2016 Cape Cod Real Estate Review
2016 was a very interesting year for the Cape Cod region with historically low inventory of available homes leading the headlines. The 14% year over year decrease in actively marketed homes on the Cape and Islands MLS resulted in 2016 ending with the lowest recorded inventory level since that statistic had been tracked. This is an astounding 48% drop from the 10 year high. Interestingly, despite this clear lack of supply, pricing has only posted a modest gain (2.7% over 2015) while sales volume showed a more impressive jump (up 13%). The takeaway: the lower end of the market (<$500,000) has been most active. By contrast, we have seen record setting purchases in many towns:
Brewster: $3,450,000 96 Winterhoff Trail
Chatham: $10,800,000 132 Shore Rd
Dennis: $3,050,000 9 Mark Rd
Harwich: $8,150,000 6-10 Neel Rd
Orleans: $7,000,000 47 Nauset Rd
Looking forward, it seems inevitable that interest rate increases will continue at a modest clip. These increases will be tempered by expanded lending products and increased loan-to-value ratios so we do not anticipate the increasing rate environment to significantly impact price appreciation.
Anecdotal feedback from existing customers/clients suggest there are two distinct groups of prospective buyers in the current market: those looking for a “deal” or those looking for something that is new or newly renovated to call their own. The deal seekers hunt for near term equity opportunities and are willing to deploy minor improvement efforts to achieve their goal. Inventory, or lack thereof, has been particularly frustrating to these buyers as sellers simply are not overly motivated to provide the value they seek. By comparison, turn-key buyers are willing to stretch to have the home in move-in condition and, in some cases, overlook the near-term asset value for convenience. This prioritization of one’s personal enjoyment over the asset value has been the primary driver of the region’s speculative development business at all price points.
Looking into the crystal ball, we anticipate a solid improvement in pricing in 2017. The relative affordability of financing, demographic patterns and scarcity of inventory should lead to positive appreciation gains in 2017 for Cape Cod Real Estate.