Real Estate Trends

Cape Cod Market Update March 2020

February Review:

As 2020 starts rolling into the Spring market, February brought some interesting happenings. February closings, inventory and supply of homes are all down nearly 20% compared to 2019.  We did see a 15% increase in pending sales last month which may portend more closings in March.  Inventory compared to January is on the rise, a trend that is indicative of the start of the Spring market. One ongoing and significant market force is the lack of inventory. This dearth of supply may continue to put upward pressure on prices and favors sellers.  However, buyers are not at an absolutely terrible disadvantage as mortgage rates continue to decline (and bizarre things are happening in the mortgage market at the time of writing).  We would also be remiss to not mention COVID-19 and the more recent economic turmoil.  Do we know how this will affect the local market? Nope. Frankly we are in uncharted territory here folks.  Stay healthy and safe!

Contact us today, we are always glad to discuss the market in further detail if you have questions. For more market data check out our blog category Real Estate Trends.

Recent Market Summary

    Dec     Jan     Feb  
    Closed Sales    350     270     324  
   Inventory     1,346     1,397     1,426  
   Median Sales Price   $436K     $431K     $435K  
   Avg Days on Market    109     108     120  
   Avg % of Original Price    93%     93%     93%  

 

Cape Cod Affordable Housing Update | Feb 2020

We get a lot of questions from folks interested in the issue of housing affordability here on the Cape, so we thought we’d give a quick overview of the issue and some of the potential solutions being discussed.  

What exactly is meant by “affordable”?  The benchmark for housing affordability is 30% of a family’s income.  Here on Cape, the Area Median income (AMI) from 2014-2018 (per census) was $70,621 (see here for census data).  During the same interval the median home sale price was $367,700.  The total monthly payment on a median priced home comes to approximately 28% of median income if the buyer has a traditional 20% down payment (jump to our math below).

So with a good-sized down payment, the median priced home can be purchased by the median-earning household.  Good news so far.  Now let’s break down housing affordability for households earning below median income.  Take a look at the graph of residential price distribution in 2019.  Here we matched home prices to the income brackets in the next graph to determine how many homes are available to homes in their income price range.  Notice the steep decline in available homes below median income affordability of $367k.  Now compare that to the graph of income distribution.  Notice the mis-match.  If your household earns 68% AMI you may be only 32% away from median in terms of income, but 32% less than median home value equates to $250k, and there are almost no homes available in that price bracket.  

In addition, these graphs don’t account for the quality of the housing at each price point.  A good-quality ‘move in’ condition home can be found around the median price point of $367,000.  However, once you get down to about the $300,000 mark it is extremely challenging to find a home that is not in need of significant repairs or upgrades before it is ready for occupancy.  (If we could graph housing quality against price point, it would show an even sharper peak than the price graph).  On the one hand, this presents an opportunity to a buyer who is willing to buy a fixer upper for a low purchase price, bang nails after work and build equity.  However, it also means that same buyer must budget for repairs in addition to down payment, which further reduces the price of the home they can afford.  And for the less hands-on households, it means a home purchase is a nonstarter.

Ok, so it is a challenge for a household earning less than AMI to buy a home, so they decide to rent and save up to buy down the line.  Good plan – but let’s take a look at rental market first. Per HUD guidelines, fair market rent for a 3 bedroom house in Barnstable county is $1,919/month (reference here).  This is $264/month more than the same household would be paying for a median priced home of their own.  Why the mis-match? Barnstable County has a 1% vacancy rate for rentals, which represents a huge shortage – a healthy rate would be 7%.  This shortage translates to high demand, which translates to – you guessed it, high prices. 

So let’s circle back to the median home value calculation above, which assumed that our median earning family had a 20% downpayment to apply to their median-priced home.  If a renting household is paying close to $300 (16%) per month more to rent than to own, it can be a real challenge to save enough money to put towards a downpayment.  They are stuck in a loop of paying too much for rent, while also pricing themselves out of the possibility of homeownership.

