Monthly Archives: July 2021

It’s Not a Housing Bubble

We hear occasionally from potential buyers or sellers, who say that they’re going to make their move “after the bubble bursts.”

Many of us have memories — usually bad ones — of 2006-2008. Some younger investors are being given advice about what they should do by good old Uncle Harry, who “knows a little something about real estate” and remembers his own bad experience from back then.

Talking head housing experts on your favorite cable news network — who get paid to say controversial things — are also suggesting the worst might be yet to come.

But, here’s why today is not an example of history repeating itself.

The housing market isn’t driven by risky mortgage loans.

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130.

Homeowners aren’t using their homes as ATMs this time.

During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).

Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.

This time, it’s simply a matter of supply and demand.

FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months nation-wide.

Builders also overbuilt during the bubble but pulled back significantly over the next decade.

To put it simply, there’s simply not enough homes to keep up with current demand.

On Cape Cod, despite a general trend towards an increase in the amount of single family homes coming onto the market, June 2021 saw the lowest number of new listings for a June in 18 years.

Condominium sales are on the rise

However, condominium sales are showing signs of real life. Year to date, pending sales are up 31%; closed sales are up 26%, and median sales price is up 15%.  These strong numbers are probably fueled by the lack of single-family inventory and rising single-family home prices as well.

BTW…Mari was quoted last week in an article in Banker and Tradesman, a leading publication for the financial services and real estate professions. The article is linked here.

As always, we’re available to assist you in reviewing your options. Please contact us at 508-568-8191 or msennott@todayrealestate.com. We’re happy to help.

Enjoy today’s sun…

Mari and Hank


For Mass. Remote Workers, Life’s a Beach

Mari is quoted in this recent article from Banker and Tradesman, a financial services and real estate weekly publication for Massachusetts

By James Sanna (July 18, 2021)

Homebuyers looking to retire early or work remotely from more bucolic surroundings continued to flood Cape Cod and some South Shore towns this spring, pushing median sale prices to astounding heights.  

Chatham ended May with a year-to-date median sale price of just under $1 million, 37.55 percent higher than its year-end median sale price in 2019, according to The Warren Group, publisher of Banker & Tradesman.  

Falmouth saw a similar surge over the same time period: 229 homes sold at a median price of $590,00, up 35.63 percent from year-end 2019.  

Even communities like Sandwich and Mashpee, typically out of the limelight and havens for Cape Cod’s middle- and working-class homebuyers, saw dramatic leaps in median price: 31.83 percent in the former and 31.03 percent in the latter.  

“It’s unreal how tight the market is,” said Greg Kiely, managing broker for Sotheby’s International Realty’s Cape Cod brokerages.   

WFH, Retirees Powered Demand  

Unlike mid-2020, where the Cape saw a rush of buyers desperate to escape the perceived greater threat of COVID-19 in urban areas, many of this spring’s house-hunters were looking to swap their current homes for ones closer to the beach life they’d always dreamed of.  

“People were saying to themselves: ‘You know what? I’ve proven I can work from home for 15 months. I think I should do this permanently,’” said Richard Waystack, executive broker at Jack Conway & Co.’s Harwich office.  

A part of this new set of work-from-home buyers overlaps with the retiree buyers the Cape traditionally attracts, Waystack said, thanks to empty-nesters’ ability to uproot themselves without having to worry about children still in school. Many of these buyers were targeting homes priced between $500,000 and $1 million.  

“We got a lot of empty-nesters, people who were going to buy in five years, but now that they can work from home they’re getting into the market sooner,” said Natalia Weiner, a sales associate at Gibson Sotheby’s International Realty’s Harwich Port offices.  

The Cape’s historically lower prices helped amp up the area’s appeal, she said. Interest rates were another key driver that helped some buyers keep up in bidding wars or afford bigger and better properties than they might have been able to in other Massachusetts markets.

Where Is the Inventory?  

The result has been a feeding frenzy across all price points.  

“Everything is selling. If anything is on for more than a week and a half, buyers are asking what’s wrong with it,” said Mari Sennott, a Sandwich-based agent with Today Real Estate.  

