Real Estate Trends

Cape Cod Market Update October 2020

September Review: Aug Market update

 The Cape Cod real estate market continues its foray into uncharted waters.  September saw the highest single family median sales price ever recorded in Barnstable County at $550,000. Additionally inventory remains incredibly low with only 921 homes available cape-wide.  These two factors are putting incredible pressure on buyers by resulting in multiple offer scenarios and many homes being sold for over asking price, indicating the desperation for housing on Cape Cod.  While this market seems good for sellers in the short term, an unsustainable housing market on the Cape is not good for anyone, even sellers. Stay healthy and safe everyone!  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

    July     Aug     Sept  
    Closed Sales    582     509     559  
   Inventory     1,128     1,019     921  
   Median Sales Price   $499k     $545k     $550k  
   Avg Days on Market    106     99     97  
   Avg % of Original Price    95%     96%     97%  

Cape Cod Market Update September 2020

August Review: Aug Market update

  We are in an unprecedented market on Cape Cod folks.  Sellers are heavily favored in the current clime as we are seeing multiple offers over asking price on many properties, a norm previously only seen in super-hot markets like Boston, San Francisco and other booming urban areas.  Inventory is down 51% from August last year and the lack of inventory is driving up median sales price (up 27% from last year).  Despite the lack of inventory, both pending sales and closed sales are up significantly as well, 71% and 31% respectively, indicating an incredible demand for single family homes on Cape Cod.  What do we expect for the fall? Who knows? We are in uncharted waters here. What we do know is that, if you are thinking of selling, now is an excellent time.  If you are thinking of buying, while the market may seem outrageous there are still good values out there so don't get discouraged. Stay healthy and safe everyone!  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

    June     July     Aug  
    Closed Sales    419     582     509  
   Inventory     1,296     1,128     1,019  
   Median Sales Price   $475k     $499k     $545k  
   Avg Days on Market    108     106     99  
   Avg % of Original Price    95%     95%     96%  

Cape Cod Market Update August 2020

July Review: July Market update

July, like June, saw a significant uptick in real estate activity on Cape Cod. Presumably buyers are seeing the benefits of the Cape lifestyle and, through demand, creating an exceptionally hot market. Closed sales and pending sales are both up significantly from this time last year leading to the dearth of inventory that is still driving the market (as well as driving increasing prices). This is a heavily favored seller's market with only 3.1 months of inventory available across the county (less in certain markets) and properties seeing multiple offers and going under contract quickly. This trend follows the larger national trend of more interest in suburban, exurban and rural areas than cities. If you are looking for a getaway from the craziness in your area, we do still have a few weeks available in late August and September at our seasonal vacation rentals. Stay healthy and safe everyone!

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

    May     June     July  
    Closed Sales    239     419     582  
   Inventory     1,479     1,296     1,128  
   Median Sales Price   $455K     $475k     $499k  
   Avg Days on Market    102     108     106  
   Avg % of Original Price    95%     95%     95%  

Cape Cod Market Update June 2020

May Review:

  The May market felt continued pressure from COVID-19 resulting in uncharacteristically low new listings, closings and inventory. With so much pressure on the supply side, median sales price increased 6.4% from this time last year. Fortunately, Governor Baker's transition into phase 2 of reopening on June 8th has made both sellers and buyers more comfortable with the transaction process so we expect to see activity pick back up in the market (in fact we have already seen activity start to increase). While June 2020 likely won't be as busy as June 2019, we expect to see positive trends towards a more normal market continue. Additionally, short-term seasonal vacation rentals are now open with some restrictions as well as increased cleaning requirements and, with restaurants starting to open with limited capacity/outdoor seating, the Cape is on its way to a subdued but wonderful summer. Stay healthy and safe everyone!

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

    Mar     Apr     May  
    Closed Sales    326     264     239  
   Inventory     1,471     1,455     1,479  
   Median Sales Price   $441K     $440K     $455K  
   Avg Days on Market    124     116     102  
   Avg % of Original Price    94%     95%     95%  

Cape Cod Market Update May 2020

April Review:

  April certainly was a little unusual. When the Spring market should have been in full swing much came to a grinding halt instead. Closed sales were down 22% from April 2019 and saw a decrease from March 2020, which is unusual as well. We expect the trend of low sales to continue into May since the lagging indicator of number of pending homes (those that are under contract) was down 43% from April 2019.  Inventory was also low in April and was down nearly 60% from 2019, and was nearly flat from March, again an unusual thing to see when the Spring market should be taking off.

  Are we concerned? Well, not exactly.  While we do expect the overall trend of low home sales and inventory to continue for another month or two, depending on the timing of Governor Baker's 4 phase reopening plan, there are good things too.  First, we are open for business and doing business (see the blog from our agent, Amanda Bebrin, regarding what buying looks like with social distancing in place). If you need to buy or sell, we can, and are, getting it done. In the short-term there is pent up demand for homes and many sellers are waiting to list or have removed their homes from the market, so we expect a boom as more restrictions are eased. Second, mortgage rates are at near historic lows and if you are buying, now is a good time for financing. Third, short-term seasonal vacation rentals are open to essential workers and we look forward to having them open fully in phase 2, which may be as soon as June 8th. Finally, after working from home since March, we are eager to reopen the office to regular visitors and hours, following the outlined guidance from the Commonwealth. All of these things indicate that life will, soon, be getting back to normal. Stay healthy and safe everyone!

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

    Feb     Mar     Apr  
    Closed Sales    324     326     264  
   Inventory     1,426     1,471     1,455  
   Median Sales Price   $435K     $441K     $440K  
   Avg Days on Market    120     124     116  
   Avg % of Original Price    93%     94%     95%  

Cape Cod Market Update April 2020

March Review:

Well, life looked a lot different in March than we are used to and we can only assume that any changes the Cape Cod real estate market felt in March are merely the beginning of a trend line that we do not yet have a full view of. Some good news is that Gov. Baker has deemed real estate an essential service so we are still able to perform all of our normal functions, but with some adaptation based on the social distancing recommendations. This is crucial as it allows for home purchases, often not remotely discretionary, to continue in an otherwise crazy time. Looking at last month here is what we know.  Inventory is down significantly from this time last year, by approximately 20%.  Additionally we did not see a significant rise in the number of new listings and some homeowners chose to temporarily withdraw their properties from the market in light of COVID-19.  These factors have resulted in a mere 3% gain in inventory instead of the 8% gain we saw for the same period in 2019.  Another important point here is that the magnitude of the shutdown was not felt until the middle of March so these numbers do not reflect a market completely under the current lock-down guidelines. However closings were up compared to 2019.  This is likely because the time that it takes for transactions to finalize, typically 45 days, means many of these closings were initiated back in January.  We expect that this lack of inventory may push prices up further in the short-term though the longer-term consequences of a nation's economy stuck in first gear are much more difficult to predict. However, mortgage rates are at record lows and the increased number of closings in March indicated what would have been a strong Spring market if not for the lock-down. We are hoping that enough of the emergency economic measures for renters and homeowners will keep people in their homes safe and healthy. Stay healthy and safe yourself!

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

    Jan     Feb     Mar  
    Closed Sales    270     324     326  
   Inventory     1,397     1,426     1,471  
   Median Sales Price   $431K     $435K     $441K  
   Avg Days on Market    108     120     124  
   Avg % of Original Price    93%     93%     94%  

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%