December Review:
The December Cape Cod real estate market was quiet, much as expected, with low inventory, few closings, and continued high prices.
Inventory remains low. The number of single family homes for sale in December was 400, down 11% compared to 2022. It would not be a surprise if inventory remains low because new listings were also down 30%.
Months Supply isn't showing the whole picture, a full breakdown. One metric we bring up occasionally is "Months Supply" of inventory which tracks not just number of homes for sale, but also the relationship to market activity, through pending sales. This number estimates how long, given current activity, it would take to sell all of the houses on the market. Interestingly, this metric appears to be gaining ground year-over year since the initial pandemic effect in later 2020. But you can't just track this one metric because it paints a strange picture. Let me explain...
In more normal times, we look for 5-6 months supply of inventory indicating that there are good options for buyers so they can take a little time to decide on a home, but houses are still closing in a reasonable amount of time which is good for sellers. In other words, balance between supply and demand. However when there are so few homes on the market it is impossible to have a lot of activity. Let's examine an oversimplified version.
Pretend a widget salesman stocks 100 widgets per day. On average he sells 50 of those widgets. Meaning his supply of inventory is 2 days worth. Suddenly, there is an explosion at the widget factory and the salesman only gets 20 widgets to sell. In that case his supply is 0.4 days (current inventory = 20 widgets, divided by the recent average sales = 50/day), he'll probably sell out around lunch time. After a few weeks of this "new normal", his supply of inventory stabilizes to 1 widget per day (20 widgets inventory divided by 20/widgets sold on average). Now pretend there is day where he gets 30 widgets to sell and he sells them all. If you calculate his supply of inventory that day, it looks like it is 1.5 days, because you take the supply for the day (30 widgets) and divide by the average recent daily sales (20/day). Things look to be improving right? But not at all! Because there is still a shortage of widgets, and even if he got 40 widgets tomorrow his supply would appear to be 2 days (40/20), right back where we started, but he would sell all of those widgets no problem because demand has not changed. Again this is oversimplified, but essentially the Cape Cod real estate market is the widget salesman, we have had such low inventory, and thus so few sales, for so long that comparing "Months supply of Inventory" to previous years is more like comparing widget days supply of 1.5 days to 0.4 days. The widget (real estate) market appears from this angle to be improving, but it ain't the whole picture. Actually the Cape market is also affected by decreasing demand (unlike our widget salesman) because of ever increases and higher mortgage rates so this impacts the demand side of the equation as well.
Whichever seat you are in, whether buying, selling or vacation renting, the professionals at Chatelain Real Estate are here to give you the expert advice you will need to make your transaction a success. For more market data check out our blog category Real Estate Trends. You can also give us a call any time - we look forward to hearing from you.
| Sept | Oct | Nov | Dec | |
| Closed Sales | 223 | 267 | 224 | 195 |
| Inventory | 565 | 591 | 535 | 400 |
| Median Sales Price | $795k | $811k | $773k | $730k |
| Avg Days on Market | 29 | 34 | 31 | 45 |
| Avg % of Original Price | 98% | 97% | 97% | 96% |