Our mobile site is optimized for smaller screens.

TRY IT NO THANKS

Real Estate Trends

Market Trends and Analysis - Part 3

    Our goal in this series is it to help you understand how we interpret markets on the Cape and how this informs our recommendations when developing pricing strategies.  In this installment we will be evaluating a specific market - single family homes on the water, Barnstable to Orleans (Homes on Water Bodies & Homes on Beaches). Immediately we notice some relevant trends.

    First the median sales price for these homes is much higher than the Barnstable County median at $1,200,000, yet take far longer to sell with a median days on market of 95 (and an average of 231).  To be fair these are expensive waterfront homes, occupy a smaller market niche, and ultimately take longer to sell.  We also see, based on the bar graph at left, that the group of fastest selling homes (43 days or less) sell for 94% of the asking price - as compared to Brewster in Part 2, those fastest selling homes did so in 25 days or less with 99% of the asking price. 

    Getting back to the waterfront case study, the homes that take longest to sell require price reductions on the order of 12% off the original asking price and only sell for 79% of the original asking price.  What we see here is that people tend to price waterfront homes very aggressively (high) and require significant reductions before they sell.  Furthermore these homes are sold for far less than the original asking price as well as the current asking price - something to think about if you are in the market for a $1,000,000 home on the water.  Consider also that many of these sellers have a price in mind and are willing, can afford, and believe that waiting will get their asking price; however, as is evident in the data, waiting longer does not return a higher sale price.

    We discovered one more interesting thing here.  When analyzing certain markets it is useful to know how square footage affects sale price - and it may not be what you think.  In this market (and this is not always the case) the larger the home the fewer dollars per square foot ($/sqft) it returns.  Using the trend line on the graph we would predict that a 9000sqft home would sell for about $500/sqft whereas a 1000sqft home would sell for closer to $600/sqft.  Mind this is a loose relationship but it is a trend that reappears in many markets.  The takeaway?  Larger waterfront homes are having a harder time selling than smaller ones - price reductions may be warranted earlier in developing a sales strategy.

  Check back next time for our final part in the series: some long term analyses.

Market Trends and Analysis - Part 2

    Our goal in this series it to help you understand how we interpret markets on the Cape and how this informs our recommendations when developing pricing strategies.  In this installment we will be evaluating a specific market - homes in Brewster between $300k and $500k.  We chose this market because it includes the current median sales price in Barnstable County of $380,000. 

    From August 1, 2017 until October 26th (when we ran the numbers) only 25 homes have sold in this price range in Brewster.  Remarkably, the median sales price is ...$380,000, and the average days on market is 66.  As a result we note that in the past three months houses in Brewster sell more quickly than the average in Barnstable County.  Furthermore Brewster shows signs favoring sellers.  We see this in the fact that homes sell relatively quickly and return a higher % of original list price than Barnstable County overall (please see Part 1 for this graph and explanation).  When looking at the last 3 weeks we also note that fewer price reductions are needed before homes are selling.  Other points of interest that we consider - though don't have time to discuss fully - include absorption rate, total listings and withdrawn listings.

    We look forward to introducing part 3 of this series when we compare markets with specific features (water!).  If you are curious about how your home will compete in your local market please contact us today or click here to get a home valuation.

Market Trends and Analysis - Part 1

    We always try to understand the real estate market on Cape Cod in a variety of ways and to explain our understanding to our clients.  For the first installment of this series we will be looking at Barnstable County as a whole and explaining an interesting trend that carries over into many markets on Cape Cod.  Our goal is to help you understand how we interpret the market here on the Cape and how it informs our decisions when developing pricing strategies.

    To begin we found residential property sales from $100,000 to $2,000,000 for the past 365 days and calculated the median days on market and sales price.  In this case median days on market is 55, median sales price is $380,000.  Why median and not average? When describing a set of data that is not normally distributed (a bell curve), average is not necessarily the best way to describe the central tendency of the data.  The median says that 50% of homes that sold were equal to or greater than that price, and the other 50% were less than or equal to that price.  This helps us get a better picture than the average for what a typical house sells for on Cape Cod (since only a few expensive homes will pull this average up).  Also for the days on market the same discrepancy is apparent: median is 55 days, average 100 days.  The average in this case is skewed above what is typical because some houses take a very long time to sell.  So we stick with median for these cases.

