Lower and Outer Cape Market Report 3/11/08

The best statistic to gauge how the market is currently performing is to look at "pending sales", so let's take a quick look at todays' numbers:

Brewster 14 pending sales Avg price: $456,664

Chatham 15 pending sales Avg. price:$1,159,287

Eastham: 16 pending sales Avg price $637,719

Harwich: 40 pending sales Avg price $619,792

Orleans 17 pending sales Avg price $819,988

Wellfleet 11 pending sales Avg price $719,118

These numbers hardly appear to offer an argument for any sort of a buying opportunity and might be slightly misleading for would be sellers, but let me give you a little context and see if you don't agree that now might be the time to "get off the sidelines" no matter which side of this you are on.

One of the most frequent responses I get, from prospective buyer clients lately, when I pass this information along as part of my regular market updates, is " Well, this information is better for you than me... it doesn't look like this area of the Cape has gotten its share of the bad market yet...but it will, and I will buy next year after prices come way down!" This line of thinking is probably faulty on a number of accounts...let me point out a few of the most important.

First, Time Magazine ran a piece last week titled, "Ignore the Headlines!" by Dan Kadlec, where he notes that Fed rate cuts always "lift the economy eventually." He also makes the case that buying a home today will beat waiting another year even if home prices drop an additional 10 percent. In the article, the author makes a case that is impossible to argue with.. To buy a $218,900 home at 5.5 percent is $994.31 a month. To buy next year at $197,010 at 6 percent will cost $994.94. The irony is that in the time Kadlec did his research and when the magazine came out, interest rates were already back over 6 percent, making his example all the more compelling. Does it make any sense to hold off six months to a year to save $.63 cents a month? And that's assuming that sellers, in this generally affluent market, will participate in reducing their properties an additional 10%..... Now, the figures the author used to illustrate his point are much lower than likely sales prices here, but the point still holds true.

Secondly, and along the same lines, as part of the stimulus package the feds recently rolled out, the conforming rate mortgage price limit was just raised considerably, allowing many of our properties to be bought without incurring much higher "jumbo" mortgage rates. For many properties here, buyers buying power jumped exponentially overnight. However , this "gift" is not permanent...this arrangement is set to expire in 2009. For prospective buyers, this offers an opportunity to buy much more house, for the same dollar, than you could a few weeks ago..if you are a prospective seller, well..., it means exactly the same thing to you in reverse.

Third, and this is where I can offer only anecdotal information, this is the "land of the discretionary seller". That is to say that this area of the Cape is, in general, a very affluent area and the real estate market does not necessarily have to default back to any affordability index based on local median incomes in times of economic slowdown.

Most owners here have their properties on the market because they feel like market conditions are such that they can get a "fair" price for their property that would be consistent with market pricing of the last few years...given the prospect of having to significantly discount their properties to move them, they will either be content to just let them sit on the market, possibly with a modest reduction here and there or refuse to sell the property altogether and either rent the property seasonally or simply pull it from the market and wait things out.

A large part of our historically high inventory levels, often used by market watchers as a sign of current or pending weakness, have been at essentially the same levels for a number of years..as you can see above, pricing has not nose dived in response.

What you should see in the data listed above is, in general, the "smart money" identifying and buying the properties where there is a pressing need, whether financial or otherwise to sell. There are opportunities here for buyers to find relative bargains...but, you must know the market to be able to recognize these pockets of “vulnerability”

For a daily email update of the best values in these markets, contact us at caperealestate@hotmail.com