So what is the solution?  There is no silver bullet, but bringing more rental units online is a big part of the answer.  One tool that has gained a lot of traction on the Cape is easing prohibitions on accessory apartments.  This is a minor change which can go a long way to bringing more small, organically affordable, market rate units into the market place.  Other initiatives include property tax incentives for landlords of long-term rentals, form-based code zoning reform to encourage multi-use and multi-family development, and raising density in areas where the infrastructure already exists to service a higher density of homes.  A lot of innovative work is being done to help restore a healthy, balanced real estate market to the Cape (and the nation).  It’s a topic that is near and dear to our hearts – if you ever have questions, please don’t hesitate to reach out.  We’d be happy to discuss in greater detail.


Calculations

Area Median income 2014-2018 (per census): $70,621
    • Average Median home price 2014-2018 (per CCI board of realtors): $367,700

At today's conforming interest rate of 3.375% (CC5 2.06.2020) a mortgage on a $367,700 home looks like this:

    • 20% Down payment = $73,540
    • Loan Amount = $294,160
    • Principal/Interest monthly payment = $1,300.47
    • Taxes = $245 (assuming an imaginary town with 8/1000 mil rate and assessed value equal to purchase price {market value is typically actually 120%-124% of assessment for most towns in the mid-Cape})
    • Insurance = ~$110

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Total Monthly Payment Estimate = $1,655.47

2019 Cape Cod Real Estate Market Recap

Are you interested in the health of the Cape Cod real estate market?  How it compares to Massachusetts' real estate trends? We have had some time to review the market data from 2019 and have some interesting findings to report.  We'll take a few key points and break them down 

Inventory: What is "month's supply" and who cares?

Month's supply of inventory is a way of describing how much property is currently salable in the market.  It tells us that, if no homes were added to the market, how long it would take for all 'for sale' properties to be sold.  It is based on how quickly homes have been selling over the past few months and how many homes are currently for sale.  When it comes to inventory, 2019 saw a decline and was down nearly 20% from 2018 (see the graphic at right from the Cape Cod and Islands Association of Realtors).  This has been the overall trend since 2015 when months supply of inventory was at 7.9, at 2019 year end it was 4.0.  Who cares?  With inventory so low the market favors sellers.  Generally between 5 and 6 month's of inventory is considered a healthy and sustainable amount.  4 is heavily in seller favored territory and means that buyers may compete against multiple offer scenarios or have difficulty seeing a home before an accepted offer takes it off the market.  The lesson for buyers is be prepared! Contact one of our local agents to see what this looks like.

 

 

Median Sales Price: Why does it keep going up?

2019 median sales price in Barnstable County rose 2.5% to $410,000.  Median price in 2015 was $350,000 and has been steadily increasing since then with the steepest gain in 2018.  Something to note however is that not all markets on the Cape are experiencing an increase in this metric while others are far outpacing the larger area. The question as to why median price continues to increase is multifaceted.  Since 2015, the larger economy has seen cumulative inflation about 8.5%.  The Cape Cod real estate market has seen cumulative median price increase of 17% in this same time leaving us with 9.5% to account for.  Supply and demand plays a significant role in the Cape economy and with inventory decreasing since 2015 and demand remaining high, this places upward pressure on the price of homes.  Additionally with construction costs also quite high new homes are not being built which contributes to the lack of inventory.  Also in order for builders to make a profit, new homes are being built at ever higher price points driving the market up even more.  

Statewide and Larger Trends: Cape in Context

Massachusetts as a whole is also suffering from historically low inventory and increasing median sales prices as well.  According to the Massachusetts Association of Realtors (MAR), even with the rising cost of homes, Massachusetts first-time home buyers comprise 45% of home buyers, way above the national average of 33% of home buyers. This is good news as it indicates the State is a desirable place to live. MAR states that the increasing complexity of buying homes, has 93% of buyers using a real estate agent to assist in the process of buying as opposed to purchasing directly from a builder or owner (for the entire press release, see here). This trend has increased through this decade. Additionally, the historically low interest rates throughout much of 2019 (3.375% at the time of writing), coupled with the 88% of buyers financing their homes, highlights the strength of this real estate market for sellers and buyers.  