Year-to-date through June 30, Barnstable County had seen nearly 10 percent fewer new single-family listings hit the market, according to the Cape Cod & Islands Association of Realtors, with 63 percent fewer houses for sale in June alone.  

Despite the return to a semblance of normalcy in Massachusetts over the last few months, much of the “organic” sources of inventory – move-up buyers and buyers downsizing or going into retirement homes – did not materialize this spring.  

“The places that came on were people who were taking opportunities to capitalize on the prices or because life forced them to,” Kiely said.  

As prices surged, that created difficulties for buyers seeking financing, said Cape Cod Five sales manager Kimberly Geary. Many offers crossed her loan officers’ desks where the home inspection or mortgage contingencies had been waived. In some cases, buyers had added demands.  

“They wanted to make sure maybe if the appraisal isn’t coming in [at the sale price], they wanted to be sure that the buyer could pay cash,” she said. “Then you had people tapping into their retirement accounts and investments [to pay the difference and saying, ‘Can you give me delayed financing?’ Once they bought, we’d immediately put in a refinancing so they could recoup the money.”  

Cape Workforce Squeezed  

But with much of the Cape’s existing inventory eaten up by buyers last year mad to find a home at the lowest mortgage interest rates on record, many of these off-Cape buyers found themselves looking at neighborhoods not often considered vacation home territory.  

“If people are piling onto the Cape to move here … they have to go to the Yarmouths, the Mashpees, the Denises,” Kiely said.  

With easy highway access to Boston for the few days each week owners may have to be in the office, Sennott said Sandwich has proved popular.   

“I just got a new buyer yesterday. She’s working at a firm based in New York, with an office in Boston. She’s 100 percent remote; now she’s going to be going into the office one or two days [each week],” she said.  

Proximity to Boston helped boost towns on the South Shore, too, said Maureen Barry, manager of Jack Conway & Co.’s Hull and Marshfield brokerages. Even Hull saw its median sale price jump by 30.64 percent, thanks in part to downsizers moving in from Hingham and Cohasset.  

“Once they found out they could work from home, they had no problem finding a house quite some distance from the city,” she said.   

But with off-Cape buyers beating a path to the communities that largely attracted local buyers who work in the area, both first-time and move-up buyers found themselves shut out, Kiely said. And even mortgage interest rates hovering around 3 percent aren’t able to help them beat out other bidders.  

“If you needed a mortgage, you probably weren’t winning the offer,” he said.  

Future Still in Motion  

The single-family market’s froth dissipated somewhat as spring turned to summer, thanks to more than a few buyers deciding to take the summer off, frustrated at being unable to win bidding war after bidding war.  

“Two to three months ago we were standing in lines for open houses. That has stopped,” Sennott said. “We’re still seeing multiple offers. We might not be seeing 30 offers but we’re seeing four, five, and we’re seeing them in a week instead of an hour.”  

This could offer some local first-time buyers a chance to bid on homes without worrying as much about deeper-pocketed competitors, Kiley said.  

The pace of new listings and sales this fall will offer an indication of whether the 2020 and spring 2021 markets ultimately prove an aberration, Kiley said, and significant questions remain. Will the liberal work-from-home policies that unshackled many new Cape buyers from their daily commutes stay in place at many companies through the fall? If they don’t, or if companies reduce their remote-only workers’ salaries, how will the area’s new arrivals react? And will some sellers decide not to list if the pace of price increases and sales records slows?  

“Is this a temporary shift? Everything in real estate is temporary,” Barry said, laughing. “We have to be very aware. Our job as Realtors is to make our buyers aware of what’s going on in the market. … What I’m telling people is: Put an exciting price on your house. The market will tell you what your house is worth.”   

What Concerns Buyers?

Last week, Fannie Mae released their Home Purchase Sentiment Index (HPSI). The survey showed 77% of respondents believe it’s a “good time to sell.”

But, it also confirms what many are sensing: an increasing number of Americans believe it’s a “bad time to buy” a home. The percentage of those surveyed saying that hit 64%, up from 56% last month and 38% last July.

