Cape Cod Market conditions for late 2011

Our Cape Cod market continues to show strength in the last 2 quarters, as Buyers overcame concerns about economy and snapped up the best available properties. Cape Cod sales volume in 2011 is down about 10% compared to 2010 and median price dropped 2% for the same period. This is reasonable for the current situation, and is good considering 2010 sales were buoyed by the government tax incentives. 2011 has had no artificial buying stimuli, so the sales this year have been truly free market.

Many Buyers and Sellers recognize that the ‘bottom’ is here-especially when calculating the cost to purchase-with interest rates at historic lows. The Second home/vacation buyers seem to be aware of this and have made a significant contribution to real estate sales this year. We have seen significant interest in beach properties, village properties in Cotuit, Osterville Centerville, and Marstons Mills

Pricing and preparing a home for sale has never been more crucial-Buyers will buy the ‘good’ properties-priced well and prepped for showing. Sellers realize that condition sells and pricing to the market is key to success.

Consumer confidence appears to be growing slowly, and this will likely increase the desire to make the investments that have been postponed due to uncertainty and negative news.

2012 should be a year of gradual improvement in the Cape Cod real estate market, as interest rates should remain low and prices for properties will have hit bottom and may start to rise by Mid Year as demand reduces the inventory backlog. We don’t expect prices to rise much in the next year, but more desirable locations and appropriately marketed properties could exceed this modest expectation.z

Until you can return to the Cape (or even better buy your vacation home here) enjoy this scene overlooking Nauset Marsh from Fort Hill area of Cape Cod National Seashore on a glorious November day

As we enter the second half of 2011, the real estate forecast is partly  cloudy!  I have had a great first 6 months of 2011, and my Sellers and Buyers seem pleased to buy or sell their Cape Cod property.

We look ahead and some economic signs are troubling, but the activity here on Cape Cod seems to not always be directly affected as other areas of the country are. Second home buyers are purchasing properties for personal use, and/or for eventual retirement. There seems to be a trend toward down-sizing, too, as many of the larger homes remain unsold. The First Quarter 2011 statistics for Cape Cod and the Islands shows the number of sales down substantially by 41%, as compared to 2010, and yet the median price rose by 5.7%. This doesn’t mean prices are rising, yet it does show that there are more expensive houses selling as compared to the vast number of foreclosures that pulled the median prices down in 2010 (and created the larger number of sales in 2010-combined with the tax credit incentives).

I continue to work full time as an experienced real estate professional, and am ready to help you or your referrals with buying or selling decisions. Enjoy the phot below, showing one of only 2 bridges that access Cape Cod -we are an island unto ourselves!

I was asked to comment on the ‘holiday homes’ market for a Boston newspaper article to be published. I assembled statistics and snapshots of the market for that interview and here are my thoughts.

The short report is that the Cape Cod real estate market has been active in the First 3 months of 2011. First time buyers are still competing with second home ‘holiday’ home buyers for the properties under $300,000-which is the fastest moving segment, with only a 5 month ‘supply’ at this point-almost a balanced market on Cape Cod!

Sellers are listing homes, and they need to be ‘prettied up’ to sell successfully. We see that there is a significant difference in the success of selling a mint condition home vs. one that shows even a little ‘tired’. Price is of course a critical factor, but buyers are strongly gravitating toward homes that are most updated, clean and well maintained.

Buyers are buying on Cape Cod, but the pace slowed since last year at this time, when the Tax Credits were stimulating buying activity for First Time and ‘move up’ (or down) buyers. Our sales volume for Cape Cod is off by 40% from first quarter of 2010, BUT median prices are up by 5.7%. Because pending sales are up so significantly, I am confident that this volume deficit will be greatly reduced when May and June sales are reported.

Are prices going up? Not at this time-the median price increase is attributable, I believe, to the huge percentage of sales in the lower tier of pricing (below $200,000) in 2010. Simply said, not much in the more expensive price range (over $500,000) was selling at all on Cape Cod in early 2010! In 2011, we have fewer homes under $200,00 to sell.

What happens from here? Mint condition, well priced homes will continue to sell; homes needing maintenance and price adjustments will be shown and shown-to the frustration of Sellers and their agents. Higher interest rates are pressing at the gate, and I am very concerned about the impact that a point or more interest rate jump will have on Buyers’ ability and willingness to buy. A double dip is a strong possibility if this happens, as the Cape Cod housing recovery is fragile and spotty.

Where are the ‘hot spots?’ From ‘pending sales’ perspective, Towns with large second home opportunities seem to be leading. This doesn’t mean all pending sales are second homes, but it is an indicator to support the observation that second home (holiday home) buyers are heavily participating in our market.

Real Estate on Cape Cod-Been down so long it looks like up!

Prices to fall further vs real estate prices on uptick, interest levels rising vs affordability reduced. Jobs uncertain vs no double dip recession. Recent news is more optimistic, for sure, but always tempered with ‘as long as…’ or ‘but if’.

I have been digesting both the last quarter 2010 summaries and the 2011 outlooks, and the picture is not clear. Cape Cod’s real estate market is distinct from the rest of Massachusetts, as we are a ‘vacation home’ community within commuting distance to a major city with strong and diverse employment.

I would be naïve to suggest that Cape Cod Real Estate sales are not vulnerable to future economic uncertainty, but we may have taken our ‘hit’ and could be heading up in sales volume and average price in 2011.  Since January 1, 2011, we have had a substantial increase in Buyer traffic, precipitated by jump in interest rates from their 2010 lows, and by the prospect of significant activity on both the very low end of pricing and the luxury property segment. Sandwiched in between-the mid range houses from $300,000-1,000,000 there are buyers looking, but carefully considering each decision, and awaiting price reductions to motivate them to act.

In summary, we see bright signs ahead, with 2011 likely to be the transition year to a modest real estate recovery in 2012 for Cape Cod real estate. Asking prices on individual properties are not set to rise, but as I have said before, properties that show very well and are priced for the current competition have an excellent chance of getting sold in early 2011. See Chart below (from Cape and Islands MLS reports) showing inventory levels in December dropped to only 10 months at the current rate of sales-a great sign to demonstrate movement in market. If you have questions, or would like more information about the Cape Cod Real estate marekt, contact me at deb@onestophomes.com

Deborah Schilling,
…One yard at a time –selling Cape Cod real estate for 25 years, with focus on Villages of Barnstable and beyond, including Marstons Mills, Cotuit, Osterville, Centerville, Hyannis, Barnstable and West Barnstable.