There are two sides to the real estate market on Cape Cod. Most vacation and second homeowners are primarily aware of the more glamourous side of Cape Cod life. Living in enclaves surrounded by the beach, golf courses and luxury living they are immersed in the upside of an appreciating marketplace.
There is a different reality within the real estate market on Cape Cod, for the local community at large who share a much different demographic than the second home or retirement community. The locals have lived, raised families, and worked on the Cape their entire lives. The Cape’s major industry is tourism. Many businesses have historically been seasonal due to business volume. Some are shifting to annual models as there is a greater shift to full year Cape residency.
Local Housing Affected by the Real Estate Market on Cape Cod
The wave of real estate appreciation particularly over the past 2 years has adversely impacted housing stock for this local community. As in other communities, the housing prices keep climbing here on the Cape. Although leveling off slightly due to higher interest rates, prices have climbed significantly over the past few years. Housing stock is low thus demand is still driving market prices.
Seniors who live on a fixed income are being hit with high property assessments as property values rise to reflect the market. Many are unable to afford or sustain these impending increases. According to Boston Agent Magazine the affordability index for the Cape is 43% as of early August. This means that the average Cape Cod income is only 43% of the required income needed to live on the Cape.
Investors and landlords are reexamining the option of selling Cape properties while the real estate market on Cape Cod has been hot and multiple offers have been the norm. This leaves a crisis for those who are unable to join the bandwagon of home buyers. Renters are suddenly notified by landlords that a long-term rental will not be renewed because the landlord decided to cash in and sell. A new landlord can charge a premium seasonal weekly rental to cover the cost of an overpriced home and decide against renting year-round at a fair market rate.
The lack of affordable housing has been felt all through the Cape and Islands. On Nantucket for example, according to Housing Nantucket, the median home price rose to $2.1M in 2021 and rental properties are virtually extinct. This compounds the difficulty of island workers to find affordable housing. If people can’t afford to live in such communities, they cannot be expected to provide services for the year-round residents who need them. This type of inequality is not sustainable long term as there is an interdependence between the service provider and the consumer.
While larger hotel and country club venues may offer housing to seasonal staff the smaller local businesses do not have such facilities. Low wages for seasonal and service jobs can’t cover the high costs of Cape Cod rentals. As a result, and side effect, impatient tourists complain when they must wait for a table or even an ice cream cone because service is slow. Service is slow because there are staff shortages. There are staff shortages because there is a lack of housing for seasonal and local workforces. The impact of housing shortages effects both residents and tourists who may feel their vacation experience is compromised. It’s a no-win situation with snowball effects.
Cape Cod’s Rising Cost in Housing
To illustrate the rapid rise in housing costs, take a look at the chart below. In Barnstable alone, housing prices have risen 23.8% in the past year and exceeds 57% over the past two years. The median home value is now $824K. The graph shows changes in the Barnstable area only.
The housing crisis on Cape Cod came much quicker than anticipated. The Cape Cod Housing Authority commission who looks at affordable housing projections is a few years behind the sudden rise of housing costs. These upward trends make it nearly impossible to find housing on the Cape and Islands for those with limited incomes.
Housing Assistance on the Cape
Housing Assistance Cape Cod, HAC is an organization whose mission is to advocate for affordable housing on Cape Cod. Their mission is to help provide affordable housing for the Cape’s most vulnerable. Each spring they do a walk to fundraise for this cause.
The Mashpee Housing Authority offers programs to help seniors and families with limited incomes. There are certain required criteria to be eligible for such housing programs. Likewise, there are Housing Authorities by each local Cape Cod Town.
While there are organizations to help with housing assistance often there are financial or other criteria to qualify for such services. For young professionals or individuals who do not fit these criteria the open market continues to be very limited. One such model to create housing is above commercial space such as in Mashpee Commons. The combination of retail, entertainment and apartment living may be ideal for this type of tenant. If housing is not affordable the ability to attract a diverse workforce will be limited. Debate on how to solve this crisis expands throughout the Cape with proposals to build larger expanded rental communities across the region. Planning now is essential for the growing Cape community.
While appreciation of real estate is rewarding for those who can afford to invest in Cape Cod property, this causes much different repercussions for the other side, the rental market. This is the dichotomy of the real estate market on Cape Cod. The quality of life for all residents will depend on having the ying and yang of both. There are those who provide and those who consume their services. There is an interdependency needed to sustain a balanced lifestyle for both ends of the spectrum. If the Cape wants to attract and retain a diverse workforce, it must offer affordable housing options for all its residents.