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.