Truro had the highest median price, $523,000, for single-family homes sold in Barnstable County during the first three quarters of the year. This beachfront home in Truro is for sale for nearly $2.2 million.
Cape Cod – a vacation destination for thousands of visitors every year – saw its median home prices jump 17 percent during the first three quarters of the year.
The median price for single-family homes sold through September of this year was $305,000, up from $260,000 during the same three quarters just a year ago. Single-family median home prices soared more than 20 percent in eight out of 20 towns and villages in Barnstable County during that time, and prices in another eight towns rose more than 17 percent, according to The Warren Group, parent company of Banker & Tradesman.
Prices in two Outer Cape communities, Truro and Provincetown, are among the highest in Barnstable County. The median single-family home price in those communities reached a new high-water mark, exceeding $500,000 during the first three quarters of the year for the first time ever. Truro boasted the highest median sales price at $523,000 – an 18 percent increase from a year ago when the median price was $443,750. Meanwhile, in Provincetown the median price climbed about 14 percent this year to $518,250 from $455,000 during the first three quarters of 2002.
Cape Realtors struggled to explain the drastic increases, particularly at a time when the overall number of home sales was down and the economy still sluggish. But some said that a combination of factors – including a boost in consumer confidence, low mortgage interest rates and a large number of baby boomers who are seeking vacation and retirement homes – have led to increasing demand. At the same time, land preservation efforts have restricted the supply of buildable land and put upward pressure on prices.
“Our [Truro’s] so-called entry market has stepped up to the point where basically you’re in the $400,000 range just for what I consider to be a modest three-bedroom Cape in the woods with no particular attributes,” said Nick Brown, broker-owner of Thomas D. Brown Real Estate Assoc. in Truro.
The same home would have sold in the mid- to high-$200,000 range four or five years ago, said Brown. Local Realtors say it’s not the value of the home that has gone up, but the land that it sits on.
“There is so little land on the market on the Outer Cape that the market has driven that underlying piece [of property] sky-high,” said Brown.
Price appreciation in Barnstable County was steepest in the Lower Cape town of Orleans. The median price for single-family homes sold in Orleans during the first three quarters of 2003 surged 28.6 percent to $495,000 from $385,000 the during the same period in the prior year.
Nat Santoro, manager of the Kinlin Grover GMAC Real Estate office in Orleans, said unlike last year, there have been more high-end property sales in 2003 as consumer confidence improved.
Also contributing to the rise in prices was the low supply of homes on the market priced between $300,000 and $500,000. And with a growing number of retirees seeking second homes, the demand for homes on the Cape was greater.
The fact that home prices reached the $500,000 threshold in Truro during the first three quarters didn’t come as a surprise to Brown.
“What does surprise me is when you have 40 to 50 percent of your housing stock on the market over $1 million when your absorption rate is six to seven units,” said Brown. “That tells me that we have currently a three-year supply of high-end housing on the market.”
Slips and Dips
That abundant supply of high-priced housing isn’t troubling local Realtors too much. A key factor buoying the market in Truro, explained Brown, is that 68 percent of the community’s land mass is preserved as part of the Cape Cod National Seashore, which means that only about 30 percent of the land can be developed. Two-thirds of that already has been developed, and Brown estimated that roughly one-third of the remaining developable space is the hands of very wealthy owners who aren’t likely to sell or develop it anytime soon.
However, Brown believes that the real estate market will flatten in some Cape communities in upcoming months.
“In Wellfleet, we have seen the first 15 to 20 very small price reductions,” he said. Brown said that Truro is likely to see prices flatten as well, but not necessarily dip, and that Provincetown “hasn’t found the top” of the market yet.
While prices escalated in Barnstable County during the first nine months of 2003, unit sales took a slight dip. Single-family home sales were down 1.5 percent to 3,791 sales from 3,849 last year. Truro’s home sales were 7.7 percent lower – 48 vs. 52 last year — and Provincetown’s sales fell 20 percent from 35 to 28. In Orleans, single-family home sales dropped 8.2 percent to 89 through September this year from 97 during the first three quarters of 2002.
The trend is similar to what’s happening in other parts of Massachusetts. In Berkshire, Dukes, Norfolk and Plymouth counties – where single-family home median prices experienced double-digit appreciation during the first three quarters this year – home sales fell, according to The Warren Group. As of last week, The Warren Group did not have statistics for the full three quarters for Bristol, Essex, Franklin, Middlesex, Suffolk and Worcester counties. However, statistics available through August for Franklin and Middlesex counties reveal a similar home sales and price pattern. In Worcester County, there was a slight increase of almost 2 percent in single-family home sales volume, while the median selling price jumped up by 20 percent.
During the third quarter, however, sales of detached single-family homes in Massachusetts rose significantly, according to a report released by the Massachusetts Association of Realtors last week. Sales of detached single-family homes were up 16.1 percent statewide and 9.5 percent on Cape Cod during the third quarter, driven by buyers who acted quickly as mortgage rates started to creep up early during that period, according to MAR. The rate on a 30-year fixed mortgage rose from an average 5.69 percent in the second quarter to 6.27 percent in the third quarter.
The sales volume increase across the state was the first in three quarters, following sales declines of 10.6 percent and 4.9 percent during the first and second quarters of the year, respectively, MAR reported.
The increased sales activity also kept pressure on home prices from July through September. The average selling price for a single-family home increased 6.8 percent to $390,295 during those months, compared to $365,553 during the same month in the pervious year. MAR reported that average sales price for a single-family home on Cape Cod surged 17 percent to $456,626 in the third quarter of this year.
However, according to MAR, the rate of appreciation continued to moderate because of the growing number of homes for sale, which helped contribute to a more balanced real estate market.
“We welcome the fact that home prices are no longer rising rapidly,” said MAR President Peter P. Casey in a press release last week. “Double-digit appreciation rates may be desirable for sellers, but they aren’t good for the long-term health of the market. Today’s more modest price increases mean homeowners can still build equity, while a larger number of buyers of moderately priced homes have been able to remain in the market and the bargaining position of those buyers is improving as inventory levels grow.”
While MAR is projecting sales activity to slow during the fourth quarter of 2003 because of the seasonal nature of the New England housing market, the group’s leaders say that demographic trends will keep buyer demand strong.
“Today, the greatest growth in new household formation in this country is occurring among immigrants, and many have settled in Massachusetts and are buying homes in large numbers in several of our urban communities,” said Casey. “We’ve also seen a surge in activity among aging baby-boomers, many of whom are in their peak earning years and have begun downsizing to luxury condos or purchasing vacation or investment properties.”
