When it comes to home prices, there’s trouble in paradise.

Cape Cod has kicked off 2016 on a losing streak, with home prices dropping 3 percent through the first five months of the year, even as they have continued to climb skyward across the state, especially in Greater Boston. And this may not be just a temporary blip, but rather an emerging pattern.

While tony suburbs in the Boston area have long ago blown past record highs set during the real estate boom a decade ago, Cape resort towns are still struggling to get back to their last peaks.

Competition is as fierce as ever for more modest homes in the $400,000 and under range, with the sandy spit’s smaller population year-round of blue-collar and middle-class families struggling to put a roof over their heads. However, the Cape market is softer on the high end, where expensive homes can languish and where buyers flush with gains from the sale of Boston-area homes can make out.

“It’s a busy market for sure, but it is not that insanity of 10 years,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate on Cape Cod. “I don’t think any town on the Cape has come back to the highs of 2006 and 2007.”

Barnstable County, which covers the Cape, was the only region in the state to see home prices fall through the first five months of 2016.

The median home price on the Cape is $340,000 year to date through May, down from $350,000 a year ago, according to The Warren Group, publisher of Banker & Tradesman.

By contrast, suburbs along the I-95 Boston to Providence corridor saw prices jump 6 percent while Boston and its environs posted a 4 percent gain.

The decline in home prices has been pretty evenly spread across the Cape, from Osterville up to Truro.

Mid-Cape, Marston Mills has taken the biggest hit, with the median price plunging 14 percent to $314,500. Dennis is down to $325,000 after a 7 percent decline, while Osterville’s median fell 5 percent, to $485,500. The Lower Cape towns of Harwich ($330,000) and Orleans ($564,638) have seen prices fall by 9 percent and 6 percent, respectively, while on the Outer Cape Truro’s median price is now $605,000 after edging down 4 percent.

Prices on the Cape stand out for another reason – they still lagging the peaks set more than a decade ago.

Just take Harwich. The median price through the first five months of 2005 was a lofty $384,000, nearly $55,000 higher than it is today. Dennis is still $42,000 off its last peak, while Truro is $65,000 off. And Orleans? It’s in a league of its own, with the median price in town a whopping $150,000 below where it was during the last boom.

These are big gaps, and they are not likely to be closed soon, especially with prices now headed in reverse.

By contrast, several Boston neighborhoods and suburbs – not to mention Cambridge – have long since set new records, leaving the highs of the mid-2000s in the dust.

The biggest change right now can be found within the upscale second-home market, where properties simply aren’t moving as fast.

Jeff Smith, a broker with LAER Realty Partners, notes he has one million-dollar listing in Dennis that has been on the market for 111 days.

He is also working with a buyer eyeing a $900,000 Cape in Cotuit that boasts ocean views but is in need of a lot of work.

The market is slow enough that his buyers have opted to let the listing sit for a couple months before getting back in touch with the owners. The hope is they will have come down on their asking price by then.

That’s a far cry from what the market was like on the Cape back in the mid-2000s. The mania that gripped the market a decade ago – with a scramble to buy up second homes – has not returned. And unless you bought at the peak of the real estate bubble, it would be hard to argue that this is a bad thing.

In fact, today’s calmer market – if that’s not putting an overly positive spin on it – offers up some decent buying opportunities for those hunting for a vacation pad or their retirement dream home, Blatz noted. Buyers who sell homes in the red-hot Boston market can make their dollars go a lot farther on the Cape.

“If someone is selling a property in Boston, they can get top dollar there and buy something here for prices that may seem much better here than they did at the top of the market in the mid-2000s,” Blatz said. “From that standpoint, it’s a great market for buying a retirement or second home.”

Trouble In Paradise

Of course, a big exception to that are the more modestly price homes that are being fought over by the Cape’s hardy band of year-round residents who keep the peninsula’s schools, restaurants and banks humming.

One modest Sandwich Cape sold for nearly $400,000 – $25,000 over asking – just 13 hours after it was put on the market, Smith said. Another buyer of his just agreed to buy a Cape in Mashpee for $265,000 without even seeing it first – and is counting herself lucky for actually landing something.
“That’s the weird part,” Smith said. “People who are trying to live here are having a hard time, but people who want to vacation here have more to pick from.”

It’s anyone’s guess why the second home market isn’t drawing the kind of frenzied buying activity it used to. The Cape is still one of the most beautiful spots on the planet, yet it is increasingly crowded and jammed with traffic.

For the World War II generation and their Boomer kids, a place on the Cape was the ultimate. But Xers and Millennials aren’t necessarily wedded to those old dreams.

There is such a thing as too much love and the Cape is slowly but surely being loved to death. And the Cape’s sluggish prices could just turn out to be the canary in the coal mine.