There are no two ways about it. 2020 was a remarkable year for the Cape Real Estate market. We started off the year in familiar territory with January and February showing roughly the same level of market activity as in recent years. But when the COVID pandemic took hold in March we saw a sudden slump in both pending sales and new listings – by the end of April new listings for single family homes were less than half of what they were in April 2019. Things started to turn around in May, and by the end of July first quarter losses had already been erased and year-to-date median sale price and closed sales were up. This trend continued until the end of the year, with record-setting monthly numbers in Q3 and Q4 eventually leading to a full 17.9% increase in median home sale price, and 19.8% increase in closed sales.
This 19.8% increase in closed sales happened in spite of inventory continuing to lag behind demand (see graphic above). For example, buyers came back to the market in force in May. However, new listings of single family homes continued to drop until June, and by the end of the year never reached up to 2019 levels. The most obvious effect of this low inventory is higher prices (a whopping 17.9% higher). But it also leads to a faster and more aggressive market. Total days on market was down this year, and homes are fetching closer and closer to asking price as time goes by. A seller in today’s market can expect to receive 98.2% of asking price for their home, which is a significant increase over past years.
What does this mean for buyers in today’s market? Low inventory and high list/sale price ratios mean buyers should expect multiple offer situations with many homes selling for over asking price. And the ever shortening days on market means buyers have to be ready to strike when the right home comes on the market. Buyers should be pre-approved by a reputable local bank, and have a crack Realtor (like those from Chatelain Real Estate) on their side to help them move quickly and decisively.
For sellers, the takeaway is: sell! Please! We need more inventory in the marketplace in order to balance out surging demand. Continued low inventory will only keep pushing prices higher, further exacerbating our already crisis-level affordability issues. And with so many buyers out there, you are sure to get top dollar for your home.
The big question is “what about 2021?” Will the strong market hold? Will prices continue to climb? Or are we in a bubble whose collapse is imminent? The short answer is, as always: “we have no idea.” But for a long answer see part 2 --HERE-- with the most significant factors we see swimming around in the crystal ball on Agnes’ desk: