Cape Cod Real Estate Market Conditions December 2006

Real Estate Market Conditions
(As reported December 2006 by Shirley Enders)

ACROSS THE NATION
Throughout most of the country as well as on this beautiful sandbar called Cape Cod, buyers have had more choices due to a larger inventory of homes, sellers are more willing to negotiate and some who are extremely motivated are offering incentives adding up to a buyer’s market. However, the media is now indicating that buyers, who have been waiting in the wings for the best opportunity, have decided “NOW is a good time.”

Following are just a few of the many links from the economic gurus watching the market and verifying what we as Realtors are beginning to see as more and more homes are “pending” in all price ranges even during the holiday season – traditionally one of the slowest times for real estate sales.

Greenspan Says The Worst Is Over For Housing - November 28, 2006
http://www.realtor.org/RMODaily.nsf/pages/News2006112904?OpenDocument

Pending Home Sales Confirm Market Is Stabilizing - Daily Real Estate News - December 4, 2006
http://www.realtor.org/RMODaily.nsf/pages/News2006120401?OpenDocument

Realtors: Slump to end in ’07 - Boston.com (The Boston Globe online) – by Bloomberg News – December 12, 2006
http://www.boston.com/business/globe/articles/2006/12/12/realtors_slump_to_end_in_07

CAPE COD
Across Cape Cod, the number of sales of both detached single-family homes and condos eased throughout the 1st three quarters (January through the end of September).

Nevertheless, it is also clear that Cape Cod has remained a very desirable place for many to own a home – whether a primary residence or a second home. So far, while the volume of real estate sales is down significantly and we have seen significant reductions in asking prices, the final sales prices have refused to drop in correlation with the reduced demand. For example, while the number of single-family homes sold in the 3rd quarter of 2006 was -25.4% from the same period in 2005, the median asking price from the sale period in 2005 was only -3.5% across the Cape. And this is the 1st decrease in median for 2006! The 1st quarter median was level at 0.0%, the 2nd quarter was +2.5%! And while the year-to-date volume of sales is down for condos, the median sales price is still seeing a positive increase.

What these numbers indicate is that, while we have been in the process of a market adjustment, we are not seeing a big “bubble burst” as many had predicted. Once adjusted for the market conditions, most homes on Cape Cod are selling between 93-98% of final asking prices. Why is that? Many Cape Cod home sellers are 2nd home owners. Many don’t NEED to sell. Many have opted to withdraw their homes from the market or to simply “be patient” once they have adjusted the price to fair market value.

For home owners who do wish to sell in the current market, those who have owned their properties for a while will see a very good return on their financial investment (not to mention the emotional benefits they received from home ownership). They should realize that “average days on the market” data is actually longer than the statistics would reveal as the listing of many homes have expired and been re-listed starting the “count” over again. Pricing correctly from the beginning, preparing and staging their homes to be appealing to buyers is critical. And, once they sell, if they are also going to be buyers in the same market, they also will see some very good values, balancing the pendulum.

What’s in store for 2007?
It’s all about supply and demand and where we are in the cyclical market of real estate. The length and height of each curve is dependent upon so many factors in a world that is constantly changing that not even the best economic gurus can predict with pinpoint accuracy what will happen in a few weeks or months or quarters. As supply of available homes diminish, because of seller’s withdrawing them from the market or buyers who are purchasing them, the cycle will begin upward once again. But it may take most of 2007 for that to happen – perhaps a small dip in the median prices as existing inventories are used up and then modest recovery and back to a more “normal” balanced market. It appears this downward curve may be a somewhat long but shallow one. Time will tell. One thing is for sure, market histories indicate that real estate prices/investments have always proven to be a good long term investment.