As always, to discuss the larger market trends or find out about buying or selling in your market, contact one of our agents today.  

Cape Cod Market Update February 2020

January Review:

After the holidays the January market saw an increase in new listings which was up nearly 14% from January 2019.  We are hopeful this trend will continue and result in more months supply of inventory as we enter the Spring season.  We also note several trends in other metrics that indicate what the Spring may look like.  Days on market has remained largely unchanged since May (with a slight dip in the summer).  This indicates relative balance between quick sales due to under-pricing or motivated buyers and prolonged sales due to over-pricing or a dearth of buyers.  Also months supply of inventory is currently the lowest it has been in January since at least 2017.  If these trends continue the market may look similar to 2019: low inventory and seller favored.  

However, we are seeing something else happening.  The single-family home affordability index, if you have been keeping up with our reports here, remained largely the same throughout 2019 and the trend goes all the way back to the end of 2017 (with a brief decline in the fall of 2018).  This indicates that the median income on Cape Cod has been keeping pace with the median home sale price increases over the last two years.  The trend overall has the affordability index hovering in the 80s and since a score of 100 indicates the median household income can afford the median homes sale price, the Cape is still not as affordable as it could be, but at least the trend is not one of decline.  Contact us today, we are always glad to discuss the market in further detail if you have questions. For more market data check out our blog category Real Estate Trends.

Recent Market Summary

    Nov     Dec     Jan  
    Closed Sales    334     350     270  
   Inventory     1,700     1,346     1,397  
   Median Sales Price   $439K     $436K     $431K  
   Avg Days on Market    109     109     108  
   Avg % of Original Price    93%     93%     93%  

 

 

Cape Cod Market Update January 2020

December Review:

The numbers are in for December 2019.  When considering the fall market we see that closed sales have remained relatively consistent but new listings have not kept pace so inventory has been declining since September.  Compared to December in 2018, inventory is down approximately 21% and new listings about 17%; this coupled with the 2019 fall data signals a likely dearth of available listings in the near-term.  We do expect this time of year to be slow and with exceptionally low mortgage rates as well as ongoing wage growth in the market at large experts are expecting buyer activity to remain healthy into 2020.  While national new construction was on the rise in 2019, lack of inventory continues to be a problem in the local Cape Cod market as is partially signaled by a decline of 5.5% in the affordability index from December 2018.  We also went back and checked the single-family-home median sales price since 2016: $365k,   2017: $380k,   2018: $400k.  The numbers are not yet complete on 2019, but we expect them to follow this trend for the near future unless changes are made to local housing policies and/or larger economic impacts hit the Cape.  Contact us today, we are always glad to discuss the market in further detail if you have questions. For more market data check out our blog category Real Estate Trends.

Recent Market Summary

    Oct     Nov     Dec  
    Closed Sales    379     334     350  
   Inventory     1,975     1,700     1,346  
   Median Sales Price   $440K     $439K     $436K  
   Avg Days on Market    103     109     109  
   Avg % of Original Price    94%     93%     93%  

Cape Cod Market Update December 2019

November Review:

 The seasonal slowdown was in full swing in November.  When considering the past three months (Sept-Nov) we see a normal decline in Median Sales Price as well as Inventory.  We also see the related increase in Average Days on Market since buyers and sellers are now caught up in the holiday season and some homes take a bit longer to find a buyer.

  When comparing year-over-year single family homes we are seeing closed sales, inventory and new listings all down by more that 10% compared to this time last year.  National economic trends are generally strong and mortgage rates at local banks are hovering around 3.75%.

