Real estate realities
Stunning stats create a pointillist portrait, a profile of supply and demand
March and April are fulcrum months in Cape Cod’s real estate market.
“A lot of people hope to close on a new home by Memorial Day,” explains Joe Hartung, born and raised in Eastham, now in Orleans and working in the Chatham office of Gibson Sotheby’s. “So if you back it out six weeks for a typical transfer, plus a few weeks to get some work done before moving in, well, we’re already a little late!”
Then again a lot of sellers want to get one more summer in, so push out the closing to Labor Day. “Delayed gratification for the buyer,” smiles Hartung.
He often works at the high end but adds that the middle market remains a seller’s domain – understanding that what is now “middle” has evolved a long way: “Anything under $1.5 million, priced well, in good condition, is selling fairly quickly.”
For Ronnie Bourgeois, perhaps the most influential Realtor and property owner in the rental world, mainly mid-Cape, the season matters less. He goes right to year-round numbers:
“A studio is going for $1450 a month. Two bedroom, $2000. Three bedroom, $2500 to $3000. The old rule is that paying a third of your income to rent is healthy. So let’s say you’re making $1000 a week. That’s good money, but you can barely afford a studio. By the way, it’s not getting better and it’s not going to.”
A trip to the peninsula’s far end, Provincetown, finds no sense that prices are moderating; a two-bedroom, 2000-square-foot house, not in a fancy private or waterfront setting, is on MLS for $2.8 million. “More than a million dollars per bedroom,” muses Realtor Gabby Hanna at William Raveis. “We are seeing a little more inventory, but all at a million dollars and up.” For anything less, you’re looking at a tiny condo or a drive back to the bigger part of the Cape.
Hartung got intrigued with the longer picture, so working with data provided by Cape Cod and Islands Association of Realtors, Flexmls and InfoSparks, he created some fascinating graphs with accompanying hard numbers going back five years to March 2019 (April stats aren’t out yet). These craggy profiles show where we’ve come from. For example:
March comparisons, homes for sale and closed (successful transfers):
For sale Closed
March, 2019: 2271 359
March, 2020: 1987 413
March, 2021: 527 390
March, 2022: 445 304
March, 2023: 516 265
March, 2024: 587 252
This jaw-dropping info tells an amazing tale, and can be seen as a key driver for the outrageous spike in market values.
If in March, 2019, anyone predicted that by March, 2024, the total number of listings on Cape Cod would go from 2271 to 587 (up from 516 a year earlier), that person would have been considered inane or insane. But that’s what happened.
Successful transfers dropped as well, though by no means as far, proof positive that the pool of buyers is a lot deeper than the flow of sellers. Whether it’s 500 or 2000 listings, the number of deals closing has remained in the same ballpark.
Now comes time to invoke the old rule of supply and demand; supply down that much, with demand kind of steady, and guess what? Prices spike and spike — and spike.
Note also that beginning last year, listings began to creep up again, though nothing like pre-pandemic levels. “Is some of that COVID purchase remorse?” wonders Laura Clements at Cove Road Real Estate in Orleans. “I don’t know, but maybe.”
Might this sluggish rise in listings (supply) suggest that prices could or should moderate (even if only a little)? Check out this next graph:
Average Median
Mar 2019: $543,202 $398,140
Mar 2020: $610,095 $419,900
Mar 2021: $755,207 $545,000
Mar 2022: $818,521 $585,000
Mar 2023: $890,000 $650,000
Mar 2024: $842,589 $644,500
Average is found by adding up all sale prices, and dividing by the total number of sales. Median is the middle point where half the sales were priced less, half more. The average is way higher than the median because even a few high-end sales can drive the average up in a hurry (and there have been more than a few).
Averages increased roughly 55 percent in five years. Medians increased 36 percent. But now supply and demand theory might be kicking in; both dipped last year as listings rose. It’s too early to tell whether this is the start of a trend, and higher mortgage rates also have something to do with it. Might be, or might be nothing but a quick blip and dip.
This intriguing analysis doesn’t contradict what we already know and sense. But it makes one thing crystal clear:
The “free market” cannot, and will not, address our profound affordable housing crisis.
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Please find a way to share this analysis with all local elected officials. We need housing!!
My note: I do not know of a single local person (personally or professionally) that is not struggling with their financial situation in order to try and stay here.