Cape Cod Market Conditions - October 2007

Real Estate Market Conditions
(As reported October 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 not a news cast that doesn’t have something to say on the long-predicted down turn in the real estate market, stories of foreclosures brought on by sub-prime mortgage woes, and the fact that, for most of the country, it is a “buyer’s market.”

Here is a link to a NAR report released October 24, 2007:

MORTGAGE AVAILABILITY IMPROVING BUT HAMPERED SEPTEMBER EXISTING-HOME SALES

Yes, it is a buyer’s market, and there are buyers who are doing just that - BUYING, albeit at their own pace and without a sense of urgency. They are doing their homework before stepping to the plate realizing that housing remains a very good long-term investment.

The mortgage industry is recovering and qualified and creditworthy buyers can find very attractive conventional loans and interest rates. And the mortgage markets will continue to level through the next couple of quarters.

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. The charts below are a telling tale.

Note that these numbers are derived from the Massachusetts Association of REALTORS affiliated Multiple Listing Services as of 10/15/07 and represent the number of sales through the 3rd quarter (January through end of September) and medians for the 3rd quarter only.
(To view charts, click on link at bottom of article)

CAPE COD

The 2007 year started out promising with a 10.4% increase in the sale of single family homes in the 1st quarter compared to the same period in 2006. However, the number of sales started to decline in the subsequent quarters. For condos, it was the opposite. The year started off slowing in condo sales (-21.3% from 2006) and increased 11.8% in the 3rd quarter. Interestingly, for single family homes, through the end of the 3rd quarter, the number of sales are only down ½% over 2006 and for condos -4.5%. Homes are selling… though with longer shelf lives and prices adjusted for the current market.

The median prices have seen a decrease for several quarters and some upward blips on the scale but it belies what homeowners are seeing in their pocketbooks and that is not totally in line with what homeowners are seeing as differentials in their individual pockets. Many homeowners who bought in 2004 or 2005 are often not able to “break even” if they need to sell – the adjustment they need to make is much more than the median fluctuations. Why is that?

A median is the middle number of a group of numbers. That is, half the numbers have values that are greater than the median and half the numbers have values that are less than the median. While a median sales price is usually much more accurate than an average when determining a picture in regions, this agent believes the current median is skewing reality on the Cape. The reason: the huge diversity in price ranges in our region. Right now, there are more homes on the market under $275,000 than was seen on the Cape for a few years. Many of those are bank short sales. Although not jumping off the shelves because the people who would want to purchase them don’t always qualify for the conventional loans, they are selling. There are also many luxury homes (multi-million $$), despite the recent jumbo loan mortgage stress, that are selling. When the high end is selling (even after market adjustments) and the low end is selling it pulls the median in between and tends see smaller fluctuations. In fact, many homes in the $350,000 to $750,000 have longer shelf lives. The properties in this range have buyers who want to buy them because they want to make an upward and downward move – but many have a home to sell first in order to do so which can create a bit of ‘grid lock” – and hence prices adjust accordingly.
(To view charts, click on link at bottom of article)

What’s in store for 2008?

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. 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. Buyers sitting on the sidelines for further adjustments should realize that in any previous downward real estate cycle, the bottom was not realized until after it is past! Everyone has a story that begins with “If only I had bought it when it was….”

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