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%

 

Buyers are looking for homes that sparkle.  Some homes for sale on Cape Cod have been recently renovated and benefit from fresh paint, new floors or carpets, and updated appliances in the kitchen, bath or both.  A home with newer updates is definitely more appealing to buyers (but worth it? Please see our thoughts here) and with our simple trick you too can make your home look its best without spending thousands of dollars.

Ready? Vinegar, warm water, elbow grease.  No kidding.  Too often we see homes that are, quite simply, dirty.  Many sellers do a decent job cleaning their homes by sweeping, vacuuming, and mopping floors.  What so many people miss are the walls!  Spend a little time with some diluted white vinegar and wash every surface in your home.  You will be amazed at how much grime can appear on a rag from, what you thought was, a 'clean' flat wall.  Spend a little extra time by beds, furniture, paintings, and anywhere that people touch (light switches, around door knobs etc...).  Haven't you noticed that light discoloration on the wall when you move the bureau?  When your home is empty and that bureau is gone, every potential buyer walking through will notice it as well.  Another great tip: use a 'Magic Eraser' or similar product for larger marks, but be careful, these can change the texture of paint which is very visible in certain light.  

If you are trying to squeeze every ounce of potential value out of your homes consider this inexpensive way to make it more appealing to buyers.  When someone walks in and can see everything that is wonderful about your home without the distraction of dirty walls, you give yourself a great shot at a higher sale price!

If you are considering listing your home, please give us a call to put two generations of tradition and three decades of experience in your pocket.  And to see a few houses that don't need this treatment take a look at some of our listings here.  Or for some more tips for homeowners check out our blogs tagged here.

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

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.  

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%

 

 

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%

It's that time of year again, winter.  After a fairly temperate holiday season, it is easy to get a little lackadaisical about preparing your home for the fury of winter.  For this edition we checked in with Ned, who heads up our home watch services, about some winter hazards and how to get your home ready.  The point he stresses more than any other is the benefit of having a neighbor or qualified and insured business keeping an eye on your home.

Freezing

Winter on Cape Cod is not kidding around.  At the time of writing it is the beginning of 2020 and approximately 40 degrees outside.  But ol' Jack Frost knows better than anyone how to lull homeowners into a false sense of security.  Ned's tip? Turn off your water and drain your pipes.  Ned is fanatical about this and will even shut off his water in the summer if he leaves for a few days.  Here is his explanation.

"With your water off at the main line, a freezing incident (or broken pipe) is never as catastrophic.  All that can happen is the amount of water sitting in the pipes leaks out of the break, but no more!  If you leave your water on and a pipe breaks on Friday, by Sunday this could be gallons of water pouring onto your wood floors and destroying your drywall.  With a well winterized home including drained pipes, a shut-off main, antifreeze in strategic locations, and human eyes walking through habitable spaces, you greatly reduce the possibility of damage as well as the amount of damage that does happen.  The horror story is a former sales client had, over several months, tens of thousands of gallons leak out of a broken pipe before anyone noticed.  Please have your house checked."

Pests

Cold outside is cold for everything, including animals that like to be warm and fed.  If you winterize your home we recommend removing all food items, even those in plastic packages and bags.  Mice will eat through bags of rice or popcorn and make a mess in your pantry.  Also chimneys are a consideration if you don't need them for venting a furnace since raccoons, opossums and plenty of other animals can make homes in them over the winter leading to messy cleanup come spring.  

Storm Damage

As always Nor'Easters are a very real threat to property here on Cape Cod.  With hurricane force winds battering trees and roofs, these storms can drop branches or entire trees on your home.  We recommend some simple things to get ready for any storm here, and particularly where landscaping is concerned.  The main idea, remove large trees and limbs from the area immediately surrounding your house.  Old pitch pines are particularly susceptible to breaking off near the top and dropping heavy and damaging tops on houses, so pay close attention to these when assessing your landscaping.

 

Be prepared this winter and add the peace of mind of having a person walk through and around your home by contacting Chatelain Real Estate today.  With our house watch service you don't need to wait until April to discover a problem that has been ongoing since January.

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 sell.  Contact 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%

 

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?

 

In 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%