Cape Cod Real Estate Market Conditions - January 2008

Real Estate Market Conditions
(As reported January 2008 by Shirley Enders)

My dad always said “The older you get, the faster time flies.” Well, Dad, I guess you were right! It's hard to believe 2008 is already here! Cape Cod had a glorious 2007 spring, summer and autumn, many beautiful and sunny days on our beautiful sandbar. The perennial beauty amid the ever changing seasons of this area never ceases to amaze me and is something Darryl and I never take for granted. We think we live in one of the loveliest places on the planet! Darryl says this wondrous place has so much 'eye candy'. Even in winter, we look forward to walking the beaches on the fairer days.

And, like the cyclical change of seasons, the real estate market changes too. Real estate seems to be on everyone's mind and in the forefront of media and news reports.

How did Cape Cod fare in 2007?

Every real estate market is local and while Cape Cod is also experiencing the downturn in the market, expected after a number of years of incredible appreciation, it is not all doom and gloom. Economic and motivational factors of buyers and sellers affect each area differently and because it is a vacation destination and has a large number of 2nd home buyers and sellers, our statistics are a bit different than other parts of the country that are more sorely affected.

While many parts of the country are experiencing serious declines in number of sales, Cape Cod is proving to be a bit more resilient. Comparing sales through the end of 3rd quarters (apples with apples), 2005 was definitely the stellar year with 3,095 single family homes and 799 condos sold. In 2006, 3rd quarter totals for single-family homes were 2,439 (-21%) and for condos 587 (-27%). Yet, 2006 was still is among the top 5 years for volume of sales!. Interestingly, 3rd quarter totals for 2007 through the 3rd quarter are mostly on par with 2006 for single-family homes with 2,429 sold (minus .5% - less than ½ of 1%) and condo sales are only marginally down (-4.4%) with 561 sold.

What about prices? Just looking “at the numbers” the median prices are holding fairly level. How is that possible? As many of you know, I'm a bit of a stats nut. 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, the current median is skewing reality on the Cape. The reason: the huge diversity in price ranges in our region. Within a relatively small geographic area, Cape Cod offers homes under $300,000 and over $1,000,000. When the high end is selling and the low end is selling, it pulls the median in between up and we see smaller fluctuations which doesn't reflect reality within any particular price range.

The other reason is that despite a lot of bank owned properties and short sales being offered currently on the market, these are generally not anyone's “dream home” and some buyers are making other choices. There is also a large number of homes owned by 2nd home owners and they simply don't need to sell and hence can be more patient. Each property and location and price range needs to be considered individually so don't hesitate to give us a call if you are considering buying or selling. That's the benefit of having knowledgeable Cape Cod real estate agents ready to assist if desired!

It's a great time to buy!

Everyone knows someone, or they have said it themselves: “If only I had bought when…” If your goal is to buy a primary residence or a vacation home, the timing couldn't be better. Remember, the bottom of any market (no matter the length or depth of the curve) isn't apparent until it has passed. While it is not a good time to “buy and flip” properties, if your goals are longer term, NOW is a great window of opportunity. There is more property to choose from and sellers that are motivated are negotiable. And, despite the problems in the mortgage industry, if you are a credit worthy buyer with a decent job history, mortgage options are available and at great interest rates!

Any good news for sellers?

If a homeowner doesn't need to sell in a buyer's market (and many on Cape Cod don't have that urgency), their investment is very secure. Interestingly, many Cape Cod homeowners have recently successfully sold their existing homes and realized exceptional gains if they bought before or early into the “boom” and they are now buying other properties, on or off Cape, at great values as well.

The extended boom created a misconception among younger homeowners that didn't experience previous market adjustments. The fact is, residential properties, whether primary residences or second homes, overall are not a high yield short term investment. But they have always proven to be a GREAT long term investment. In fact, it is the primary way most families build wealth. And as everyone knows, home ownership has perks greater than just economic.

What's in store for 2008?

On Cape Cod, I do believe even more buyers and “wash-a-shore wanna-bees” will decide the time is right to make their purchase and step off the sidelines. It will take some time to absorb some of the existing inventory, so sellers need to be both reasonable and patient. The best economic gurus have differing options, so Darryl and I can't predict the depth of the length of the market curve but we promise to keep you up-to-date on what is real as it happens.

You can expect further market updates throughout the year. Mid-February the 2007 stats for the entire year will be available and we’ll have some insight as to how 2008 is starting out. So bookmark our site for future reference. It's a great resource for everyone who owns Cape Cod real estate… or would like to!