    The other thing we find is that the longer a house stays on the market, the less money it makes...in two ways.  Notice the graph at right.  The pairs of bars represent the fastest selling homes (selling in less than 26 days), the middle (26-118 days) and the slowest selling homes (more than 118 days).  The red bars are the current price as a percent of the original list price.  The blue bars are the sale price as a percent of the original list price. What we see is that the fastest selling houses don't reduce in price (red = 100%) and sell for very near the original asking price (98%).  The next set of homes reduce their current price to 97% of original and sell for only 94% of the original.  The last group reduce the price yet again and sell for even less than the original asking price.  The trend is towards weaker offers generating lower sales prices.

    The lesson is three fold.  First, by pricing your home well from the start you are increasing your chances of getting a better offer.  Second, leaving your home at a high price for too long tends to return lower offers - a principle which is more pronounced the longer your house spends on the market. Finally, by using qualified local real estate agents who understand the local markets you are maximizing your chances of pricing your home correctly from day one.  One final point, agents do not determine the price of your home, the market does.  

    If you are curious about how your home will compete in the local market please contact us today or click here to get a home valuation.

 

Airbnb, Mountain Towns and Cape Cod

    We think this article by Tom Vanderbilt at Outsideonline is particularly poignant.  While it characterizes a mountain town in Colorado the parallels to Cape Cod are astounding.  Vanderbilt describes how the growing trend in short term rentals through companies like Airbnb is slowly eliminating potential housing for residents.  The problem is one of economics: if you can own a home in a desirable area, why would you rent it on a long term basis - yearly for example - when you can rent it on a short-term basis, through a company like Airbnb, and generate more income?  Vanderbilt follows a local father struggling to make ends meet, working multiple jobs, and worrying about where he will live when the tourist season starts...sound familiar?  What makes the Cape such a great place to live also makes it a great place to vacation and it is difficult to dissuade a homeowner from the extra income potential.

    On Cape Cod we are finding that more and more homes are being rented just for the summer, making them unavailable for long term lease seekers.  In fact, in response to the decreasing supply of affordable housing on Cape Cod, CCYP is holding a design competition for architects (see the brochure here).  The contest encourages a repeatable homes design balancing 'affordability, utility, adaptability, durability and suitability for the target demographic (young professionals, working families, year round residents).'  Other initiatives on Cape Cod seek to remove restrictions on building and renting accessory dwelling units (more commonly known as in-law apartments) to increase the amount of available housing.  This link comes from the local MLS on Cape Cod and describes the problem well.

    While the economy plays a large roll in housing trends on Cape Cod we are curious to see where the future will lead.  On one side of the coin locals will be increasingly priced out of the market and the Cape will be a resort where service personnel commute from less expensive housing elsewhere.  On the other side of the coin the development of Cape Cod will find a balance between the tourist economy that sustains the region and more permanent solutions.

If you are interested in learning more about housing on Cape Cod and buying or selling property please contact us today with your questions.

 

Zestimates as appraisals

We have been tracking an interesting development with the 'Zestimate' function of Zillow.  You can find an article here by Kenneth Harney in the Washington Post and another here by Rachel Koning Beals of Market Watch.  To briefly summarize Zillow.com uses a feature involving a proprietary algorithm that pulls sales data and other factors (again we aren't sure what these factors are exactly) and produces an estimate on the price of the property.  From Zillow's own definition found on their website "The Zestimate® home value is Zillow's estimated market value for an individual home and is calculated for about 100 million homes nationwide. It is a starting point in determining a home's value and is not an official appraisal. The Zestimate is automatically computed daily based on millions of public and user-submitted data points."

Currently a class action lawsuit has been filed in Cook County, Illinois that claims the Zestimates® look too much like official appraisals and are misleading consumers.  In addition the suit points out that no consent is given by the homeowner for an estimate to be posted online.    

Our take?  In the absolute simplest terms real estate is a market like any other and the market determines the price (not Zillow, not your neighbor and not even your real estate agent).  Take this example, a house lists at $400,000, five buyers appear on the first day and each offer full price for the house.  The seller allows for the 5 buyers to present their final and best offer which turns out to be $420,000.  In this case the high demand allowed for a higher sale price.  If the house appraised at $400K it likely would still have sold for $420K because the MARKET demand was so high.  The alternative: a house lists for $400,000 and is appraised for the same.  However, in this hypothetical market there are lots of houses just like this one for sale.  The house is eventually sold after a very long time for $375,000 because the high supply of similar homes and low demand from buyers influenced the price for the home - the MARKET dictated the sale price.  

Do we think we know about writing a sophisticated algorithm that analyses millions of data points and synthesizes the result into an estimate of value?  Absolutely not.  Do we know if the new town zoning law restricting improvements to land adjacent to a salt marsh affects the price of your undeveloped land?  You bet.