  If you are considering getting your home ready for the Spring market, now is the time to spruce things up a bit.  Check out our advise for 5 Things to do Before Listing as well as our insights into investing in home improvements before you sellContact us today with any questions, we are always glad to help.

For more market data check out our blog category Real Estate Trends.

Recent Market Summary

    Sept     Oct     Nov  
    Closed Sales    339     379     334  
   Inventory     2,090     1,975     1,700  
   Median Sales Price   $452K     $440K     $439K  
   Avg Days on Market    98     103     109  
   Avg % of Original Price    94%     94%     93%  

 

Cape Cod Vacation Rentals Update Fall 2019

Vacation rentals on Cape Cod have been undergoing significant changes in the past 9 months.  Here is a quick update on the recent developments.  For more information we encourage you to visit the Massachusetts website of FAQs here 

What is a short-term rental?

According to the Commonwealth, "A short-term rental is an occupied property that is not a hotel, motel, lodging house or bed and breakfast establishment, where at least 1 room or unit is rented out by an operator through the use of advance reservations. A short-term rental includes an apartment, house, cottage, and condominium. It does not include property that is rented out through tenancies at will or month-to-month leases. It also does not include time-share property. A short-term rental is a rental that is not for more than 31 consecutive calendar days. The new law imposes state and local excises on short-term rentals of property for more than 14 days in a calendar year, starting July 1, 2019 for which a rental contract was entered into on or after January 1, 2019.  "

Taxes can be as much as 17.45%

All municipalities in the Commonwealth are subject to the 5.7% room occupancy tax.

Towns can choose to impose two additional taxes.  First is the local excise tax which can be anywhere from 0 to 6%.  Second is a Community Impact fee which can be anywhere from 0 to 3%.  Check the database here for your town or see below for all 15 Cape Towns.  Additionally the Cape Cod and Islands Water Protection Fund excise is 2.75% (currently no town on Nantucket or the Vineyard are subject to this).

Owner Requirements

Owners are now obligated to carry $1 million in liability insurance on each property.  Each property must be registered BY THE OWNER through MASS tax connect and tax must be remitted by the 20th of each month for the previous month's stays.  A full list of owner requirements is listed here.

What's being considered for the future?

As of right now (11/7/2019) Community Impact Fees have not been implemented in any Cape Cod Towns. However it behooves owners to read the First and Second Local Options of this FAQ from the State.  In these instances towns can add up to 3% Community Impact Fees if units are professionally managed.  If a tax of 17.45% sounds unreasonable, please consider speaking with your local representative to share your opinion.

Municipality Current Rooms Tax Rate Current Rooms Tax Effective Date Pending Rooms Tax Rate Pending Rooms Tax Effective Date Short-term Rental Community Impact Fee Rate Short-term Rental Community Impact Fee Effective Date Short-term Rental Professionaly Managed Option Short-term Rental included within 2-3 Family Home Cape & Islands Water Protection Fund Tax Rate Cape & Islands Water Protection Fund Effective Date
Barnstable 0.06 10/1/2010             0.0275 7/1/2019
Bourne 0.06 7/1/2019             0.0275 7/1/2019
Brewster 0.06 7/1/2010             0.0275 7/1/2019
Chatham 0.04 7/1/1988             0.0275 7/1/2019
Dennis 0.06 1/1/2020             0.0275 7/1/2019
Eastham 0.04 1/1/1987             0.0275 7/1/2019
Falmouth 0.05 1/1/2020             0.0275 7/1/2019
Harwich 0.04 1/1/1987             0.0275 7/1/2019
Mashpee 0.06 10/1/2019             0.0275 7/1/2019
Orleans 0.06 7/1/2019             0.0275 7/1/2019
Provincetown 0.06 7/1/2010             0.0275 7/1/2019
Sandwich 0.04 7/1/1986             0.0275 7/1/2019
Truro 0.04 12/1/1985             0.0275 7/1/2019
Wellfleet 0.04 7/1/1986             0.0275 7/1/2019
Yarmouth 0.06 7/1/2010             0.0275 7/1/2019

 

Curious about finding a rental management partner in Chatelain Real Estate, contact us today. 