The reason? Affordability, especially among first time homebuyers. Even the number of renters who say they are planning to buy within the next few years has declined.

So, let’s look closely at the market conditions that impact home affordability.

A mortgage payment is determined by the price of the home and the mortgage rate on the loan used to purchase it. Lately, monthly mortgage payments have gone up for two key reasons:

  1. Mortgage rates have increased from 2.65% this past January to 2.9%.
  2. Home prices have increased by 15.4% over the last 12 months.

Based on these rising factors, a home may be less affordable today, but it doesn’t mean it’s not affordable.

Three weeks ago, ATTOM Data released their second-quarter 2021 U.S. Home Affordability Report which explained that the major ownership costs on the typical home as a percent of the average national wage had increased from 22.2% in the second quarter of 2020 to 25.2% in the second quarter of this year. But this is still below the standard 28% of income that lenders say homeowners should pend on mortgage, insurance and property taxes.

What does this mean for buyers?

As a buyer, while you may not get the deal someone you know got before the virus crisis, that doesn’t mean you shouldn’t still buy a home. Here are your alternatives to buying and the trade-offs you’ll have with each.

Alternative 1: I’ll rent instead.

Some may consider renting as the better option. However, the monthly cost of renting a home is skyrocketing. According to the July National Rent Report from Apartment List: rental prices have grown a staggering 9.2% this year! In previous years, growth from January to June is usually 2-3%.

We know that here on Cape Cod, the monthly cost of rent is as high as a mortgage payment, if not higher.

If you continue to rent, chances are your payment will keep increasing at a fast pace. That means you could end up spending significantly more of your income on your rental as time goes on, which could make it even harder to save for a home.

Alternative 2: I’ll wait it out.

Others may consider waiting for another year and hoping that purchasing a home will be less expensive then. Let’s look at that possibility.

We’ve already established that a monthly mortgage payment is determined by the price of the home and the mortgage rate. A lower monthly payment would require one of those two elements to decrease over the next year. However, experts are forecasting the exact opposite:

  • The Mortgage Bankers Association (MBA) projects mortgage rates will be at 4.2% by the end of next year.
  • The Home Price Expectation Survey (HPES), a survey of over 100 economists, investment strategists, and housing market analysts, calls for home prices to increase by 5.12% in 2022.

We have also talked to potential buyers, who are waiting for those who took advantage of mortgage forbearance to be forced to sell their homes. What this strategy ignores is that the average American homeowner has more than $200,000 in equity in their home. As people return to work and can afford the monthly mortgage payment, refinancing will eliminate any past due amount.

As we’ve noted in previous posts, the Cape market has calmed down over the last several weeks. Open Houses are generally not as busy; offers are not as numerous, and total dollar amounts — while still at or above asking price — are not as what-are they- thinking high. (But there are still exceptions.)

Interest in negotiating incentives — like waiving home inspections — also seems to be fading.

What is clear is that whether you’re a seller or a buyer continuing to sit on the fence waiting to make your move may not be the best strategy.

As always, we’re happy to help you review your options. Please contact us at 508-568-8191 or mennott@todayrealestate.com. Thanks.

Mari and Hank

The Real Estate Market Is Calming Down

In last week’s post we wondered if the real estate market on Cape Cod was shifting. We only had anecdotal evidence based on our own experience and that of our colleagues to suggest that there seemed to be a change.

Now, we have the official stats from the Cape Cod and Island Association of Realtors that suggests something may be going on.

The biggest evidence is a drop of $30,000 in median sales price for a single family home from May ($630,000) to June ($600,000) across Barnstable County. So, while the final sale price as a percentage of list has remained steady (104%), the actual dollar amount decreased.

It’s important to note that a year to date comparison from 2020 to 2021 shows a nearly 35% increase in median sales price overall. ($447,500 vs. $603,000.)

Inventory increased last month (502) from the previous (448). While this is still less than what a usual supply of single family homes needs to be, it’s trending in a positive direction. The Cape now has 1.2 month supply of available homes. At least three months is needed to be considered even reasonably healthy.