Why don't you give us a call and see if three decades of experience and two generations of tradition can help you in the real estate market here on Cape Cod. For a professional home valuation done by local agents click here.

 

 

Trends in home ownership

    One question that comes up frequently in conversations these days is "why is inventory so low right now?"  This is a great question to ask and informs much larger discussion about the economy, local real estate markets, and larger social trends.  But let's start at the beginning.

    When real estate agents talk about 'inventory' they are really speaking of the number of homes, lots, commercial properties etc... that are currently for sale.  Generally the unit in which inventory is expressed is time - in other words 'there are 8 months of inventory'.  The inventory is the supply (homes) available in the market and so has an effect on both the sale price as well as the amount of time that homes stay on the market.  In other words, potential buyers in a market with high inventory may not be motivated to make strong offers because they know that there are a lot of comparable homes they can buy.  Additionally buyers may spend more time shopping around because there are so many homes to see that match their criteria.  If you were a buyer in the early '80s or '90s you may have experienced a market like this (although regionally markets vary quite significantly). A more recent example of a high inventory market was a result of the great recession when the housing bubble burst.  In this instance the unprecedented level of foreclosures flooded the market with homes, when taken simultaneously with the concurrent financial instability, some homes spent years on the market.  The graph from the St. Louis Fed gives a nice snapshot of housing inventory from 1963-2017.

    The alternative to a high inventory market is, obviously, a low inventory market.  These are generally characterized by fewer days on the market and higher sale prices.  Potential buyers outnumber the available homes so bidding wars and offers over asking price are more common.  A great example of this is the market in San Francisco currently - the city is so desirable for a variety of reasons that home supply is inadequate to meet the demands of the market - the result, outrageous prices.  

    With this background let's return to our original question, 'why is inventory so low?'.  There is no short answer but we have a few theories and found this article by Connor Dougherty from the New York Times to be incredibly insightful.  In brief his theory is that people are not selling their homes but instead are choosing to stay in smaller, traditionally starter homes, or choosing to upgrade their existing homes rather than move for more space or amenities.  The economic impact of the great recession allowed many homeowners to refinance into incredibly low interest rates, as a result they are deciding to stay in their current homes rather than incur the expenses of a move with a higher interest rate.  Additionally the demographic of baby-boomers are largely at an age where many are still in the workforce (partially due to the great recession) and are are not quite ready to downsize. Because of the disproportionate affect of the boomers on the economy the availability of homes is low.

    Will this last forever? probably not, but here are some things to consider.  First, as the boomers age, they will begin to downsize with more frequency thereby increasing inventory.  Second, many millennials were young professionals early in their careers and family lives when the great recession hit.  They saw the result and suffered the consequences at a time in their lives when they were least equipped to deal with it.  Many lost jobs, moved back home or chose to continue renting rather than stick their necks out with a mortgage.  Additionally and for whatever reason, millennials are delaying starting families.  Given the size of this demographic this is surely impacting the market, we'll see how millennials will affect the real estate market as more and more of them graduate into adulthood.

If you are interested in learning how your home will compete in the market or your position as a buyer, contact us today.

 

When is the right time to sell your home?

Have you been tossing and turning at night wrestling with the decision to sell your home?  When is the right time to sell?  Am I going to regret not selling my home now?  Will the housing market slip back towards favoring buyers?  Deciding to sell your home can be a serious decision but don't be discouraged; keep these points in mind and you will be on the right track to making a good decision about whether to sell your home.

 

Equity

    Put simply, equity is how much of your home you actually own.  It is a funny thing to think about but mortgages, liens, home equity loans etc... all mean that something other than you (usually a bank) have an ownership interest in your home.  If you sell, all of these mortgages and liens need to be paid before you.  Getting a comparative market analysis from a real estate agent gives you an idea of the value of your home in the current market. Then you can calculate how much equity remains in your house for you to take away. 

 

Equity is not Net

    Unfortunately, your net profit from the sale of your home is not, simply put, net = sale price - mortgage.  Just to list a few of the often overlooked expenses for which sellers are responsible: Attorney's fees, broker's fees, title V septic inspections, and sales tax stamps all subtract from the overall proceeds of the sale.

 

 

 

Trends in the Market

    Everyone loves to predict the future so why should prospective sellers be any different?  Familiarizing yourself with the local market data as well as talking to a real estate agent about comparing your home to others in the area (comparative market analysis) will help you decide if now is a good time for you to sell.

