Yesterday, I told you about the big news on Nantucket Island this summer, which is that rapid beach erosion is threatening to cause a bunch of $5-$10 million houses to fall into the Atlantic.
The owners of these houses have been trying for years to persuade the Town of Nantucket to let them spend their own money to enact various erosion-control measures, including “de-watering” systems, “beach nourishment and replenishment” programs (barges dumping sand), and, most recently, a “hard armour” seawall at the base of the bluff.
For more than a decade, however, the Town has resisted, arguing that these measures might threaten fragile ocean fisheries and ecosystems, increase erosion elsewhere, and have other nasty unintended consequences.
(The full-time year-round middle class residents who control the Town, it is also suspected, may be quietly enjoying the spectacle of watching wealthy part-time summer residents get ever more animated as their houses get closer to falling into the Atlantic. Nothing, after all, will turn you into a devout environmentalist and preservationist than a good case of schadenfreude.)
This summer, however, the threatened homeowners on Nantucket’s famous Baxter Road have finally gotten the Town’s attention.
By hiring a lawyer to point out some things to the Town.
The homeowner’s lawyer has pointed out, for example, that, if the erosion next winter is as bad as the erosion last winter, a stretch of Baxter Road itself might fall into the Atlantic. And if that happens, the lawyer has pointed out, the water, sewage, and electric services that the Town is legally required to provide to more than a dozen houses at the far end of Baxter Road via pipes and wires will get cut off. And since the Town is legally required to provide these services, the lawyer has pointed out, the Town will have to find and acquire some new land on which to put new wires and pipes and then rebuild them. The cost of this land acquisition and construction, the lawyer has estimated, might cost the Town, say, $10-$15 million.
And, of course, for every additional $5-$10 million house that plops into the Atlantic, the lawyer has also pointed out, the Town will lose significant tax revenue. And then there are the legal fees and penalties the Town might incur for defending itself against a lawsuit that the lawyer might file–a lawsuit in which the lawyer might accuse the Town of being liable for the loss of tens of millions of dollars of property value by refusing to allow the homeowners of Baxter Road to protect their houses by building erosion-control measures with their own money. This loss of tax revenue, legal fees, and lawsuit could get pretty expensive, the lawyer has pointed out, especially after factoring in the $10-$15 million the Town might have to fork over to acquire (by eminent domain, which is rarely popular) new land on which to install new pipes and wires to provide the municipal services the Town is legally required to provide to the houses that are about to get cut off.
The lawyer’s observations have apparently been heard.
Because suddenly the Town is seriously considering a proposal by the Baxter Road folks to hard-armour the bluff with a rock “revetment” that will eventually be nearly a mile long.
No one knows whether this seawall, if erected, will stop the erosion and prevent the $5-$10 million houses from falling into the Atlantic (the Atlantic’s a powerful beast, especially with the climate changing and sea levels rising).
And no one knows whether this seawall will ruin fisheries, starve fragile ecosystems, accelerate erosion for the poor unprotected slobs who live on either end of it, or have other unintended consequences.
But the Town, it seems, is finally ready to let the Baxter Road homeowners give it a try.
And that, my friends, is creating an opportunity for some real-estate speculation!
You see, there are two sides of Baxter Road.
There is the ocean side, with the direct ocean views and gorgeous $5-$10 million houses that are threatened by the bluff erosion.
And then there is the inland side, which has indirect ocean views and gorgeous $2-$5 million houses that are not (yet) threatened by the bluff erosion.
The only difference between these two sets of houses–the direct cause of the price discount–is the direct vs. indirect ocean views.
But when the house across the road that is blocking your view of the Atlantic falls into the Atlantic, well, then, your indirect ocean view becomes a direct ocean view.
And if the natural force that caused your neighbour’s house to fall into the Atlantic and give you a direct ocean view were to be suddenly subdued by, say, a seawall?
Well, then, you might just get to keep that direct ocean view.
And that would add millions of dollars to the value of your house!
You can see where this is going.
