Cape Cod Real Estate Market Conditions - Aug. 2006

The Cape Cod Real Estate Market
(As reported August 2006 by Shirley Enders)

CAPE COD

Throughout Cape Cod, the sales of both detached single-family homes and condos eased throughout the 1st two quarters of 2006.
Year-to-date (January through end of June), the number of single-family units sold was down 18.9% from the same period one year ago. Fewer buyers in the market and more homes from which buyers can choose has relieved much of the upward pressure on prices, resulting in the smallest gains in a number of years.
The Cape Cod condominium market started 2006 with only a slight decrease in number of sales 1st quarter and yet saw a significant gain in median price. However, for the 2nd quarter, the number of sales was down significantly and appreciation leveled with only a slight difference with the same period in 2005. This is not all that unusual in a market where buyers may have more affordable choices in single-family homes from which to choose including a supply in the high $200,000s and low $300,000s.
The motivation of the sellers varies depending on their individual circumstances. Many of the sellers are 2nd home owners and are not necessarily in a hurry to sell and can wait. Others who have relocated or who must move for any variety of reasons might be more “negotiable” than those who will continue to utilize their second home as a vacation home or rental as they have in the past. Unfortunately, homeowners who bought during the upward cycle with too little down are feeling the pinch right now.
It is clear that the recent era of double-digit appreciation is long gone. However, it is also clear that Cape Cod is remaining a desirable place for many to own a home. So far, while the volume of real estate is down significantly and we have seen significant reductions in asking prices, the final sales prices have refused to drop in with the reduced demand. The median held firm for the 1st quarter and saw a slight rise in the 2nd.
What Realtors have noticed is significant reduction in ASKING pricing. Sellers in 2005 were in the old “hot market” mentality remembering days of multiple bids and relatively short market times before negotiating satisfactory terms. However, because of the larger amount of inventory on the market, sellers are now becoming more realistic and once asking prices have been adjusted for the new market conditions, residential properties seem to be selling within 93% to 100% of FINAL ASKING PRICES. Since fewer buyers have a lot to choose from and are taking their time in making decisions, sellers are finding they must be more patient than in prior years.