The real estate doctor is in the house
Checking on vitals like Cape Cod home sales and prices -- diagnosis, prognosis
It’s that time again: Like a regular health check-up, we’re ticking off the real estate economy’s vitals.
Before sharing hard number equivalents to heart rate and blood pressure, some impressions about overall health:
The raging fever we’ve experienced has not broken, but has subsided. “We’re getting back to something at least closer to what I would call ‘normal,’” says Realtor Steve Flynn. “I like it, because you actually have to show houses, sellers need you. You need to sharpen your pencil, do it right.”
That said, hard and fast offers above asking price are still coming, though fewer. But the times when frantic buyers didn’t even dare to demand a home inspection are waning, again a return to “normalcy” many find healthier.
But as with any diagnosis, how the patient presents and what’s really going on can differ. So numerical stethoscope out, here are some of the latest available stats as reported by the Cape Cod and Islands Association of Realtors. Note some lag time, as these cover through August.
Single-family homes on Cape Cod, one month (August) and calendar year-to-date, 2021 vs 2022
Sales completed:
8/21: 385
8/22: 304
YTD 2021: 2668
YTD 2022: 2143
% change YTD: -19.7%
Median price:
8/21: $620,000
8/22: $700,000
YTD 2021: $603,000
YTD 2022: $690,000
% change YTD: +14%
Pending sales:
8/21: 393
8/22: 321
YTD 2021: 2854
YTD 2022: 2274
% change YTD: -20.3%
New listings:
8/21: 462
8/22: 329
YTD 2021: 3222
YTD 2022: 2783
% change YTD: -13.6%
Amount of existing inventory in time, based on expected sales volume:
8/21: 1.5 months
8/22: 1.9 months
Diagnostics, and some prognosis:
When both sales and pending sales are down around 20 percent, you might think that new listings and the total existing inventory would climb by a comparable amount. Instead, new listings also dropped compared to last year, though total inventory seems to have grown a bit given that there is almost two months in the queue.
That said, there’s no medication strong enough to stop home temperatures from continuing to rise. The median hit $700,000 in August, meaning half of homes sold were more expensive than this, half less. For eight months in 2022, a $690,000 median is 14 percent above last year.
Many home sales on the Cape remain basically cash transactions, no mortgage because buyers have enough on hand (perhaps having sold something elsewhere, perhaps just flat-out loaded) to write a check. So sharply rising interest rates don’t impact this crowd.
But Laura Clements, president of the Board of Realtors, details the interest-rate impact on those who don’t have that kind of wealth.
“It breaks my heart,” she says, taking a breath, then launches in:
A family wants to buy a home on Cape Cod, and has done all the right things, working hard, saving up, perhaps lining up help from family or friends, and six months ago they were just about there.
They were looking at homes in the $600,000 range. With 20 percent down ($120,000), they needed to qualify for a $480,000 mortgage. The interest rate was 3.25 percent. That meant principal and interest payments would be about $2089 a month. A stretch, but they were in the game and the banks weren’t ushering them out the door.
Now interest rates are more like 6.25 percent. For the same mortgage amount, $480,000, their principal and interest payment is now $2956, another $867 per month, every month. They no longer have enough income to qualify for a bank loan.
Put another way: With these interest rates, even with $120,000 ready for a down payment, the highest total price a bank would qualify this family to purchase would be around $450,000, meaning a $330,000 mortgage.
“And these houses,” adds Clements, “don’t exist.”
Small wonder that the rental market continues to be ridiculously hot; one account says a $1400 a month year-round rental in the mid-Cape jumped to $3200 for the summer.
The medical chart doesn’t take us through September, historically a strong month for listings as people wrap up the summer and consider options. So I wondered what kind of telltales (even if anecdotal and incomplete) might offer fresher market clues. Clements had an idea:
She took a look at one week’s activity, September 24 through October 2, focused on five towns in her bullseye – Harwich, Brewster, Orleans, Eastham, and Wellfleet. She knew there were a bunch of open houses on the Sept. 24 weekend, so wanted to gauge reaction:
In that one week and five towns, contracts to purchase were signed for 10 homes listed for less than a week, 2 on the market from one to two weeks, 3 listed for two to four weeks, and another 4 more than four weeks. That’s 19 home sales, more than half under agreements within seven days of showing up on the market.
The fever hasn’t broken.