Well folks, the sleigh ride is over. For the first time since 2019, last year concluded on something of a mixed note for the Cape Cod Real Estate market. Cape homes set a new record 12-month high of $679,750 in December of 2023, up an eye-watering 66% from $410,000 in December 2019. But if we look closer, we see that prices from November 2023 to February 2024 have dropped more than usual for the holiday season. We will be keeping a close eye on this metric in February and March, by which time prices usually start ticking up again, and looking for signs of a consolidating contraction in median price. Tune in to our monthly market report then for an update.
On the buying side, macroeconomic factors governed the local market in 2023. Interest rates opened the year in the 6.5% range, peaked in November at 7.8%, and closed out the year back around 6.6%. Historically speaking rates in the mid-6% range aren’t bad. But remember that these are the highest rates in decades so homebuyers today are paying year 2000 mortgage rates on homes that were priced during a regime of rates hovering around 3%. The principal and interest payment on a median home at prevailing rates in 2000 was $2,735 in inflation-adjusted 2023 dollars. The payment on the same home purchased in November 2023 was $4,085, a 49% increase in monthly payment for the very same home. Until either rates or prices begin to fall, the real purchasing power of those buyers who intend to finance will remain considerable weaker than it was 24 years ago.
Which raises the big question – what will the new year bring? Jerome Powell stopped answering our calls years ago, so we’ll leave interest rates aside for now. Looking at prices, we’re seeing a larger than average drop for this time of year. New listings continue to fall, but no faster than they have been for the last 5 years. Closed sales also continue their decline since setting a record in 2021 and are hovering near the record low set in 2009. Until interest rates or prices (or both) drop and folks feel confident moving from their current home, the most likely source of inventory is from folks moving out of the area altogether or moving in with relatives as they age. When we add all those currents together it feels like the winds may be shifting. But how far and how fast, it’s impossible to tell.
Whether you are buying or selling, stay up to date on the latest local market conditions by signing up for our monthly newsletter HERE.