 

 

Personal Needs

    One factor that should never be overlooked is simple reality.  When you (you have time) to sit down and rationally evaluate your current life situation, often the decision to sell or stay becomes more clear.  Are you expecting triplets and the one bedroom condominium suddenly seems like a closet?  Selling and upgrading is probably the right decision regardless of how much of the mortgage is paid off.  Are you tired of that old drab kitchen?  Perhaps new cabinets and fresh paint is all you need.

As always please contact us with any questions and put three decades of experience and two generations of tradition in your corner.

 

CAPE COD SECOND HOME OWNERSHIP

Seasonal/Recreational/Occasional Use Homes also known as Second Homes

Have you ever wondered as you are driving around the Cape, how many homes are not primary residences?  It is a surprise to find out how different the percent of second homes is in the various towns.  Below are the percentages noted in the 2010 US Census Demographic Profile Data.      

  • Sandwich            13          
  • Bourne                20.6
  • Falmouth             32.3
  • Mashpee             34.5
  • Barnstable           22
  • Yarmouth             31
  • Dennis                 50.9
  • Brewster              39.6
  • Harwich               40.5
  • Chatham              52.9
  • Orleans                38
  • Eastham              55.8
  • Wellfleet               64
  • Truro                    64.6
  • Provincetown        52.8

TIME TO MOVE--MORTGAGE RATES ARE GOING UP

If you have been waiting for the market to improve before buying a Cape Cod property, it's time to get the job done.  The Fed has indicated that mortgage rates are on their way up, and in anticipation the markets have already started raising rate.  Last week alone we saw the rate for a 30 year conventional fixed mortgage at one local bank jump from 3.5% to 4%.  This added nearly $30/$100,000 to your monthly payment.  If rates go up to 5%, your payment would go up nearly $90 per month per $100,000!!!!   So it's time to get moving.  Check out 21 Chase Avenue that has room for your entire gang and all our other listings.  Give us a whistle to make your move headache-free and fun.     

Home ownership rates down, but don't be discouraged

According to the US Census bureau's third quarter housing report released this week, home ownership rates in America are down to their lowest point in 19 years.  Sounds like bad news for buyers and sellers alike, right?  Not so fast...a closer look reveals that buyer behavior has more to do with it than strict market conditions. 

Mortgage rates have been stable over the last 18 months, and are still at near-historic lows -- yesterday's advertised rate for a 30-year fixed mortgage at one local bank was 4% - exactly what it was in June of last year.  In addition, lending standards have loosened considerably over the last year.  We are seeing bridge loans, asset-based underwriting, and first-time homebuyer products hitting the market for the first time since 2008.  In fact, USDA, FHA and MA Housing all now offer low-to-no down payment products with little or no PMI.  The bar for first time homeownership has not been lower in many, many years.

So why are ownership rates so low?  According to industry analysts, it is the changing life choices of millenials that are driving market conditions.  Young people are getting married later, having children later, and consequently waiting longer and longer to buy a home.  Sam Zell of Equity Residential was quoted in Bloomberg as saying that "the deferral of marriage has...a staggering impact on real estate."

There hasn't been a better time to buy a home in recent memory - near-historically low interest rates, continually loosening lending and underwriting standards, and a balanced local inventory ensure that you can find a home at a good price, finance it at a great rate, and put very little money down.

As always, if you are thinking of buying, give us a call - we would be delighted to answer your questions, and help you take advantage of this excellent market.  We look forward to hearing from you!

 

 

combined-feed

Client Testimonials

Having purchased multiple properties in recent years, I can say unequivocally that Ed and Agnes are the two best buyers’ agents with whom I’ve ever worked.   In my experience, their responsiveness, honest and timely advice and knowledge of the Cape’s real estate market are unmatched.  Moreover, even though I was living a thousand miles away during my property search and not always available to visit the area, they did an excellent job of helping me select a home, even going so far as to take extra photos of the property and the surrounding neighborhood to ensure that it met my criteria.    

Recent Blog Posts

Market Trends and Analysis - Part 3 - 11.02.2017

    Our goal in this series is it to help you understand how we interpret markets on the Cape and how this informs our recommendations when developing pricing strategies.  In this installment we will be evaluating a specific market - single family homes on the water, Barnstable to Orleans [...]

Market Trends and Analysis - Part 2 - 10.26.2017

    Our goal in this series it to help you understand how we interpret markets on the Cape and how this informs our recommendations when developing pricing strategies.  In this installment we will be evaluating a specific market - homes in [...]

Market Trends and Analysis - Part 1 - 10.19.2017

    We always try to understand the real estate market on Cape Cod in a variety of ways and to explain our understanding to our clients.  For the first installment of this series we will be looking at Barnstable County as a whole and explaining an interesting trend that carries over into many [...]

Read More