Depending on what happens with the bluff erosion and hard-armour seawall project, we have the potential to have some serious swings in some Baxter Road house prices over the next couple of years.
We have already seen some serious swings, of course. Over the last several years, a handful of the once- $5-$10 million houses on the ocean side of Baxter Road have sold for heavily, heavily discounted prices, on account of the fact that, at any moment, they might fall into the Atlantic.
One beautiful house, for example, which might have fetched $6 million if it had been located only a quarter mile south, where the erosion is less fierce, sold last year for about $600,000.
The buyer of the house, presumably, recognised that there was some possibility that, at some point, the Town might relent and let the community build a seawall, or that the erosion might just stop of its own accord (this happens sometimes). And if either of those things happened, the buyer of the house presumably theorized, the house that he or she had just bought for $600,000 might suddenly be worth $6 million again.
Or, the buyer presumably also theorized, the erosion might continue and, in two years, the house might fall into the Atlantic, taking the buyer’s $600,000 with it.
Que sera sera, the buyer presumably said to him or herself. And then he or she plunked down $600,000 on the Bluff erosion roulette wheel.
Today, there is a house on the market at the northern end of Baxter Road.
It’s a small house (by Nantucket bluff house standards), and it is located on the inland side of the road.
A few years ago, this house, which is called “Windy Moor,” used to have only very indirect views of the Atlantic Ocean, because the two houses across from it on the ocean side would have made Jay Gatsby proud.
But the owners of one of the two mansions blocking Windy Moor’s view finally gave up a couple of years ago: They had their colossal house cut up into four sections and trucked off to Monomoy on the other side of the island. (One of the sections fell off the truck en route, which created quite a scene. But that’s a different story.)
And the owners of the other house blocking Windy Moor’s view, sadly, got a telephone call this winter saying that three successive storms had consumed a staggering 30 feet of bluff and that their house’s time had come. (You can see pictures of the demolition here.)
So now little Windy Moor, which, for most of its life, has been just a little shack on the wrong side of Baxter Road suddenly has a gorgeous unobstructed direct ocean view.
And Windy Moor is for sale. With an asking price of $950,000. A price that is likely less than half of what it would be if Windy Moor itself were not threatened by the same bluff erosion.
This sets up some interesting speculation opportunities.
(Before going further I should confess that I have a small emotional attachment to Windy Moor. 30 years ago, when I spent my teenage summers here, Windy Moore was the home of a family named Whittemore (“Whittemore” – “Windy Moor”) who had a daughter named Alison (sp?) who pretty much every guy in town had a crush on. And sometimes some of the guys in town would be lucky enough to be invited to hang out in Windy Moor’s living room with other guys and girls (and Alison) drinking beer and playing a card game called Egyptian Rat Screw. The game was fun, but it wasn’t the main attraction. I never so much as held hands with Alison Whittemore, and I haven’t seen or heard of her in decades, but I have fond memories of ancient summers that I recall every time I pass by Windy Moor.)
Anyway, the speculation possibilities are this:
If the Town allows the Baxter Road homeowners to build their seawall and it works, the erosion of the bluff might stop forever.
If that happens, Windy Moor will be left with a permanent, direct ocean view.
And if that happens, Windy Moor will suddenly be worth, say, $3 million ($4 or $5 if you did a bit of expansion and renovation).
Of course, if the Town refuses to allow the Baxter Road homeowners to build their seawall, or it doesn’t work, well, then, Windy Moor’s front yard is already only 50 feet from the edge of the Atlantic.
A couple more winters like last winter, and that 50 feet could be gone, and Windy Moor itself could fall into the Atlantic.
So, two years from now, Windy Moor might be worth zero.
In fact, given that the Town probably wouldn’t let you just let Windy Moor fall into the Atlantic, it might be worth less than zero. It might actually have a negative present value, on account of the money you will have to pay the demolition crew to destroy it and truck it away.
But no risk, no reward. That’s what speculation is all about.
So if you have $950,000 burning a hole in your pocket and you want to place it on the Bluff Erosion Roulette Wheel, get your butt up to Nantucket.
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