red Barn Road) can’t get conventional mortgages, and home insurance might soon be a thing of the past.

Prices may be just beginning to reflect this new reality.

‘Somebody has to be the bad guy’

In June, Lockwood held a continuing education class for real estate agents that focused on coastal erosion and rising sea levels.

Approximately 40 agents showed up to learn how to better discuss with their clients how to realistically set prices in this new environment, where even small waterfront homes would normally sell for millions.

“The difficult conversation isn’t with the buyers,” Lockwood says. “It’s with the sellers. They are losing money. Or at least losing money they thought they had.”

Unsurprisingly, not all seller’s agents appreciate what Lockwood has to say.

Peter Engen of Lee Real Estate, who represents 8 Ames Avenue in Madaket, refused to comment when asked whether his one-bedroom listing was overpriced at $2.6 million—even though a neighboring house was torn down after being at risk of floating off to sea a few years earlier.

“I’m not thinking $2.6 million is a good value,” says Lockwood of the listing.

While no real estate agent has confronted Lockwood yet about her campaign to bring Nantucket’s home prices down to earth, if they did, she would be OK with that.

“Somebody has to be the bad guy,” she says. “I want my profession to be thought of as people who help, not greedy people looking for a commission.”

A new normal for Nantucket real estate?

Some listings do appear to be adjusting their prices to a new reality.

In June, 124 Tom Nevers Road hit the market for $6.1 million. That’s a steep discount for the area. Nearby, a similar house at 100 Tom Nevers Road was sold in 2021 for $11 million.

“That’s telling,” Lockwood says of the new listing’s price. “It’s an enormous shift in seller expectation, and that’s good. It’s more realistic.”

But even with more down-to-earth prices trickling onto the market, Lockwood foresees a day when sellers don’t even bother to sell at all.

“If I had oceanfront property at risk for erosion, I wouldn’t bother to sell at this point,” she says. “I would say, ‘Let’s just enjoy it.’ Because you’re probably not going to get what you thought it was worth.”