Cape Cod Real Estate Market Conditions - February 2007

Real Estate Market Conditions
(As reported February 2007 by Shirley Enders)

My marketing reports always consider three levels of statistics – national, regional throughout the Baystate, and then particularly my local market – CAPE COD. Peruse it all or scroll to the information that most interests you!

ACROSS THE NATION

There is no doubt that the real estate market underwent significant changes across the nation throughout 2006 – but here is a serious reality check: Despite all the doom-and-gloom stories and dire predictions, did you know that 2006 was the 3rd highest sales per year on record? The numbers and statistics are in and, according to the National Association of Realtors, across the nation there were 6,480,000 existing-home sales in all of 2006, down 8.4% from a record of 7,075,000 in 2005. The 2nd highest total was $6,779,000 in 2004. NAR began tracking home sales in 1968.

That was “number of sales”. What about prices? The national median existing-home price for all housing types (including single-family, town homes, condos and co-ops) was $222,000 in December of 2006, which is unchanged from December 2005. Note that the median price is determined considering half of the homes sold for more and half sold for less.

While national statistics are interesting, regional statistics are always more reliable for a “picture” of any one particular area. Comparing December 2006 to 2006, existing-home sales in the Midwest rose 4.3%; increased 0.8% in the South, declined 2.8% in the Northeast; fell 9.1% in the West.

Because home-price trends vary greatly from one region to another and even within metro areas, home buyers and sellers are always encouraged to get accurate and reliable information from their LOCAL real estate professionals.

REGION BY REGION IN THE BAYSTATE

Massachusetts is a beautiful and diverse state – beautiful ocean villages, incredible cosmopolitan cities and suburbs, as well as incredibly beautiful countryside. Consequently our real estate picture varies from location to location as well. While the number of homes sold across the Baystate were down considerably in 2006 versus 2005 (from -7.4% in the more affordable westerly areas to -28.4% in the Southeast), the median selling prices of homes were more resilient than one would expect. A major adjustment from the red hot seller’s market of from 2001 to mid-2005 but certainly not a huge “bubble burst”.

CAPE COD

As the statistics comparing 2006 with 2005 show, the Cape Cod real estate has also proven very resilient. While single-family homes sales were down 19.9% the annual median home selling prices dipped a mere -1.9%. For condos, the annual number of sales was down -25.8% but the median selling price rose 2.0%. Why is that? The answer is two-fold.

First, Cape Cod is a unique area from the rest of Massachusetts since 40% of Cape Cod homes are 2nd homes (fewer on the Upper-Cape and more as one travels to the outer-Cape). Many 2nd home owners simply do not have to sell and can be patient knowing many consider this beautiful sandbar to be on the “wish list” of many potential home buyers.

Secondly, real estate is a “slow boat to turn”. 2006 was the year of adjustments as sellers finally realized that the days of double-digit appreciation were gone. As inventories grew and fewer buyers were responding to home offerings, ASKING PRICES decreased and adjusted. Interestingly, once adjusted for the current market, the homes that sold generally sold within 93-98% of final asking prices… resulting in the median sold prices varying only marginally quarter-to-quarter.

What’s in store for 2007?

It’s all about supply and demand. 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. In the meantime, sellers need to price realistically from the beginning, be reasonably patient and expect longer shelf-life – and also anticipate the buyers are expecting sellers to be very negotiable on price and/or terms.

Because of a continued high inventory of homes for sale, buyers have plenty of choices and a lot of bargaining power. That, combined with very favorable interest rates, seem to have buyers returning to the market realizing it is a very favorable window of time in which to buy. Amazingly, during the normally very slow winter season on Cape Cod, quite a number of homes in all price ranges are “pending” sale! And Internet activity of buyers looking earnestly from afar is evident. That bodes well for the spring market!

One thing is for sure, market histories indicate that real estate prices/investments have always proven to be a good long term investment.

To view the whole article including all the charts go to http://www.athomecapecod.com/market_conditions.html