Unreal Estate: New Arrivals Fuel Eye-Popping Increases

By: Ed Maroney

Topics: Housing and homelessness , Economic development , Community Sustainability

ORLEANS — You don’t find a 314 percent increase in something often – maybe that’s how much your blood pressure rose during last week’s presidential debate – but that figure is an indication of the real estate market’s exponential growth.

Pending sales of single-family properties in Orleans jumped from seven in August 2019 to 29 this August, a 314.3 percent increase, according to the Cape Cod & Islands Association of Realtors local market update. Closed sales rose from 11 to 29 for an increase of 163.6 percent. Year to date in August 2019, the median sales price was $729,000; by this August, it had soared to $873,500, almost 20 percent more. That’s the second highest on the Cape, trailing only Provincetown ($1,240,000) and ahead of neighbors Brewster ($519,500), Chatham ($771,000), Eastham($500,000), and Harwich ($462,056).

In August 2020, the median sales price of a single-family home in Orleans was one buck short of a million dollars, placing third behind Provincetown ($1,335,000) and Chatham ($1,040,000).

The Orleans condo market heated up as well. The median sales price for the first eight months of 2019 was $189,250; for the same period in 2020, it was $304,500, an increase of 60.9 percent. Condos are selling faster this year to date (104 days on the market) than last (131), and the percentage of original list price received was almost 100.

“In my 45 years in real estate, I have certainly seen overheated markets, but I have never seen it come on so hard and so fast,” said broker Bob Wilkinson of Wilkinson & Associates Real Estate. He compared his reaction to the changes being wrought to “how my grandfather probably felt about the Model T as compared to the horse.”

What’s driving the market, Wilkinson said, “is people that are able to work from home, not all of them, not even close to it, are choosing to leave the cities because of the pandemic. Far and away, they strike me as wealthy people.” Noting Realtors Association CEO Ryan Castle’s observation that the primary drivers are between 35 and 45, he said, “these folks are what’s causing this absolute explosion in real estate.”

“The good news in it,” said Wilkinson, “is that the school population is going up. People that age have children. We’ve had a constant drain on students over many years now.”

Nauset Schools Superintendent

ntendent Tom Conrad has said he’s not seeing an increase in new students from off-Cape as of yet. One explanation may be that families moving here are easing the transition by having their children continue to “attend” school in their former communities remotely for a time.

“One of my agents has grandchildren living here,” Wilkinson said. “They left California, but they’re going to school remotely in California. I guess we’ll have to wait until next year, but I heard Eastham Elementary had an uptick.”

Wilkinson said he thinks the new arrivals are coming primarily from Boston and New York. He said he asked an associate what happens after they experience their first “hard and cold winter” without their favorite cafes in New York and city friends. “We could see a pin put in this bubble,” Wilkinson suggested, but his colleague said the new folks are likely to decide, “Why didn’t we do this sooner?” and tell their friends to do likewise.

“They don’t need to commute to Boston” in an age of remote working, said Wilkinson. “They’re done with Boston. It’s that profound. I think for a lot of people coming here, their visits to the city will be few and far between.”

Demand is so great that spec houses “are being built at a rapid rate,” said Wilkinson. “We recently sold one for someone who works for one of the great big Internet companies, just over $600,000. She’s been told that she never needs to return to the workplace.” He added that “some spec houses are going under agreement before they’re built.”

The pace of the market has picked up considerably. “The waterfront properties on the market for a very long time, one or two years, most of those have been conveyed or are pending sales,” Wilkinson said. “One sold off Barley Neck had been on the market 700 days.”

The condo market has caught the fever as well. “If you’re barely able to buy in Orleans, you have to buy a condominium,” Wilkinson said. “That will put pressure on those. Condos often would take a little time to sell. Not anymore.” The number of condos for sale this August was 14, a 50 percent drop from last August.

The downside of all this activity “is that the price structure is going to rule out an awful lot of buyers that may have grown up here and wanted to stay here or return here,” said Wilkinson. “They can’t compete for these properties. They can’t even play on the same ball field.” He believes “the pressure on the towns to create workforce housing has really now come to full boil.”

The town’s affordable housing trust and affordable housing committee are working to meet the goal of 100 additional housing units within the decade “to sustain a healthy combination of home ownership and rental for people who live and work in our town,” committee chair Nancy Renn wrote in an e-mail reply. “In Orleans, seasonal homes have increased faster than year-round homes, year-round rentals are few, mid-range housing stock is minimal, and many workers, families, and seniors are overspending on housing.” Noting that the town has nearly reached the state standard of having 10 percent of its housing stock identified as affordable, she wrote, “Orleans’s success does not fully address the ongoing need for workforce housing in our community.”

The trust and the committee have exercised a variety of options: providing land and additional funding for a Habitat for Humanity house, buying property where a developer can create housing units, laying the groundwork for conversion of the Cape Cod 5’s former operations center into affordable rentals, and buying a condo unit.

“I think condominiums should be what the town purchases when they come on the market,” Wilkinson said. “The thing I like about it is that you can spread the housing around so people feel they’re not living in a workforce housing complex.”

Will the recent arrivals participate in the life of their new community? “Time will tell, but the chances of it are much better,” Wilkinson said, recalling his company’s sale of a waterfront house that was one of six that the people owned. “Their intention was to spend two weeks here in summer,” he said. “It’s an extreme example, but folks just buying and using in the summer season are not invested in the community. Year-rounders have more interest, especially if they start families.”

Wilkinson thinks the newcomers could be good for local businesses but cautions that, “It’s kind of the Amazon generation. Other than food, they may buy everything online.”

Looking forward, he said, the situation “can break one of two ways.” The challenge of the pandemic will be solved, people will feel safe in cities again, and the folks who moved to Orleans will want to return “to all those famous restaurants and see their friends,” he said. “If they sell and move back, it will let the air out of the balloon in a heartbeat. On the other hand, they could decide they wished they’d done this sooner and they’ll get their friends to move here. If I had to take a bet, that’s probably what they will do.”