CHATHAM – The sale of single-family homes in town increased by more than 50 percent during 2020, reflecting an unprecedented year in real state sales Cape wide.
COVID-19 was a major factor driving the super-charged market, with buyers seeking second homes away from populated areas. People nearing retirement age moving up plans to buy on the Cape also contributed to the increase in sales, said Ryan Castle, CEO of the Cape Cod and Islands Association of Realtors (CCIAOR). A shift to working from home was also a factor, he said.
“COVID forced a lot re-evaluation” of plans, he said.
But the increase in prices also means fewer entry-level homes on the market and may further exacerbate the region's affordable and attainable housing crisis. As of early this week, there were only 20 single-family homes listed for less than $1 million in Chatham, Harwich and Orleans combined, Castle said. A lack of overall inventory – there are only a total of 74 homes on the market right now in the three towns – is likely to be the limiting factor in real estate sales this year, he said. Compared to a year ago, the number of homes on the market was down 65 percent at the end of 2020, according to the CCIAOR.
“We've got an inventory problem right now,” said Tony Guthrie of Robert Paul Properties.
Inventory levels are the lowest he's seen in his 40 years in the business, said John C. Ricotta, president of John C. Ricotta and Associates, Inc.
“Certainly the inventory levels are going to have to come up, or there's nothing to buy,” he said.
According to the CCIAOR, single-family property sales in Chatham were up 53.5 percent, from 185 in 2019 to 284 in 2020. The median sales price increased 4.6 percent to $862,750, and homes spent 3.1 percent less time on the market than in 2019. Sellers received the list price on 92.9 percent of sales, up from 90.9 percent in 2019.
In Orleans, single-family home sales were up an incredible 86.8 percent, from 106 in 2019 to 198 last year. The median sales price was $827,500, up 13.4 percent, and properties spent 4.9 percent less time on the market. List price was paid in 93.1 percent of sales, a 3.2 percent increase.
Sales of single-family homes were up 10.4 percent in Harwich in 2020, with 328 transactions compared to 305 in 2019. The median price was up 11.5 percent to $514,000, and homes were on the market an average of 87 days, 20.2 percent shorter than 2019. List price was received 96.4 percent of the time, a 2.7 percent increase.
All three towns also had significantly more sales pending at the end of the year than at the beginning of 2020.
In Barnstable County, sales were up 20.6 percent, according to the Warren Group, and the average median sales price increased in 2020 to $520,000, a 26.8 percent jump.
Real estate sales began to ramp up in May, setting new records for months at a stretch. COVID-19 changed the dynamics of the market, creating something of a frenzy, said Guthrie, fed by ongoing low interest rates.
“Last year was just a crazy market,” agreed Ricotta.
An influx of buyers who may – or may not – turn into year-round residents could be an opportunity to create a more sustainable year-round economy, Castle said, “but only if we have enough housing to meet the demands of all.” But the median prices realized last year remain too high for most year-round workers. Zoning and other regulations encourage maximizing properties, leading to larger, higher-priced housing, he said, and many towns haven't had the political will to make the changes that will lead to more reasonably priced housing.
The balance of “who gets to buy” in Chatham is even more skewed now than it was six months or a year ago, said Select Board Chair Shareen Davis.
“The Select Board has been committed in the last several years to build a foundation for more affordable and attainable housing inventory and have worked diligently in that direction,” she said in an email “There is a trifecta of community sustainability issues to address: housing, jobs and schools. There is no time like the present to put our efforts aggressively to work for the sustainability of our own.
“The pandemic real estate boom has put it in the forefront even more,” she said. The board recently voted ask voters to purchase two private parcels for affordable housing at the May annual town meeting. Details on the size of the parcels and the number of homes that might be built have yet to be released as the board continues to negotiate with the current owners.
With the year closing with a 21.7 percent increase in pending sales, the strong market is expected to continue, Castle said, but inventory levels will likely determine if sales keep up with last year's records. A six-month supply is a health level, he said. “We're at 1.2 (months) or so, at the end of December,” he said.
Chatham is likely to retain its desirability, Ricotta said. He said he has mixed emotions about that because it's keeping so many people out of the market. The rental market is even tighter as many opt to stay in seasonal homes rather than renting them. “If I had a 25-story apartment building, I'd be able to fill every single [unit],” he said.
No one expects the bottom to fall out of the market anytime soon, even with the low inventory. Sellers are definitely in the driver's seat, although anecdotes of bidding wars and sales happening the same day as a listing are a bit overblown, Guthrie said. Anyone trying to exploit the market with unreasonable listing prices or homes in poor condition are likely to be disappointed.
“If you're smart, it will sell quickly,” Guthrie said. “You still have to do all the bells and whistles to make your house appealing.”
The lack of inventory isn't just a Cape problem, said Castle. “A lot of places around the country are feeling this crunch,” he said. “Housing is not right now around the country.”