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.