Slump hits summer hideaway

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

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 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 Steinfurth has resorted to a risky tactic that is new to the real estate market here: Offering 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 America’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 that things are picking up, Ranney disagreed, noting 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 Schmidt, chief executive of Google, and his wife, Wendy; General Electric’s former chief executive, Jack Welch; and David Rubinstein, of the Carlyle Group, a private equity firm.

The island’s airport, Nantucket Memorial, was jammed with private planes. 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 July 1 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.

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