So what does this mean?

For buyers — particularly those who dropped out of the market after being frustrated with long lines at open houses and price competitions that they couldn’t win — this could be a good sign. If you were among the discouraged, it might be time to re-start your search.

For sellers — as we’ve been suggesting for weeks now — your return on investment is potentially shrinking. While we’re continuing to see most offers come in above list price, they’re generally not at the numbers or mind boggling levels that we saw just a few months ago. The time for you to act is now, as competition is increasing with more homes coming on the market.

If you’re wondering about where you will move if you sell, the larger inventory is also a positive for you.

Is this a temporary slowdown because of buyer fatigue and distractions due to weddings, graduations, and vacation planning? Or is something else at work? Time will tell, but smart real estate investors — sellers or buyers — should take note.

As always, we’re happy to help you review your options. We’ve been helping our clients make the best decisions for themselves for more than 20 years.

We’re honored that so many have turned to us this year. Through the first six months of 2021, we rank second out of Today Real Estate’s 100 agents in terms of closed purchases. (Arguably, we’re first, as #1 is a team of six that has led the Today roster for years.)

So, let’s connect soon at 508-568-8191 or msennott@todayrealestate.com.

Don’t wish for it; go for it!

Mari and Hank

The Market Is Settling Down

In last week’s post we wondered if the real estate market on Cape Cod was changing. We only had anecdotal evidence based on our own experience and that of our colleagues to suggest that there seemed to be a shift.

Now, we have the official stats from the Cape Cod and Island Association of Realtors that suggests something may be happening.

The biggest evidence is a drop of $30,000 in median sales price for a single family home from May ($630,000) to June ($600,000) across Barnstable County. So, while the final sale price as a percentage of list has remained steady (104%), the actual dollar amount has decreased.

In Sandwich, the median price dropped from $590,000 in May to $539,000 in June — a not insignificant decrease of more than $50,000.

It’s important to note that a year to date comparison from 2020 to 2021 shows a nearly 31% increase in median sales price in Town overall. ($420,000 vs. $550,000.)

Inventory across the Cape increased last month (502) from the previous (448). In Town, it jumped from 25 to 34 homes. New listings nearly doubled from 28 to 50, while days on market increased from 14 to 24.

The Cape now has 1.2 month supply of available single family homes. At least three months is needed to be considered even reasonably healthy.

So what does this mean?

For buyers — particularly those who dropped out of the market after being frustrated with long lines at open houses and price competitions that they couldn’t win — this could be a good sign. If you were among the discouraged, it might be time to re-start your search.

For sellers — as we’ve been suggesting for weeks now — your return on investment is potentially shrinking. While we’re continuing to see most offers come in above list price, they’re generally not at the volume or mind boggling levels that we saw just a few months ago. (In Sandwich, the percentage over list dropped from 105.6% to 103.1%)

The time for sellers to act is now, as competition is increasing with more homes coming on the market.

If you’re wondering where you can move if you sell, the larger inventory is also a positive for you.

Is this a temporary slowdown because of buyer fatigue and distractions due to graduations, weddings, and vacation planning? Or is something else at work? Time will tell, but smart real estate investors — sellers or buyers — should take note.

As always, we’re happy to assist you in reviewing your options . We’ve been helping our clients make the best decisions for themselves for more than 20 years.

Please reach out at 508-568-8191 or msennott@todayrealestate.com. Talk soon…

Don’t wish for it; go for it!

Mari and Hank

Has the Market Shifted?

We won’t have official numbers from the Cape Cod and Island Board of Realtors for at least a week, but anecdotally — based on what we’ve seen and our colleagues are saying — there seems to have been a shift in the area’s real estate market.

The Open House frenzy of March and April seems to have calmed. While there are always exceptions, there are no longer lines of buyers waiting to see a property. What we used to describe as a “busy” Open House has returned.

Multiple offers are still the norm, but not in the numbers of a few months ago. Bids are still over asking price, but there aren’t as many head scratchers, because of the large amounts involved.

What hasn’t changed is that list price is now the starting point. The days of bidding low are a thing of the past — at least for now.