Take a look at what is for sale throughout Cape Cod here

Looking for a vacation rental on Cape Cod, click here?

 

Cape Cod Market Update November 2019

https://campaign-image.com/zohocampaigns/369239000002508004_zc_v18_market_update_oct_2019.jpgIn October Barnstable County saw more of the fall slowdown with a significant reduction in new listings compared to this time last year.  Additionally new listings are down 5% year-to-date continuing the trend of historically low numbers of homes for sale.  Despite this the October market largely kept pace finishing with 5.7 months supply of inventory available.  Remember that 6 months is the magic number for a sustainable market between buyers and sellers.    Single family homes have not seen significant gains in median price since June and the affordability index has gained 20% since the start of the year signaling good news for buyers.  In addition continued low mortgage rates (~3.625% at time of writing) helps buyers looking to get into the market.  

  We will continue to keep our eyes on the amount of inventory as well as the months of supply available Cape-wide.  However we can't stress enough how the entire County is not representative of market niches.

 

Recent Market Summary

    Aug     Sept     Oct  
  Closed Sales     382     339     379  
  Inventory     2,082     2,090     1,975  
  Median Sales Price     $431K     $452K     $440K  
  Avg Days on Market     90     98     103  
   Avg % of Original Price     94%     94%     94%  

Cape Cod Market Update October 2019

September Review:

  The fall market is looking lackluster now that the September numbers are in.  With new listings, closings, and inventory down we did not see as significant an amount of activity in the market as this time last year.  With inventory countywide at a 6 month month level,  neither buyers nor sellers see a great advantage currently.  Not all markets are seeing this balance though so don't hesitate to check in if you are curious about a certain subset of the market (i.e. towns or price ranges).  Additionally, the lack of new listings may lead to a further drop in supply of inventory but fewer buyers in the market may not result in much change going into the usually slower holiday season.  Nationally a strong economy and low mortgage rates are helping to keep the real estate market active.

For more market data check out our blog category Real Estate Trends.

Recent Market Summary

    July     Aug     Sept  
    Closed Sales    341     382     339  
   Inventory     2,044     2,082     2,090  
   Median Sales Price   $435K     $431K     $452K  
   Avg Days on Market    101     90     98  
   Avg % of Original Price    94%     94%     94%  

 

Check out these two blogs for more valuable insight into real estate on Cape Cod

 

  5 Things to do before listing your home  

    Shellfish Season is Here!  

      
   

Cape Cod Market Update September 2019

August Review:

   The trends in the Cape Cod market this year seem to be delayed approximately a month compared to last year.  In other words, August this year compares more closely with July last year.  We felt this in the Spring and now again in the late Summer as the August data seemingly reflects what is typically the July slowdown (whereas July was as busy as June the year before).  We see this normal seasonal slowdown reflected in the chart at right in that closed sales were up while new listings and inventory were all down.  We don't think it is worth ringing any alarm bells but the lack of new listings in August could lead to a more competitive market for buyers in the fall.  The most relevant factors influencing the real estate market right now are: historically low interest rates, overall economic trends looking favorable (at least in the near term), Barnstable County inventory at a healthy level of 6 months.  On another note we were pleased to see the affordability index move towards improving affordability in the single family home market in August, an increase in affordability of 7.5% compared to this time last year.  For more market data check out our blog category Real Estate Trends.

Recent Market Summary

  June   July     Aug  
    Closed Sales  361   341     382  
   Inventory   2,067   2,044     2,082  
   Median Sales Price   $450K     $435K     $431K  
   Avg Days on Market  106   101     90  
   Avg % of Original Price  95%   94%     94%  

 

Check out these two blogs for more valuable insight into real estate on Cape Cod

 

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