Why the change? There are several potential reasons.

May and June can be some of the slower months in the housing industry as people focus on weddings, graduations, summer plans, etc.

But, national housing industry publications are also talking about “buyer fatigue.” Too many lines to see properties that became out of reach, because competition pushed the prices beyond what many could afford. (Or thought was reasonable.)

At the same time, the number of listings has crept up. While inventory is still nowhere near what it needs to be, the increase in available property is a good sign.

Over the past few weeks, we’ve been on more successful listing appointments than we have in several months.

It has also taken less time to find buyers new homes. Last week, a client closed on a property that he purchased for list price after we were the only ones to attend the Open House.

Finally, with so many getting vaccinated, the urgency to move to areas like Cape Cod for the open space, recreational activities, etc. has lessened. Health clubs are open again. The kids can swim in the condo pool. Favorite restaurants and bars are now providing indoor and outdoor dining.

You also have to wonder if the “work-at-home” thing has fizzled a little. Morning traffic reports for Boston are starting to look vaguely similar to those of pre-virus days.

Is this a temporary lull or another example of a return to normalcy? We should have a definite answer by the end of summer.

In the short -term, what does this mean for buyers and sellers?

For buyers — especially those who stepped out — it’s time to get back in.

For sellers, who have been sitting on the sidelines, you may have lost money. While offers are still coming in for over asking prices, they are not as high as they typically were just a few months ago. (But there are still exceptions.) While no one expects prices to drop, potential return on investment is shrinking.

As always, we’re available to answer your questions or help you review your options. We’ve been helping our clients make the best decisions for themselves for over 20 years. Just contact us at 508–568-8191 or msennott@todayrealestate.com.


If you haven’t, please visit Mari’s Facebook group Cape Cod Dining at Home (and anywhere else.)

Began early in the virus crisis to exchange recipe ideas during the lockdown and support local restaurants, it has grown to 4,200 members from across the country.

Don’t wish for it; go for it!

Mari and Hank

Has the Market Changed?

We won’t have official numbers from the Cape Cod and Island Board of Realtors for at least a week, but anecdotally — based on what we’ve seen and our colleagues are saying — there seems to have been a shift in the area’s real estate market.

The Open House frenzy of March and April seems to have calmed. While there are always exceptions, there are no longer lines of buyers waiting to see a property. What we used to describe as a “busy” Open House has returned.

Multiple offers are still the norm, but not in the numbers of a few months ago. Bids are still over asking price, but there aren’t as many head scratchers, because of the large amounts involved.

What hasn’t changed is that list price is now the starting point. The days of bidding low are a thing of the past — at least for now.

Why the change? There are several potential reasons.

May and June can be some of the slower months in the housing industry as people focus on weddings, graduations, summer plans, etc.

But, national housing industry publications are also talking about “buyer fatigue.” Too many lines to see properties that became out of reach, because competition pushed prices beyond what many could afford. (Or thought was reasonable.)

At the same time, the number of listings has crept up. While inventory is still nowhere near what it needs to be, the increase in available property is a good sign.

Finally, with so many getting vaccinated, the urgency to move to areas like Cape Cod for the open space, recreational activities, etc. has lessened. Health clubs are open again. The kids can swim in the condo pool. Favorite restaurants and bars are now providing indoor and outdoor dining.

You also have to wonder if the “work-at-home” thing has started to fizzle. As example, Boston traffic reports are starting to sound very similar to those of pre-virus days.

Is this a temporary lull or another example of a return to normalcy? We should have a definite answer by the end of summer.

In the short -term, what does this mean for buyers and sellers?

For buyers — especially those who stepped out — it’s time to get back in.

For sellers, who have been sitting on the sidelines, you may have lost money. While offers are still coming in for over asking prices, they are not as high as they typically were just a few months ago. (But there are still exceptions.) While no one expects prices to drop, potential return on investment is shrinking.

As always, we’re available to answer your questions or help you review your options. Please contact us at 508–568-8191 or msennott@todayrealestate.com. We’re happy to help.

Mari and Hank